Of the many flaws in Joe Biden’s irresponsible spending plans, perhaps the least discussed is that they rely on wishful thinking. The president assumes that glaringly improbable outcomes will magically come to pass.
I’m not referring here to obvious miscalculations, such as that goosing an overheating economy with $6 trillion of unnecessary spending won’t spark inflation; politicians are rarely masters of economics, and Biden seems particularly innumerate, so there is no great surprise there.
But if he is not a numbers guy, he is, by reputation at least, a people person. So, how could he fool himself, except willfully, that other politicians would choose to support plans that it’s in their interests to oppose? The president has received two short, sharp shocks recently that puncture his rosy expectations that states and foreign nations will self-inflict damage to help him achieve his ill-conceived agenda.
Officials from the Organization for Economic Cooperation and Development, the club of rich nations, are signaling that Biden’s proposed 15% minimum corporate tax rate is an idea from cloud cuckoo land. He thinks it’s the floor. Some of them think it’s higher than the ceiling.
He wants to make America a sort of fiscal prison, as I’ve previously written, in which his corporate tax increases are inescapable. To discourage U.S. companies from fleeing to low-tax jurisdictions, Biden is trying to negotiate a ubiquitous international norm, so businesses that try to run will find they cannot hide.
Now, however, he’s learning that other countries don’t voluntarily make themselves unattractive to overseas investment. They’ve started telling Washington that a 12-13% rate is what they have in mind — Hungary might not go that high, which could put the kibosh on the whole European Union — but would that deter American business fleeing the 28% rate Biden intends to impose to fund his welfare largesse?
And just as he is trying to control foreign countries’ tax rates, Biden is also trying and failing to fix state tax rates within the U.S. The $1.9 trillion “COVID relief” bill, which Congress passed in March, seeks to impose a ban on states using federal money to offset tax cuts. This flies in the face of the competitive federalism that the founding fathers built into our elegant constitutional design. A federal court’s preliminary opinion this month was that Ohio, which is suing, has a “substantial likelihood” of winning its case.
What we’re seeing is Biden’s efforts to arrogate tax policy overseas and at the state level foundering on the fact that his interests do not coincide with theirs. Just because he wants to turn every nook and cranny of America, and every corner of the developed world, into high-tax allies of his socialist agenda doesn’t mean those yearned-for allies have any intention of becoming Washington’s pawns.
Biden and the Democrats are determined to change America, as they repeatedly declare. But they not only have no mandate to do so, but also probably lack the allies and constitutional arrangements to turn their dreams (our nightmares) into reality.
