The Secret Tax Loophole Making the Rich Even Richer

How do we prevent America from becoming an aristocracy, while also funding the programs that Americans desperately need? 

One way is to get rid of a tax loophole you’ve probably never heard of. It’s known as the “stepped-up basis" rule.

Here’s how the stepped-up-basis loophole now works. Take a man named Jeff. At his death, Jeff owns $30 million-worth of stocks he originally bought for a total of $10 million. Under existing law, neither Jeff nor his heirs would owe federal tax on the $20 million of gains because they’re automatically “stepped up” to their value when he dies — $30 million. 

Under Biden’s proposal, Jeff’s $20 million of gains would be taxed. And don’t worry: Biden’s proposal doesn’t touch tax-favored retirement accounts, such as 401-Ks, and it only applies to the very richest Americans.

As it is now, the stepped-up basis loophole enables the super-rich, like Jeff, to avoid paying more than $40 billion in taxes each year. It has allowed them to skip taxes on the increased values of mansions and artworks as well as shares of stock. 

In fact, it’s one of the chief means by which dynastic wealth has grown and been passed from generation to generation, enabling subsequent generations to live off that growing wealth and never pay a dime of taxes on it.

Unless the stepped-up basis loophole is closed, we will soon have a large class of hugely rich people who have never worked a day in their lives. 

Over the next decades, rich baby boomers will pass on an estimated  $58 trillion of wealth to their millennial children — the largest intergenerational transfer of wealth in history.  

Closing this giant tax loophole for the super-rich is how Biden intends to fund part of his American Families Plan, which would provide every child with 2 years of pre-school and every student with 2 years of free community college, as well as provide paid family and medical leave to every worker.

Close this stepped-up basis loophole, and we help finance the programs the vast majority of Americans desperately need and deserve. We also end the explosion of dynastic wealth. It should be a no-brainer.

A hospital in Uttar Pradesh, India’s most populous state, is being charged under the country’s National Security Act for sounding the alarm over a lack of oxygen that resulted in Covid deaths. The hospital’s owner and manager says the police have accused him of “false scare-mongering,” after he stated publicly that four of his patients died on a single day when oxygen ran out.

Since Covid-19 exploded in India, the prime minister, Narendra Modi, seems more intent on controlling the news than the outbreak. On Wednesday, India recorded nearly 363,000 Covid cases and 4,120 deaths, about 30 percent of worldwide Covid deaths that day. But experts say India is vastly understating the true number. Ashish Jha, dean of Brown University’s School of Public Health, estimates that at least 25,000 Indians are dying from Covid each day.

The horror has been worsened by shortages of oxygen and hospital beds. Yet Modi and his government don’t want the public to get the true story.

One big lesson from the Covid crisis: lying makes it worse.

Vladimir Putin is busily denying the truth about Covid in Russia. Demographer Alexei Raksha, who worked at Russia’s official statistical agency, Rosstat, but says he was forced to leave last summer for telling the truth about Covid, claims that the daily data in Russia has been “smoothed, rounded, lowered” to look better. Like many experts, he uses excess mortality – the number of deaths during the pandemic over the typical number of deaths – as the best indicator.

“If Russia stops at 500,000 excess deaths, that will be a good scenario,” he calculates.

Russia was first out of the gate with a Covid vaccine but has fallen woefully behind on vaccinations. Recent polling puts the share of Russians who don’t want to be vaccinated at 60 to 70 percent. That’s because Putin and other officials have focused less on vaccinating the public than on claiming success in containing Covid.

The U.S. is suffering a similar problem – the legacy of another strongman, Donald Trump. Although more than half of U.S. adults have received at least one dose of coronavirus vaccine, more than 40 percent of Republicans have consistently told pollsters they won’t get vaccinated. Their recalcitrance is threatening efforts to achieve “herd immunity” and prevent the virus’s spread.

Like Modi and Putin, Trump minimized the seriousness of the pandemic and spread misinformation about it. Trump officials ordered the Centers for Disease Control and Prevention to downplay its severity. He declined to get vaccinated publicly and was noticeably absent from a public service announcement on vaccination that featured all other living former presidents.

Trump allies in the media have conducted a scare campaign about the vaccines. In December, Laura Ingraham posted a story on Facebook from the Daily Mail purporting to show evidence that Chinese communist party loyalists worked at pharmaceutical companies that developed the coronavirus vaccine.

As recently as mid-April, Fox News host Tucker Carlson opined that if the vaccine were truly effective, there’d be no reason for people who received it to wear masks or avoid physical contact.

“So maybe it doesn’t work, and they’re simply not telling you that.”

Why then should anyone be surprised at the reluctance of Trump Republicans to get vaccinated? A recent New York Times analysis showed vaccination rates to be lower in counties where a majority voted for Trump in 2020. States that voted more heavily for Trump are also states where lower percentages of the population have been vaccinated.

The Republican pollster Frank Luntz claims  Trump bears responsibility for the hesitancy of GOP voters to be vaccinated.

“He wants to get the credit for developing the vaccine. Then he also gets the blame for so few of his voters taking it.”

Trump’s Republican Party is coming to resemble authoritarian regimes around the world in other respects as well – purging truthtellers and trucking in lies, misinformation, and propaganda harmful to the public.

Last week the GOP stripped Representative Liz Cheney of her leadership position for telling the truth about the 2020 election. At last week’s congressional hearing about the January 6 attack on the Capitol, one Republican congressman, Andrew Clyde, even denied it happened.

“There was no insurrection,” he said. “To call it an insurrection is a bold-faced lie … you would actually think it was a normal tourist visit.”

Biden says he plans to call a summit of democratic governments to contain the rise of authoritarianism around the world. I hope he talks about its rise in the United States, too – and the huge toll it’s already taken on Americans.

Democrats are Running Out of Time

The political window of opportunity for Joe Biden and Democrats to deliver on their promises to the American people and pass the legislation the country needs, could close at any time. 

We must understand how rare it is that the Senate and the House and the presidency are all under the control of the Democratic Party.

That’s happened in only 4 of the past 28 years

The Democrats’ current Senate majority would end with the shift of a single seat from Democrats to the Republicans. That could happen even during this session of Congress. In 27 of the 38 Congresses since World War II, the party in control of the Senate has changed during the session.

Not to be morbid, but we also need to consider that this Senate has six Democratic senators, over the age of 70, who are from states where a Republican governor would be free to replace them with a Republican should a vacancy occur.

Five other Democratic senators are from states in which a Democratic vacancy would go unfilled for months until a special election was held to fill the seat — which itself would hand the G.O.P. control of the Senate at least until that special election.

It would be foolish to count on the Democrats increasing their numbers in the Senate or the House in the midterm elections of 2022. The president’s party rarely, if ever, picks up more seats during midterm elections. The last time a Democratic president has not lost Democratic seats in Congress in his first midterm election was 1934.

Meanwhile, state Republicans — who, not incidentally, control a majority of state governments — are proposing an avalanche of bills to make it harder for likely Democratic constituencies to vote, including people of color, young people, and low-income people. Some states, like Georgia, have already put these voter suppression measures into place.

And with these state Republicans in control of the upcoming once-in-a-decade redistricting process, we could see even more gerrymandering in these states — meaning an even greater likelihood that Republicans gain ground in the House.

If Joe Biden and the Democrats are going to accomplish what a majority of Americans want them to — such as raising the minimum wage, expanding health care, strengthening unions, raising taxes on big corporations and the wealthy, providing free public higher education, and strengthening voting rights with the For the People Act — they’ve got to get it done, now. 

That means Democrats have to get rid of the Senate filibuster and stop worrying about bipartisanship. 

The window of opportunity is already tiny. And it’s closing fast.

America prefers to look forward rather than back. We’re a land of second acts. We move on.

This can be a strength. We don’t get bogged down in outmoded traditions, old grudges, obsolete ways of thinking. We constantly reinvent. We love innovation and disruption.  

The downside is a collective amnesia about what we’ve been though, and a corresponding reluctance to do anything about it or hold anyone accountable.

Now, with Covid receding and the economy starting to rebound – and the 2020 election and the attack on the Capitol behind us – the future looks bright.

But at the risk of being the skunk at the picnic, let me remind you:

We have lost more than 580,000 people to COVID-19. One big reason that number is so high is our former president lied about the virus and ordered his administration to minimize its danger.  

He also lied about the results of the last election. And then – you remember, don’t you? – he tried to overturn the results.

He twisted the arms of state election officials. He held a rally to stop Congress from certifying the election, followed by the violent attack on the Capitol. Five people died. Senators and representatives could have been slaughtered.

Several Republican members of Congress joined him in the big lie and refused to certify the election. They thereby encouraged the attempted coup.

This was just over four months ago, yet we seem to be doing everything we can to blot it out of our collective memory.

Last Tuesday, the Washington Post hosted a live video chat with Missouri Republican senator Josh Hawley, a ringleader in the attempt to overturn the results of the election. Hawley had even made a fist-pump gesture toward the mob at the Capitol before they attacked.

But the Post billed the interview as being about Hawley’s new book on the “tyranny of big tech.” It even posted a biography of Hawley that made no mention of Hawley’s sedition, referring instead to his supposed reputation “for taking on the big and the powerful to protect Missouri workers,” and as “a fierce defender of the Constitution.”

Last week, “CBS This Morning” interviewed Florida Republican senator Rick Scott, another of the senators who tried to overturn the election by not certifying the results. But there was no mention of any of his sedition. The CBS interviewer confined his questions to Biden’s spending plans, which Scott unsurprisingly opposed.  

Senators Ted Cruz and Ron Johnson, and House minority leader Kevin McCarthy also repeatedly appear on major news programs without being questioned about their attempts to undo the results of the election.

What possible excuse is there for booking them if they have not publicly retracted their election lies? At the least, if they must appear, ask them if they continue to deny the election results and precisely why.

Pretending nothing happened promotes America’s dangerous amnesia, which invites more attempts to distort the truth.  

Trump is consolidating his power over the Republican Party, based on his big lie. The GOP is about to purge one of its leaders, Wyoming Representative Liz Cheney, for telling the truth.

The big lie is being used by Republican state legislatures to justify new laws to restrict voting. On Thursday, hours after Florida installed a rash of new voting restrictions, Texas’s Republican-led Legislature pushed ahead with its a bill that would make it one of the hardest states in which to cast a ballot.

The Republican-controlled Arizona senate is mounting a private recount of the 2020 presidential election results in Maricopa County – farming out 2.1 million ballots to GOP partisans, including at least one who participated in the January 6 raid on the Capitol.

Last Monday, Trump even lied about his big lie, issuing a “proclamation” to co-opt the language of those criticizing the lie. “The Fraudulent Presidential Election of 2020 will be, from this day forth, known as the BIG LIE!” he wrote.

Most Republican voters believe him.

It is natural to want to put all this unpleasantness behind us. We are finally turning the corner on the pandemic and the economy.

Why look back to the trauma of the 2020 election? Because we cannot put it behind us. Trump’s big lie and all that it has provoked are still with us. If we forget what has occurred the trauma will return, perhaps in even more terrifying form.

The Republican Rebrand, Exposed

The Republican Party is trying to rebrand itself as the party of the working class.

Did they vote for the American Rescue Plan? No. Not a single Republican in Congress voted for stimulus checks and extra unemployment benefits needed by millions of American workers.

So what have they voted for? Well, every single one of them voted for Trump’s 2017 tax cut for the wealthy and corporations, of which 83 percent of the benefits go to the richest 1 percent over a decade. 

They claimed corporations would use the savings from the tax cut to invest in their workers. In reality, corporations used their tax savings to buy back shares of their own stock in order to boost share values. And some corporations then fired large portions of their workforce. Not very pro-worker, if you ask me.

Have they voted for any taxes on the wealthy? No. Quite the opposite. Republicans refuse to tax the rich. They’ve even been trying to get rid of the estate tax, which only applies to estates worth at least $11.7 million for individuals and $23.4 million for married couples. Working class my foot.

Have they backed a bill to raise the minimum wage to $15 an hour, which a majority of Americans favor? No. Republicans refuse to raise the minimum wage even though it would give 32 million workers a raise. That’s about a fifth of the entire U.S. workforce.

Do they support unions, which empower workers to get better pay and benefits? No again. To the contrary: Republicans have enacted right-to-work laws in 28 states, decimating unions’ bargaining power and enabling businesses to exploit their workers. 

And when it comes to strengthening labor laws, only five out of 211 Republicans voted for the PRO Act in the House – the toughest labor law legislation in a generation. 

How about the historic union drive at the Bessemer, Alabama Amazon warehouse, which Joe Biden and almost all Democrats have strongly backed? Just one Republican spoke out in support. All others have been dead silent.

What about backing regulations that keep workers safe? Nope. In fact, they didn’t bat an eye when Trump rolled back child labor protections, undid worker safeguards from exposure to cancerous radiation, and gutted measures that shield workers from wage theft.

Do they support overtime? No. They allowed Trump to eliminate overtime for 8 million workers, and continue to repeat the corporate lie about “job-killing regulations.”

What about expanding access to healthcare to all working people? Not a chance. Republicans at the state level have blocked Medicaid expansion and enacted Medicaid work requirements, while Republicans in Congress have tried for years to repeal the entirety of the Affordable Care Act. If they succeeded, they would have stripped healthcare away from more than 20 million working Americans.

So don’t fall for the Republican Party’s “working class” rebrand. It’s a cruel hoax. The GOP doesn’t give a fig about working people. It is, and always will be, the party of big business and billionaires.

By almost any measure, Joe Biden’s first 100 days have been hugely successful. Getting millions of Americans inoculated against COVID-19 and beginning to revive the economy are central to that success.

Two thirds of Americans support Biden’s $1.9 stimulus plan, already enacted. His infrastructure and family plans, which he outlined last Wednesday night at a joint session of Congress, also have broad backing. The $6 trillion price tag for all this would make it the largest expansion of the federal government since Lyndon Johnson’s Great Society. But for most Americans, it doesn’t feel radical.

Rather than bet it all on a single large-scale program such as universal healthcare – which Clinton’s failed to accomplish and which Obama turned into a target of Republican fearmongering – Biden has picked an array of popular initiatives, such as pre-school, public community c0llege, paid family and medical leave, home care, and infrastructure repairs, which are harder to vilify.

Economists talk about pent-up demand for private consumer goods, caused by the pandemic. Biden is responding to a pent-up demand for public goods. The demand has been there for years but the pandemic has starkly revealed it. Compared to workers in other developed nations, Americans enjoy few social benefits and safety nets. Biden is saying, in effect, it’s time we caught up.

Besides, it’s hard for Republicans to paint Biden as a radical. He doesn’t feel scary. He’s old, grandfatherly. He speaks haltingly. He’s humble. When he talks about the needs of average working people, it’s clear he knows them.

Biden has also been helped by the contrast to his immediate predecessor – the most divisive and authoritarian personality to occupy the Oval Office in modern memory. Had Biden been elected directly after Obama, regardless of the pandemic and economic crisis, it’s unlikely he and his ambitious plans would seem so benign.

In his address to a joint session of Congress Wednesday night, Biden credited others for the achievements of his first hundred days. They had been accomplished “because of you,” he said, even giving a nod to Republicans. His predecessor was incapable of crediting anyone else for anything.

Meanwhile, the Republican party, still captive to its Trumpian base, has no message or policies to counter Biden’s proposals. Trump left it with little more than a list of baseless grievances irrelevant to the practical needs of most Americans – that Trump would have been reelected but for fraudulent votes and a “deep state” conspiracy, that Democrats are “socialists” and that the “left” is intent on taking away American freedoms.

Biden has a razor-thin majority in Congress and must keep every Democratic senator in line if he’s to get his plans enacted. But the vacuum on the right has allowed him to dominate the public conversation about his initiatives, which makes passage more likely.  

Trump is aiding Biden in other ways. Trump’s yawning budget deficits help normalize Biden’s. When Trump sent $1,200 stimulus checks to most Americans last year regardless of whether they had a job, he cleared the way for Biden to deliver generous jobless benefits.

Trump’s giant $1.9 trillion tax cut for big corporations and the wealthy, none of which “trickled down,” make Biden’s proposals to increase taxes on corporations and the wealthy to pay for infrastructure and education seem even more reasonable.

Trump’s fierce economic nationalism has made Biden’s “buy American” initiative appear innocent by comparison. Trump’s angry populism has allowed Biden to criticize Wall Street and support unions without causing a ripple.

At the same time, Trumpian lawmakers’ refusal to concede the election and their efforts to suppress votes has alienated much of corporate America, pushing executives toward Biden by default.

Even on the fraught issue of race, the contrast with Trump has strengthened Biden’s hand. Most Americans were so repulsed by Trump’s overt racism and his overtures to white supremacists, especially after the police murder of George Floyd, that Biden’s initiatives to end police brutality and “root out systemic racism,” as he said on Wednesday night, seem appropriate correctives.  

The first 100 days of the Biden presidency were also the first 100 days of America without Trump, and the two cannot be separated.

With any luck, Biden’s plans might be the antidote to Trumpism – creating enough decent-paying working class jobs, along with benefits such as childcare and free community college, as to forestall some of the right-wing dyspepsia that Trump whipped into a fury.

How to Stop Republicans from Stealing Elections

Republican-controlled state legislatures have introduced over 361 voter suppression bills in 47 states, and some states, like Georgia, have already enacted them into law. 

There’s only one way to stop this assault on our democracy. It’s called the FOR THE PEOPLE ACT, and the window for Congress to pass it is closing.

These Republican voter suppression bills are egregious —they shrink early voting periods, add onerous voter ID requirements, limit eligibility for mail-in ballots, ban ballot drop boxes and drive-through voting, and even make it a crime to give voters in line water.

The FOR THE PEOPLE ACT, on the other hand, would prevent these tactics and make it easier to vote. In addition, gerrymandering would be reduced and the power of small political donors would be amplified.

It could not come at a more critical time.

The Republican assault on our democracy is based on the lie that there was widespread voter fraud in the 2020 election. Multiple recounts in battleground states like Georgia found nothing. Investigations by the Department of Homeland Security and the Justice Department found nothing. 61 out of 62 courts found nothing.

Republicans claim they’re just listening to the concerns of their voters and restoring “trust” in our elections. Rubbish. The real purpose of these restrictions is to hamper voting by Black people, people of color, young people, and lower-income Americans. 

After Black voters and organizers in Georgia flipped the state blue for the first time in decades, the GOP is pulling out all the stops to prevent the same from happening in other states. The situation is even more dire given the upcoming once-in-a-decade redistricting process, allowing Republican-controlled states to further gerrymander congressional districts.

Their assault on the right to vote is a coordinated, national strategy led by top party leaders and outside dark-money advocacy groups like the Heritage Foundation. That group is working directly with state legislatures to provide them with “model legislation” and gearing up to spend $24 million in eight states to advance these bills ahead of the midterms.

Unless the FOR THE PEOPLE ACT becomes law, these restrictive state bills will go into effect before the upcoming 2022 midterm elections, and entrench Republican power for  years to come. So it’s essential we protect voting rights now, while we still can. 

This is not a partisan fight. It’s a battle between forces that want to go backward to an era of Jim Crow, and the majority of Americans who want to build a more inclusive democracy.

Yet the FOR THE PEOPLE ACT faces an uphill battle in the Senate because of the archaic filibuster rule that requires a 60-vote supermajority to pass legislation.

The good news is Senate Democrats have the power to end the filibuster and thereby allow the FOR THE PEOPLE ACT to become law. It’s time for Democrats to unite on this, without hesitation. 

The stakes could not be higher. Simply put, it’s democracy or authoritarianism.

Elon Musk and Jeff Bezos want to colonize outer space to save humanity, but they couldn’t care less about protecting the rights of workers here on earth.

Musk’s SpaceX just won a $2.9 billion NASA contract to land astronauts on the moon, beating out Bezos.

The money isn’t a big deal for either of them. Musk is worth $179.7 billion. Bezos, $197.8 billion. Together, that’s almost as much as the bottom 40 percent of Americans combined.

And the moon is only their stepping-stone.

Musk says SpaceX will land humans on Mars by 2026 and wants to establish a colony by 2050. Its purpose, he says, will be to ensure the continued survival of our species.

“If we make life multiplanetary, there may come a day when some plants and animals die out on Earth but are still alive on Mars,” he tweeted.

Bezos is also aiming to build extraterrestrial colonies, but in space rather than on Mars. He envisions “very large structures, miles on end” that will “hold a million people or more each.”

But Musk and Bezos are treating their workers like, well, dirt.

Last spring, after calling government stay-at-home orders “fascist” and tweeting “FREE AMERICA NOW,” Musk reopened his Tesla factory in Fremont, California before health officials said it safe to do so. Almost immediately, 10 Tesla workers came down with the virus. As cases mounted, Musk fired workers who took unpaid leave. Seven months later, at least 450 Tesla workers had been infected.

Musk’s production assistants, as they’re called, earn $19 an hour – hardly enough to afford rent and other costs of living in northern California. Musk is virulently anti-union. A few weeks ago, the National Labor Relations Board found that Tesla illegally interrogated workers over suspected efforts to form a union, fired one and disciplined another for union-related activities, threatened workers if they unionized and barred employees from communicating with the media.

Bezos isn’t treating his earthling employees much better. His warehouses impose strict production quotas and subject workers to seemingly arbitrary firings, total surveillance and 10-hour workdays with only two half-hour breaks – often not enough time to get to a bathroom and back. Bezos boasts that his workers get $15 an hour, but that comes to about $31,000 a year for a full-time worker, less than half the U.S. median family income. And no paid sick leave.

Bezos has fired at least two employees who publicly complained about lack of protective equipment during the pandemic. To thwart the recent union drive in Bessemer, Alabama, Amazon required workers to attend anti-union meetings, warned they’d have to pay union dues (untrue – Alabama is a “right-to-work” state), and threatened them with lost pay and benefits.

Musk and Bezos are the richest people in America and their companies are among the country’s fastest growing. They thereby exert huge influence on how other chief executives understand their obligations to employees.

The gap between the compensation of CEOs and average workers is already at a record high. They inhabit different worlds.

If Musk and Bezos achieve their extraterrestrial aims, these worlds could be literally different. Most workers won’t be able to escape into outer space. A few billionaires are already lining up.

The super-rich have always found means of escaping the perils of everyday life. During the plagues of the 17^thcentury, European aristocrats decamped to their country estates. During the 2020 pandemic, wealthy Americans headed to the Hamptons, their ranches in Wyoming or their yachts.

The rich have also found ways to protect themselves from the rest of humanity – in fortified castles, on hillsides safely above smoke and sewage, in grand mansions far from the madding crowds. Some of today’s super rich have created doomsday bunkers in case of nuclear war or social strife.

But as earthly hazards grow – not just environmental menaces but also social instability related to growing inequality – escape will become more difficult. Bunkers won’t suffice. Not even space colonies can be counted on.

I’m grateful to Musk for making electric cars and to Bezos for making it easy to order stuff online. But I wish they’d set better examples for protecting and lifting the people who do the work.  

It’s understandable that the super wealthy might wish to escape the gravitational pull of the rest of us. But there’s really no escape. If they’re serious about survival of the species, they need to act more responsibly toward working humans here on terra firma.

America is about to revive an idea that was left for dead decades ago. It’s called industrial policy, and it’s at the heart of Joe Biden’s plans to restructure the U.S. economy.

When industrial policy was last debated in the 1980s, critics recoiled from government “picking winners.” But times have changed. Devastating climate change, a deadly pandemic, and the rise of China as a technological powerhouse require an active government pushing the private sector to achieve public purposes.

The dirty little secret is that America already has an industrial policy, but one that’s focused on pumping up profits with industry-specific subsidies, tax loopholes and credits, bailouts, and tariffs. The practical choice isn’t whether to have an industrial policy but whether it meets society’s needs or those of politically powerful industries.

Consider energy. The fossil fuel industry has accumulated “billions of dollars in subsidies, loopholes, and special foreign tax credits,” in Biden’s words. He intends to eliminate these and shift to non-carbon energy by strengthening the nation’s electrical grid, creating a new “clean electricity standard” that will force utilities to end carbon emissions by 2035 and providing research support and tax credits for clean energy.

It’s a sensible 180-degree shift of industrial policy.

The old industrial policy for the automobile industry consisted largely of bailouts – of Chrysler in 1979 and General Motors and Chrysler in 2008.

Biden intends to shift away from gas-powered cars entirely and invest $174 billion in companies making electric vehicles. He’ll also create 500,000 new charging stations.

This also makes sense. Notwithstanding the success of Tesla, which received $2.44 billion in government subsidies before becoming profitable, the switch to electric vehicles still needs pump priming.

Internet service providers have been subsidized by the states and the federal government, and federal regulators have allowed them to consolidate into a few telecom giants. But they’ve dragged their feet on upgrading copper networks with fiber, some 30 million Americans still lack access to high-speed broadband, and America has among the world’s highest prices for internet service.

Biden intends to invest $100 billion to extend high-speed broadband coverage. He also threatens to “hold providers accountable,” for their sky-high prices – suggesting either price controls or antitrust enforcement.

I hope he follows through. A proper industrial policy requires that industries receiving public benefits act in the public interest.  

The pharmaceutical industry exemplifies the old industrial policy at its worst. Big Pharma’s basic research has been subsidized through the National Institutes of Health. Medicare, Medicaid, and the Affordable Care Act bankroll much of its production costs. The industry has barred Americans from buying drugs from abroad. Yet Americans pay among the highest drug prices in the world.

Biden intends to invest an additional $30 billion to reduce the risk of future pandemics – replenishing the national stockpile of vaccines and therapeutics, accelerating the timeline for drug development, and boosting domestic production of pharmaceutical ingredients currently made overseas.

That’s a good start but he must insist on a more basic and long-overdue quid pro quo from big pharma: allow government to use its bargaining power to restrain drug prices.    

A case in point: The U.S. government paid in advance for hundreds of millions of doses of multiple COVID-19 vaccines. The appropriate quid pro quo here is to temporarily waive patents so vaccine manufacturers around the world can quickly ramp up. Americans can’t be safe until most of the rest of the world is inoculated.

Some of Biden’s emerging industrial policy is coming in response to China. Last week’s annual intelligence report from the Office of the Director of National Intelligence warns that Beijing threatens American leadership in an array of emerging technologies.

Expect more subsidies for supercomputers, advanced semiconductors, artificial intelligence, and other technologies linked to national security. These are likely to be embedded in Biden’s whopping $715 billion defense budget – larger even than Trump’s last defense budget.

Here again, it’s old industrial policy versus new. The new should focus on cutting-edge breakthroughs and not be frittered away on pointless projects like the F35 fighter jet. And it should meet human needs rather than add to an overstuffed defense arsenal.

Biden’s restructuring of the American economy is necessary. America’s old industrial policy was stifling innovation and gauging taxpayers and consumers. The challenges ahead demand a very different economy.

But Biden’s new industrial policy must avoid capture by the industries that dominated the old. He needs to be clear about its aims and the expected response from the private sector, and to reframe the debate so it’s not about whether government should “pick winners” but what kind industrial policy will help America and much of the world win.

Does Trickle-Down Economics Actually Work?

To the extent the Republican Party has any economic platform at all, it’s trickle-down economics. Unfortunately for the GOP, it’s based on three giant myths. It’s time to debunk them once and for all.

Myth #1: Tax cuts for corporations and the rich create more and better jobs. 

Wrong. Corporations used Trump’s giant tax cut to buy back shares of their own stock and boost share prices. From 2017 to 2018, stock buybacks increased by a staggering 50 percent. Lowe’s spent $10 billion on stock buybacks in 2018, and then fired thousands of workers with no notice or severance. Walmart and AT&T also laid off thousands of workers. 

And contrary to the claim that the tax cut would boost wages by $4,000 a year, a recent analysis found that in the year after the Trump tax cut, wages increased by about the same as they did before it, and then slowed. 

Tax cuts for rich individuals don’t trickle down, either. The rich simply get richer. Two years before Ronald Reagan’s first tax cut, the richest 1 percent of Americans owned less than 23 percent of the nation’s wealth. A decade later, after two rounds of tax cuts for the rich, they owned over 28 percent. By 2019, after more tax cuts for the rich by George W. Bush and Donald Trump, people at the top owned almost 35 percent of America’s wealth. Meanwhile, average wealth barely budged for the middle class, and went negative for the bottom 10 percent.

It gets worse. During this pandemic alone, America’s 664 billionaires have added $1.3 trillion to their collective wealth and now own over $4 trillion. That’s almost double the wealth of the bottom half  — 165 million Americans.

But nothing has trickled down. Even before the pandemic, wages stagnated.

Myth #2: Tax cuts for big corporations and the rich spur economic growth.

Baloney. Not even Ronald Reagan’s surging economic growth rate was driven by tax cuts. It was driven by low interest rates and humongous government spending. 

George W. Bush promised his 2001 and 2003 tax cuts would pay for themselves (sound familiar?) by spurring economic growth. That didn’t happen. A 2017 study led by one of Bush’s former chief economists found that the tax cuts had no significant effect on growth. In fact, growth declined, slowing to just 2.8 percent from over 3 percent during the Clinton years. The economic expansion under Bush was one of the weakest expansions since World War II.

Donald Trump claimed his tax cut would be like “rocket fuel” for the economy, and would spur annual growth of 3 percent. After its first year, growth slowed to 1.9  percent.

Finally, a recent study analyzing tax data spanning 50 years from 18 advanced economies found that tax cuts for the rich only benefited the rich and had no effect on job creation or economic growth. I, for one, am shocked.

Myth #3: Deregulation spurs economic growth.

More rubbish. The cost savings from deregulation go to corporate executives and major investors, while the costs and risks land on the rest of us. 

Trump’s Environmental Protection Agency rolled back regulations on everything from clean air and water standards to dangerous chemicals in products — benefiting chemical and fossil fuel executives and investors while forcing everyone else to deal with polluted air and toxins. 

His Labor Department loosened child labor laws and scaled back the number of workers eligible for overtime pay. Companies raked in savings, while workers were exploited. 

And with the help of Congress, he rolled back banking regulations put in place after the 2008 financial crisis — to the benefit of rich Wall Streeters and the detriment of everyone else.

Don’t forget Ronald Reagan’s deregulatory agenda allowed for-profit healthcare companies to flourish, contributing to the out-of-control health care costs we’re saddled with today. And that deregulation of the financial sector was a major cause of the 2008 crash, as it allowed banks to make risky bets.

In other words, the Republican trickle-down claim that deregulation helps us all is baloney. Regulations that protect you and me from being harmed, fleeced, shafted, injured, or sickened by corporate products and services are clearly worth the cost.

So don’t fall for trickle-down nonsense. Making big corporations and the rich even richer through tax cuts and regulatory rollbacks doesn’t make the rest of us better off. It just makes big corporations and the rich even richer.