Ever since the Obama administration came into office, the Chamber of Commerce has been fearmongering about its plans to close certain corporate tax loopholes. And now the Chamber is also wading into the debate over the administration’s plans to allow the Bush tax cuts for the wealthy to expire on schedule, with the its chief economist, Martin Regalia, saying that bringing tax rates back to where they were under President Clinton “is a corporate bullet in the head”:
“That’s what you’re suggesting, is a corporate bullet in the head. That is going to be a bullet in the head for an awful lot of people that are going to be laid off and an awful lot of people who are hoping to get their jobs back.”
Regalia also said that allowing the Bush tax cuts for the richest two percent of the population to expire — saving $830 billion over the next ten years — is a “fool’s error” and “accused the Obama administration of acting ‘as if the upper class aren’t part of the economy’.”
The “Voice of Business” is explicitly going to bat for the rich here, as the personal income tax has little to do with the corporations that the Chamber represents. But this outlandish rhetoric is just part and parcel of the usual response from the Chamber of Commerce to a tax increase.
In 1993, when President Clinton proposed his tax increase, the Chamber said “the considerable goodwill that the President had, despite the skepticism that business normally shows toward a Democrat, is largely gone.” The Chamber also criticized President Reagan’s tax increase of 1983, saying, “no doubt that it will curb the economic recovery everyone wants.”
The reality, of course, has been much different. Under President Clinton, the country experienced the longest period of sustained economic growth in its history. And as far as the business community is concerned, Clinton’s economic policies resulted in more business investment as a percentage of GDP than President Bush’s. Michael Ettlinger and John Irons ran the numbers:
[Business investment] was 2.8 percent in the seven-year period beginning in 1981 and 2.7 percent in the period beginning in 2001. In the period with higher taxes beginning in 1993, the growth rate was 10.2 percent. In the parallel portions of the business cycles following the tax changes of 1981, 1993, and 2001, investment grew faster under the 1993 tax regime than under either supply-side regime. The average rate of growth was 10.5 percent post-1993, 1.4 percent post-1981, and 6.1 percent post-2001.
With its fearmongering about tax increases, the Chamber of Commerce is much like the Republican party, which also excoriated Clinton’s plan. But that actually makes sense, considering that the Chamber’s board “is overwhelmingly Republican, having contributed six to one to conservative over liberal politicians.”