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Opinion | How Not to Let Corporations Kill Biden’s Agenda

That said, the Biden agenda doesn’t need the revenue from a higher corporate tax rate.

The budget resolution that will make it possible to move forward on that agenda if Sinema and Senator Joe Manchin can be brought on board doesn’t require that all investments in the future be fully paid for. In fact, it allows for up to $1.75 trillion in borrowing. And if opposition from the corporate wing of the Democratic Party — can we stop calling them “moderates”? — prevents tax increases, better to borrow than not to invest.

Should we be worried that increased borrowing would threaten U.S. solvency? No. The interest rate on long-term federal debt is only about 1.65 percent, so even adding $1.75 trillion in debt would mean only about $30 billion added to annual interest costs — 0.15 percent of gross domestic product, which is trivial.

And even this calculation greatly overstates the true debt burden, which should be calculated using the real, that is, inflation-adjusted, interest rate — which is negative.

What about concerns that deficit-financed spending might be inflationary? Again, it’s important to do the math. If the U.S. were to end up borrowing another $1.75 trillion, that would be over the course of a decade, not a single year — and the Congressional Budget Office projects total G.D.P. over the next decade of $288 trillion. So while it might sound as if we’re talking about huge deficit spending, the additional deficit would be only 0.6 percent of G.D.P., which simply isn’t a big deal.

In fact, given the arithmetic you might wonder why Biden ever wanted to raise taxes enough to fully pay for his investment agenda. The answer, I think, was more about the politics than the economics — that pitching his plans as deficit-neutral was supposed to reassure politicians who haven’t caught up with current mainstream economic thinking, and who still regard budget deficits as a major threat.

At this point, however, it looks as if a final budget deal, if there is one, will have to involve substantial borrowing. And that’s OK. We can deplore the corporate influence that may block some justified tax increases, but borrowing to invest for the future isn’t a bad thing in itself. Hey, businesses do it all the time. So Democrats should just go for it.

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