Business groups sense momentum in scaling back Democratic priorities
Business lobbyists sense momentum with their efforts to scale back corporate tax hikes and other legislative priorities in the Democratic-only $3.5 trillion spending package that they argue would damage the nation’s economic recovery.
The business groups are emboldened by House Democrats’ recently released tax plan, which falls short of the proposals from President Biden and progressive lawmakers, and Sen. Joe Manchin’s (D-W.Va.) insistence that he won’t support a $3.5 trillion bill.
Meanwhile, moderate Democrats in the House are threatening to block proposals that rein in drug prices and eliminate oil and gas tax breaks following industry lobbying efforts.
K Street insiders say they expect Democrats to succeed in passing their party-line spending bill that invests in climate, child care and health care. But the final figure will be far lower than $3.5 trillion, lobbyists said, meaning lawmakers won’t need to raise as much money through taxes.
“I don’t think people realize how much this has gone from a Bernie Sanders bill to a Joe Biden bill,” said Jonathan Kott, a former top Manchin aide and lobbyist at Capitol Counsel. “At the end of the day, I think you’re going to see a Biden economic bill that Democrats can run on in 2022.”
Business interests have made inroads with moderate Democrats who are fearful that both the $3.5 trillion price tag and tax hikes could hurt them at the ballot box next year, when the party will attempt to defend razor-thin majorities in Congress.
Those tailwinds are reflected in the House Ways and Means Committee’s tax proposal unveiled by Chairman Richard Neal (D-Mass.) on Monday. It calls for a 26.5 percent top corporate tax rate, lower than Biden’s 28 percent, and a minimum international tax of 16.5 percent, down from 21 percent. Their proposal also retains scaled-back versions of lucrative tax breaks, including private equity’s carried interest tax break.
“Lobbyists and CEOs didn’t need another win, but Richie Neal decided to give them one anyway,” said Erica Payne, president of the Patriotic Millionaires, a group that is pushing for larger tax hikes.
Prominent business groups oppose any corporate tax increases and aim to further reduce the tax hikes put forth by the Ways and Means Committee.
The National Association of Wholesaler-Distributors, which is airing TV ads pressuring Arizona’s Democratic senators to block the budget reconciliation bill, reiterated its opposition to Democrats’ proposal on Tuesday.
“The Democrats’ nearly $3 trillion tax hike proposal is so massive and harmful that even if the Democrats were to ultimately cut it down, it would still destroy millions of Americans jobs and businesses,” Eric Hoplin, the group’s CEO, said in a statement.
In a letter to the Ways and Means Committee on Tuesday, the National Retail Federation said the planned corporate tax increases would lead to store closures and hinder retailers’ ability “to invest in expanded e-commerce capability needed to compete in the challenging post-pandemic marketplace.”
Business groups have an ally in Manchin, who said Sunday that he might support a smaller bill, closer to $1.5 trillion.
That comment sparked backlash from progressives such as Rep. Alexandria Ocasio-Cortez (D-N.Y.), who previously accused Manchin of huddling “weekly” with Exxon Mobil lobbyists. The two engaged in another back-and-forth after Manchin referred to Ocasio-Cortez as a “young lady.”
The public rift highlights the deep divide between progressives and centrists. Manchin alone could kill the spending bill in the 50-50 Senate, and other centrist Senate Democrats have expressed doubts about the $3.5 trillion price tag.
“They have to get Manchin and Ocasio-Cortez to both be ‘yes’ at the end of the day, and those two are calling each other names all weekend,” said Sam Geduldig, a lobbyist at CGCN Group. “I don’t know how they do it.”
Still, corporate clients are covering all of their bases, knowing that Democratic leaders need to pass their spending plan in some form to deliver a win to their voters.
“I don’t think that anybody in our shoes feels comfortable when they get good news for a long time,” said Ivan Zapien, head of the lobbying practice at Hogan Lovells and former chief of staff to Sen. Bob Menendez (D-N.J.). “We’ve seen this movie before, and the other shoe tends to drop.”
Some industry lobbying efforts have already appeared to pay off.
The House Ways and Means Committee’s tax proposal retains domestic tax breaks for oil and gas companies, despite progressives’ call to end assistance for the industry, a win for oil producers that lobbied Democrats on the issue.
Six House Democrats representing Texas districts on Tuesday indicated that they would not support legislation that targets the fossil fuel industry and criticized lawmakers for excluding natural gas from clean energy incentives. The small group has enough votes to block the final bill in the House.
The American Petroleum Institute previously launched a seven-figure TV and digital ad campaign in 140 congressional districts pressuring Democratic lawmakers to push back on anti-fossil fuel measures.
Democrats’ proposal to allow Medicare to negotiate drug prices is also endangered.
Centrist Democrats on the House Energy and Commerce Committee said that they would block the bill from being included in the reconciliation package. The lawmakers introduced their own scaled-back legislation to “preserve innovation” that would narrow the federal government’s negotiating power on drugs that have no other competitors.
The Pharmaceutical Research and Manufacturers of America, drugmakers’ top trade group, spent millions of dollars on ads opposing Democrats’ drug pricing plan this summer. Its ads argue that government-mandated drug prices would hinder the development of new drugs.
The pharmaceutical industry spent $171 million on lobbying through the first half of the year, on track to break its own spending record, according to OpenSecrets.org.
Democrats are attempting to pass their massive spending package alongside the $1 trillion bipartisan infrastructure bill while also passing annual appropriations bills and dealing with the debt limit. The confluence of impactful legislation has set off a lobbying boom as corporate clients ensure that they ward off potentially damaging measures.
Through the first half of the year, business groups and corporations spent nearly $1.5 billion on lobbying, compared to roughly $22 million in spending by labor groups and $81 million in spending by ideological groups, according to OpenSecrets.org.