U.S. Chamber sells out our economic future in report against Budget Reconciliation

Co authored by Holden Colter and Logan Solomon, September 23rd 2021

The U.S. Chamber of Commerce and the larger business narrative against Budget Reconciliation lacks greater understanding of the importance of American families and the environment on our economy.

The Chamber of Commerce released a selective and skewed report about Budget Reconciliation titled “Jobs, Tax Revenue, and Economic Growth of Proposed Tax Increase on Carried Interest”, which ignores the necessary climate and social benefits embedded in the bill. 

The report predicts bad outcomes for investors, jobs, and government, but mainly focuses on the perceived negative impacts of a bill that targets the wealthy and corporations, making the Chamber’s priorities abundantly clear. The 2022 Budget Reconciliation Bill spurs our economy through climate and social programs, reducing or eliminating economic burdens that prevent spending, and takes steps towards needed action for current and future generations to be economically well and physically safe. 

Taxes Are Reasonable and Targeted Fairly:

The Chamber says that the budget reconciliation bill will hurt our economy by negatively impacting firms, real estate, and the wealthy (those making at least $400,000 a year), but in reality these proposed taxes are historically average. The bill taxes profit on owned capital as if it were labor for the top tax bracket and raises this specific tax to 39.6%. Some may perceive this as an unreasonable tax for capital investors when compared to the 20% rate currently, but this is historically realistic, being equal to the rate following FDR’s New Deal. From 1936 to 1980, the top tax bracket was at least 70%, so a 39.6% tax is historically quite low. From an ethical perspective, saying owned capital should be taxed less than labor is a slap in the face of ordinary Americans who have been exploited by a system that uses backwards taxation logic, benefiting the select few. 

With such immense income inequality in the United States, some argue that the proposed tax increase still isn't sufficient. A RAND corporation report found that from 1974 to 2018, $50 trillion earned by the bottom 90% has been distributed to the top 1% or on an average individual basis, $1,144 every month, every single year. Ordinary Americans know the tax system hasn’t been working for them, with a bipartisan consensus of Americans supporting Budget Reconciliation’s tax increases on capital owners and the top 1%. 

This bill guarantees no family making under $400,000 a year will see a tax increase; only the top 1.8% will pay more in taxes, but the benefits will be spread throughout our society and boost our economy.

 Real Benefits with Jobs, Welfare, Consumer spending all in a small price tag:

While the Chamber’s biased report hyper-focuses on the negatives of taxation, it rarely mentions how the proposed climate and social benefits spur the economy. Financial incentives through the Clean Energy Performance Program (CEPP) promote green collar jobs, which have occupations in some of the fastest-growing sectors that will bring opportunity to every corner of the country. An Analysis Group study shows the budget reconciliation allows for less reliance on a single energy supplier, more personal spending within the economy, and tax revenues at all levels of government. It also found “that $150 billion of CEPP allocation in the recent congressional budget resolution will produce nearly $1 trillion in value.” 

Our economy is built by ordinary folks like you and me; investing in our families' wellbeing and safety will bring economic benefits across all sectors. Negotiating prescription drug prices in Medicare and expanding desperate health needs like dental, hearing, and eyeglasses reduces economic burdens on seniors. The further expansion of the Child Tax Credit puts money in the pockets of parents and allows them to directly spur our spending, meeting children's most basic needs. Universal Pre-K and subsidizing child care allow families to save money, resulting in new spending that benefits the welfare of our youngest children. Free community college would provide opportunities for good paying work that brings long-term economic freedom to families. Increasing the supply of affordable housing through housing vouchers and prioritizing disadvantaged communities helps reverse the legacy of redlining and addresses a stark reality that tens of millions of households are paying over 50 percent of their income for housing. Improving our economy through taking care of American workers seems like common understanding, but the Chamber doesn’t get it. 

Additionally, the Chamber’s phrasing of “job loss” is problematic at best and misleading at worst; what is actually happening is a shift in our labor markets. Many predicted “lost jobs” would actually be people taking advantage of the benefits provided by the budget reconciliation -- quitting their 2nd or 3rd job or moving to a better paying job. With 6.5 million people in 2020 working multiple jobs and 40% of workers globally considering resigning, our labor market will shift but back in favor of workers. 

The report repeatedly highlights real estate, private equity and venture capital as playing a “major role” in our economy, yet with a total of 153.5 million U.S. jobs, real estate (13 million jobs), private equity firms (11 million jobs), and venture capital (4 million jobs) represent only 18% percent of total U.S. jobs. 

Despite the corporate narrative, the cost of this bill is comparatively small. $3.5 trillion is less than the $3.8 trillion funneled into fossil fuels by just 60 banks since 2015. Our climate and welfare is a matter of literal defense. With the Defense Budget requesting $715 billion this year, a $350 billion-per-year price is less than half. At large, the Chamber’s biased report has short-term thinking and is fueled by the false assumption of environmental destruction as a mere side effect of economic production but in reality our environment dictates our economy. 

Our planet defines our economy and society:

We have moved from an empty world in which man-made capital was limited to a full world in which our environment is reaching its limits. We need to protect our lands and incentivize renewables that don’t exploit but protect our communities.

Our modern economic narrative has been shaped by the promise of an endless supply of fossil fuels, but we no longer have this reality. For the longest time, the only thing in fossil fuels’ favor was how dense of an energy resource it is compared to renewables. This reality is changing due to the “best first principle,” where we have gathered all the easiest (and least energy intensive) fossil fuels first, and now it involves more energy to find fossil fuels. This study proves this, showing fossil fuels’ net energy gained throughout the process has declined and is projected to continue in the future. In terms of global supply, an expert from the Milken Institute says “for two-thirds of the world, renewables are cheaper than a significant amount of carbon-based energy, so it isn’t just an argument of environment, it’s now just pure economics.” 

With an economic system that doesn’t recognize our ecosystem as a necessity, the constraints Earth puts on our global economy are rarely talked about. We have had 74% of global reported economic losses caused by weather, climate, and water hazards from 1974 to 2019. If we continue on our current trend, there will be a 11-14% reduction of global economic output by 2050, approximately $23T a year. Clean energy would help alleviate issues driven by climate change, such as by increasing air quality, which would improve human health and thereby economic production (labor). Climate change poses risks to the financial sector by hindering economic production and causing shock to industry which relies on fossil fuels. Budget Reconciliation addresses both of these issues, preventing destabilization of our economy and society through stabilizing climate. 

It is clear that we live on a finite planet. The exploitation of matter and energy through rapid consumption of fossil fuels has brought growth but also wealth inequality and climate crisis. Budget Reconciliation is the obvious pick, protecting our economy through taking real steps to prevent the climate crisis and allowing access to our basic necessities all along the way.

Support Budget Reconciliation for our economy and safety:

With corporate stakeholders getting the short term brunt, The Chamber of Commerce has vowed to defeat the budget reconciliation, showing it’s willing to attack our economic future, safety, and overall well-being. As a part of its attack, it has issued a key vote letter to Congress telling them the business community doesn’t agree with budget reconciliation. They say it’s not a durable climate policy, but we have questions and wonder if this is misinformation. With the Chamber of Commerce being called to testify on climate disinformation in Congress, clearly these individuals have a bad history. We call on the Chamber to support budget reconciliation.

There are countless ways to get more involved. You can learn more on the Chamber’s recent action through our recently released report on the Chamber’s climate obstruction. You can call your local representative and pass along the message that a stable climate is the foundation of our economy. With a strong public outcry, we can Change the Chamber and pass budget reconciliation, working towards our ultimate goal of just science based climate policy.