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As the Biden administration and Republican lawmakers battle over the size of a pandemic relief package, corporate America is on the side of the new president and Democrats in Congress on going big — but also being willing to give a little to reach greater bipartisan consensus.
Josh Bolten, president and CEO of the Business Roundtable, a large and influential group consisting of over 100 prominent CEOs, said in an interview with Kayla Tausche at a CNBC Capital Exchange event on Wednesday that conservative efforts to “whittle down” the size of President Biden’s proposed $1.9 billion plan are not echoed by the business community.
“What our members are saying is they are supporting what the Biden administration is saying about the urgency of providing the rescue that’s needed. First get the pandemic under control and second, support the most vulnerable through tough economic times,” Bolten said. “We are for whittling up on those elements of it.”
But the BRT is worried about administration efforts to move other policy measures into the Covid relief package which may reduce the odds of seeing legislation passed. Policy ideas that are not designed to address the immediate crisis are “making it difficult to get bipartisan support,” Bolten said. “We think they should be flexible about putting them aside and taking up later.”
That includes the $15 minimum wage effort. While Bolten stressed that BRT members have long supported a higher federal minimum wage and the current $7.25 is “clearly too low,” he is skeptical that this is the moment to proceed to push this through Congress on what would have to be a partisan basis. He noted that while most of his organization’s CEOs are already paying much higher minimum wages, a national mandate would hit smaller businesses harder.
Doug McMillon, the president and CEO of Walmart, is the BRT’s chairman, while Jamie Dimon, the CEO of JPMorgan Chase, GM‘s Mary Barra and Tim Cook, the CEO of Apple, are on the Business Roundtable’s board of directors.
“The increase most directly affects small business and they have been the most devastated by the pandemic,” Bolten said. “Many are flat on their back, many hundreds of thousands out of business completely and many just hanging on. We want to get them going again,” he said, noting many are customers and suppliers of larger corporations.
“Pushing through a minimum wage increase that in the short run can be very damaging to small businesses unless it is crafted in way that takes into account regional differences and appropriate carve outs … that will take a lot of time to negotiate and this package is not the right place to do it,” Bolten said.
Main Street is concerned about the timing, though it has been estimated that a minimum wage increase could help as much as 20% of the U.S. workforce. A 2019 analysis from the nonpartisan Congressional Budget Office forecast that in an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. But 1.3 million other workers would become jobless, according to CBO’s median estimate.
The BRT CEO was clear that even as the country pulls out of the worst from the pandemic, the situation is still urgent, but the urgency should be focused on “getting the pandemic under control and supporting the vulnerable over the coming months, getting more funding for vaccines and testing and public health workers, and taking care of people who have been devastated by the pandemic while we head toward a what looks like it can be a robust recovery.”
A Congressional Budget Office forecast from earlier this week expects a “rapidly” improving economy and the labor market to be back at full strength sooner than expected due to the Covid-19 vaccine rollout and legislation enacted in 2020 — its outlook is not dependent on another round of stimulus. Gross domestic product, or GDP, is expected to return to its pre-pandemic size by mid-2021 and the labor force is forecast to rebound to its pre-pandemic level in 2022, the nonpartisan CBO said on Monday.
There has been a high level of engagement and outreach, candidly, in ways that are much more extensive and deeper than the experience even at the outset of the Trump administration.
Bolten said the political odds on a bipartisan package with 60 Senate votes is “looking tough … but not impossible,” but that reconciliation does not need to be partisan if that is the ultimate path chosen. Bolten served in the George W. Bush administration in 2001 when it put through a tax cut with overwhelming GOP support and also 12 Democratic senators through reconciliation.
Echoing comments made by long-time Biden economic advisor Jared Bernstein at the same CNBC virtual event on Wednesday, Bolten said the issue should not come down to the top-line dollar figure for the relief package and haggling over some dollar amount in between, given the severity of the ongoing Covid crisis. Bernstein said, “The danger is going too small, not too big. Whittling down is the enemy of what we need to do here.” The Biden advisor also stressed that reconciliation does not mean no GOP support.
A recent public poll found over two-thirds of Americans in support of the $1.9 trillion proposal. By Wednesday evening, the House had approved a budget measure to move the proposal ahead even without Republican support and use the reconciliation process, though Democratic leaders have said bipartisan support is their preference.
The BRT CEO indicated that the Biden administration is in close contact and in some ways has been communicating even more than the Trump administration did early on. “They’ve been terrific. There has been a high level of engagement and outreach, candidly, in ways that are much more extensive and deeper than the experience even at the outset of the Trump administration. … We won’t agree on everything but we feel comfortable that we have comm channels open and people, senior people in the Biden administration want to hear from us and will take our views into account.”
Shortly after the presidential election the Business Roundtable outlined its priorities during a Biden administration and with a new Congress, including coronavirus relief to help small businesses and the removal of tariffs. On trade, the BRT wants President Biden to cut back on the tariffs that have been implemented by the Trump administration on foreign goods, though trade deals with China will remain trickier. The BRT has been opposed to Biden’s campaign proposal to raise taxes on people making over $400,000, plus an increase in the corporate tax rate.
Bolten indicated immigration reform and infrastructure also will be priorities that the Biden administration will focus on and that the BRT has high on its list as well, but not for now.
“The first thing is we have to get past the pandemic” he said.