Biden pledge to fix ‘unfair’ economy resonates with Americans
A populist undercurrent running through President Biden’s State of the Union address and churned up by turbulent conditions in the global economy is resonating with Americans.
It’s the feeling that people are “getting ripped off,” as Biden put it, by an economy that isn’t “fair” — a word that appeared in Biden’s prepared remarks nine times.
From pesky fees charged by big retail banks to deep, structural imbalances in the U.S. tax system that favor wealthy people and large corporations, Biden’s speech hit on a perennial frustration in American economic life: how the deck feels stacked by big companies and institutions against ordinary taxpayers and consumers.
“If we — the poorer people, the middle class — pay tax, the big companies are supposed to do the same. This is right. So I think the president [said] something that is true. We need more tax to be paid by the big companies, and then that money can go back to the poorer people to help people,” Jean-Michel Dossous, a New York City cab driver who watched the State of the Union on his phone, told The Hill.
Returning to the notion of economic fairness again and again, Biden touted numerous initiatives to bring down prices after a year of high inflation that has harassed American pocketbooks and that fiscal authorities, including Congress and the president, have limited powers to fight.
“Big Pharma has been unfairly charging people hundreds of dollars [for insulin] — and making record profits,” Biden said during his speech on Tuesday, praising the $35 insulin price cap for seniors who use Medicare that was passed as part of Democrats’ Inflation Reduction Act last year. Price caps have been used minimally so far in the government’s battle against high prices, which is mostly the responsibility of the Federal Reserve.
He also touted his administration’s effort to fight so-called “junk fees,” expensive penalties charged by banks, financial firms and other businesses for reasons such as late payments, insufficient funds or an attempt to cancel a service.
“I know how unfair it feels when a company overcharges you and gets away with it,” he said about the overdraft fees charged by banks, a commercial practice he called on Congress to curtail with new legislation.
The Biden administration also announced last week an effort to cap bank overdraft fees at $8 through a new rule to be issued by the Consumer Financial Protection Bureau (CFPB).
Tatiana Nazario, an administrative assistant at the Newark, N.J., public library told The Hill she “absolutely” had the feeling she was getting ripped off by big banks and that she knew people who’d gotten locked into a cycle of debt due to overdraft fees.
While some major banks have already phased out overdraft fees, bank lobbyists and advocates for the sector call those penalties a useful and popular way for consumers to smooth out expenses.
“If you get one overdraft fee and it stays in your account for a couple of days, they overdraft you again and again and again until you pay it. If you’re already broke and you’re waiting on that direct deposit to hit, by the time it hits you’re not going to have much left,” Nazario said in an interview.
“People are living off of payday loans, and now they’re promoting these apps … where you get payday loans rather than coming up with better solutions for us,” she added.
The CFPB describes payday loans as short-term, high-cost loans for small amounts of money and cautions that people’s “ability to repay the loan … is generally not considered by a payday lender.”
Of all the mentions of unfairness in the economy in Biden’s State of the Union, perhaps the point he hammered home the most was about unfairness in the tax code.
“I think a lot of you at home agree with me that our present tax system is simply unfair. The idea that in 2020, 55 of the biggest companies in America made $40 billion in profits and paid zero in federal income taxes? That’s simply not fair,” Biden said.
Steve Taylor, an adjunct English professor at the City University of New York, said he felt the same way, arguing that rich people and corporations need to be paying more.
“I think they should pay their fair share. They’re getting away with murder. These guys are not paying any taxes. I mean, come on. I pay taxes. What’s the median for working people, like 25 percent? Come on. What’s going on?” he said in an interview.
Critics of corporate tax hikes argue that big businesses still pay billions in other types of taxes outside of taxed income.
The views of Taylor and Dossous on the tax system are held by a majority of Americans, according to a variety of public opinion polls.
Fifty-two percent of Americans believe the government should “redistribute wealth by heavy taxes on the rich,” according to one such poll published by Gallup in August, while 47 percent feel the opposite. Prior to the 2008 financial crisis, those preferences were by and large flipped, with more Americans disagreeing with the idea of redistributing rich people’s wealth with taxes than agreeing.
A 2020 poll by Reuters and Ipsos found that nearly two-thirds of respondents believed “the very rich should contribute an extra share of their total wealth each year to support public programs.” Support for that position was stronger among Democrats, at 77 percent, but 53 percent of Republicans also stood behind it.
The difference between how workers and wages are taxed and how profits and businesses are taxed has been coined the “two-tiered tax system” by other members of the Biden administration, including Treasury Secretary Janet Yellen.
“At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: Opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance. This two-tiered tax system is unfair and deprives the country of resources to fund core priorities,” she said in 2021.
Tom Ankner, a librarian in Newark, N.J., said he appreciated hearing the message during Biden’s speech that the economy could treat people more fairly.
“I liked the fact that he was taking that line,” Ankner told The Hill. “Because that’s where I’d like [to see changes]. That’s the direction I’d like to see the country go.”
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