The Biden administration and its congressional allies are determined to “build back better” from the pandemic recession and its aftereffects, attaching those very words to their signature climate- and social-spending legislation now politically hanging in the balance. They will, however, have to do it without the help of corporate America, which has chosen to throw as many obstacles in their path as possible.
Usually, the resistance to such Democratic initiatives would come overwhelmingly from the Trumpian GOP minority in Congress, and to be sure, they don’t like the “socialist” aspects of the Build Back Better plan, with its former $3.5 trillion price tag (reduced to approximately $2 trillion by conservative Senate Democrats). But the Republican right is primarily absorbed in carrying on its declared culture war against liberal America; that’s what activates its base. So the guerrilla campaign against the specifics of the embattled Democratic program is being quietly waged by Wall Street, K Street, and the legions of high-priced lobbyists dispatched by executive suites around the country.
It might be assumed corporate America would gladly get on board, considering how well it’s doing economically and how much it benefited from the earlier American Rescue Plan — much more than the public at large. After all, the stock market, scorekeeper for the business elite and the investor class, recorded its seventh straight monthly rise entering September after posting 53 record closings in eight months. The S&P 500 is up over 20% for 2021 and has doubled in value since the pit of the pandemic in March 2020. Over the past year and a half, the surging securities market has created $20 million in stock wealth.
Credit the investor’s friend, the Federal Reserve Board, for this performance. Despite its statutory responsibility for managing inflation and employment, the Fed’s real concern in recent times has been boosting the stock market; it’s worked at this job nonstop since the virus struck nearly two years ago. Ignoring rising inflation, Fed officials have kept interest rates at a rock-bottom level. Simultaneously, they’ve continued to gradually deregulate the banking sector, undoing step by step the regulations put in place following the 2008 financial crash (stress tests, capital and liquidity requirements, limits on mergers, etc.), a process leading to more easy profits and rising bank stocks — up 28% since January.
America’s big banks are not the only corporate interests prospering in the era of COVID; the massive injections of federal funding that stimulated vaccine development have benefited the pharmaceutical industry to the tune of billions of dollars. Moderna’s introduction of its vaccine this year led to a 260% jump in its stock price and made it the premier company on the S&P 500. Rival Pfizer also realized unparalleled pandemic-related profits, generating $3.5 billion in the first three months of 2021 alone, a quarter of it from shots in arms.
The vaccines, developed with government subsidies it should be stressed, were then purchased for distribution from the drug manufacturers with taxpayer money at an estimated $10 to $20 per dose. Once the immediate emergency passes, industry spokesmen admit, those prices will increase at least tenfold.
Then, there are the insurance companies, the operators of federally subsidized Medicare Advantage (or “private Medicare”), whose relentless and misleading advertising during the pandemic has caused their retiree enrollments to spike, reaching 42% of Medicare recipients this year. Along the way, insurer profit margins from Medicare Advantage have risen annually, reaching their highest level ever. By early 2020, beneficiaries receiving their Medicare services from private corporations included Humana’s 3.6 million (up 17% over 2019), CVS Health’s 2.3 million (up 32%), and UnitedHealth Group’s 5.3 million.
American taxpayers made this possible by subsidizing private insurers a total of $7 billion in 2019, according to the Kaiser Family Foundation, allowing them to write off administrative costs and the extra benefits they offer. The bottom line: Uncle Sam now spends hundreds of dollars more per person to cover beneficiaries enrolled in Medicare Advantage than to cover those in traditional Medicare ($321 more in 2019), part of a transparent effort, begun by the Trump administration prior to its exit, to privatize the entire Medicare system.
Considering the largesse coming its way, you might expect corporate America to put aside its avarice for the good of the nation’s overall economic recovery and shared advancement. That would be a major miscalculation; momentum is all in the opposite direction.
Take the drug companies, for example. One objective of the Build Back Better agenda is to enhance traditional Medicare by adding needed missing benefits, such as coverage for eyeglasses, hearing aids and dental visits. To fund these and simultaneously reduce excessive prescription costs for seniors, the Democratic plan calls for implementing mandatory negotiations between Medicare and the pharmaceutical industry to lower drug prices, something specifically banned by a Republican Congress in 2003. In response, the chief industry lobby PhRMA has announced a seven-figure negative ad buy, calling the proposal “misguided” and “an existential threat.”
Or consider the small pilot program introduced by the US Postal Service to offer unbanked customers minimal financial services, including paycheck-cashing, bill-paying and ATM access. This innocuous innovation has incurred the unbridled wrath of organized banking in the form of the American Bankers Association and allied lobby groups, who fear the specter of public competition on their exclusive turf.
For the most part, however, what exercises our corporate plutocracy is that its sugar treat from 2017, the Trump tax cuts, may be rolled back as part of financing the Build Back Better plan. While giving socially responsible lip service to popular features of the pending legislation, big business is surreptitiously mobilizing across the board to halt it in its tracks. Let the lobbying games and scare tactics begin.
Lined up to stop proposed tax-based funding for the social-spending package are the following public-spirited representatives of corporate America: the US Chamber of Commerce, the Business Roundtable, the National Federation of Independent Business, the National Association of Manufacturers, and Americans for Tax Reform. In their crosshairs are any increases in the shrunken corporate-income tax, the capital-gains tax, the estate tax, and the top marginal individual-income tax, as well as enactment of a global corporate minimum tax and anything remotely resembling a wealth tax.
The Biden team has been at pains to cultivate corporate America’s policy support from the start. They now know the nature of their reward.
Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.
From The Progressive Populist, November 15, 2021
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