By Carlton Joseph
With his ambitious Infrastructure bill stuck in Congress, President Biden, like a champion boxer trying to regain momentum, is shifting his focus on his foreign relations credentials to extract a win that he hopes will benefit his domestic agenda. Treasury Secretary, Janet Yellen got the G7 to endorse a plan to set a global minimum corporate tax rate of at least 15% on multinational companies, in order to deter multinational companies from avoiding taxes by stashing profits in low-rate countries.
The group, comprising seven of the world’s wealthiest nations, also endorsed proposals to make the world’s largest companies, including U.S.-based tech giants, pay taxes in countries where they have huge sales but no physical headquarters. This rule has been in place since 1920, before the advent of the internet, and made it impossible for countries to impose a tax on a company if the company did not have a physical presence. This is a major victory and should be supported by all countries, especially underdeveloped ones.
French finance minister, Bruno Le Maire says that France will fight for that global minimum corporate tax to be as high as possible. Britain’s Treasury chief Rishi Sunak, claimed that the deal would reform the global tax system to make it fit for the global digital age to make it fair. Treasury Secretary Janet Yellen remarked that the global minimum tax would end the race to the bottom in corporate taxation and ensure fairness for the middle-class and working people in the U.S. and around the world.
Another foreign policy initiative is Biden’s plan to meet with NATO later this month to reset the relationship following Donald Trump’s snubbing of the alliance. Secretary of Defense Lloyd Austin hosted NATO Secretary General Jens Stoltenberg to discuss the security challenges facing the Alliance and to prepare for the June 14 NATO Summit.
Time is not on Biden’s side as Germany’s Chancellor Angela Merkel will retire in September, France’s presidential election will start in April 2022 and the American midterms are in November 2022. The leaders must agree on a communiqué now being negotiated, discuss the Afghanistan withdrawal, and sign off on the 2010 Strategic Concept Active Engagement, which is a statement on NATO’s values and strategic objectives for the next decade.
European officials, especially Germany, believe that Biden’s unilateral decision to pull all U.S. troops out of Afghanistan by Sept. 11 was unacceptable, and disagreed with Washington making that decision while the allies dutifully follow along. Also, European leaders were displeased and embarrassed by Mr. Biden’s decision to support the waiver of intellectual property rights on COVID-19 vaccines without consulting with allies.
The road ahead is difficult but success is possible, however, Biden must understand that the world has changed and America is no longer the world’s dominant economic power. In 2010, when the strategic concept was last revised, NATO assumed that Russia could be a partner and China was barely mentioned. Currently, Biden has initiated a number of sanctions on Russia and sees China as a threat to America’s economic primacy. Every decision has consequences which can be immediate or long-lasting, Biden must ensure that the consequences are mainly positive.
Europeans are dependent on both China and Russia for trade and energy, they have said that Russia is part of Europe and cannot be shunned and that Europe must be strong enough to defend its own interests. The European trade deal with China indicated that they believe that engagement, not confrontation, was the best policy for a declining West in the face of a fast-rising China.
Mr. Biden’s effort to define the world as a competition between democracy and authoritarianism is too simplistic. On the other, Europe’s perception of China is more sober and have abandoned trying to transform China.
Will Biden get the momentum he needs to achieve his domestic agenda, if he is unable to reinstate America’s unquestioned leadership of NATO, where he decides and they follow? Will Republican leaders agree to his ambitious Infrastructure plan? Will Republicans agree to the global 15% minimum tax on multinational corporations?
Biden seems to be hedging his bets; he is said to be considering dropping his demand to roll back the 2017 Trump tax cuts, which primarily benefited corporations and the richest people in the country, in order to gain support for infrastructure spending of at least $1 trillion.
Just when I thought Biden was serious about systemic change, he reverted to his plutocratic, corporate driven ideology. He warns that our infrastructure is crumbling, our democracy is at risk, and wants to lead the world, but instead of fighting for change and using whatever power he has to reign in renegade democrats like Senators Sinema and Manchin, he decides to continue the Republicans tax cut policy.
American needs presidents like Lyndon B Johnson, and Franklin D Roosevelt in these critical times.
One cannot lead globally if one cannot lead the country one was elected to lead. Senator Mitch McConnel’s declaration that his 100% effort is to destroy this administration and to preserve the Trumpisms of the last four years indicates that Biden’s ambitious infrastructure program might not be realized. In effect, a failure to lead leaves the world uncertain about America’s future and where she is going.
If the world does not know where you’re going, why would they follow you? Biden claimed that China’s President Xi is “deadly earnest about becoming the most significant, consequential nation in the world,” because autocrats think that democracy can’t compete in the 21st century. Autocratic Republican lawmakers seem to agree with that analysis and are determined to destroy America’s democracy. Xi might not have to work hard to achieve his vision, if that is indeed his vision.
Finally, Biden’s pivot to gain momentum is laudable, although his republican colleagues and two Dixiecrats do not share his vision. The G7 agreement on a minimum corporate tax is historic and should be acceptable to some Republicans and should be approved in Congress. However, I’m disappointed that he is proposing to scrap his plan to raise the corporate tax rate if Republican lawmakers support at least a trillion new dollars in infrastructure spending.