On Friday, the White House announced two key appointments to the National Economic Council. One is Tim Wu, one of the best informed and most scathing critics of the hyper-concentration and abuse of economic power and privacy by the big platform monopolies, namely Google, Amazon, Apple, and Facebook.
The appointment of Wu is brave, and a very big deal—especially given all of the money President Biden has raised from Silicon Valley and his appointment of power lawyers who’ve served platform monopolies to key positions at the Justice Department. Wu, a law professor at Columbia and author of several books, knows the tech industry and its abuses in depth. He has flatly called for breaking up the tech monopolies.
Wu’s influence for good will be greater or lesser, depending on who ends up with the top antitrust jobs at Justice and the Federal Trade Commission. (As acting FTC Chair, Biden has designated Rebecca Kelly Slaughter, an FTC commissioner who is a former aide to Chuck Schumer.)
But then in the same press release announcing Wu, the White House announced that the top labor person on the NEC will be Seth Harris. As we’ve previously written, Harris has been a supporter of the idea that gig workers should get partial labor law protections, but not the full range as payroll employees. He has not worked for Uber and Lyft directly, but has helped them indirectly. (In Harris’s defense, he is a big supporter of the union drive at Amazon, and helped persuade Biden to issue a strong statement defending the right of workers to unionize.)
This pairing of stellar economic appointments with not-so-great ones has become a Biden signature. On Friday, the administration also leaked two key Treasury subcabinet appointments, one progressive and the other lamentable. This seems to be a pattern.
The pending appointments were leaked by the White House to Bloomberg, a favorite media destination when Team Biden wants to low-key an appointment or preempt an unauthorized scoop.
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The progressive in question is Lily Batchelder, who will be assistant Treasury secretary in charge of tax policy. This is a crucial appointment, and a terrific choice.
Batchelder, who was on the Biden transition team, is perhaps best known and admired among progressive tax reformers for her work on the idea of an inheritance tax to replace the estate tax. The difference is that an estate tax, the current version, is paid by the estate and then the proceeds that are left are tax-free to the heirs. With an inheritance tax, the proceeds are counted as taxable income.
That means that someone inheriting a large windfall will pay tax according to their income bracket. Shifting from an estate tax to an inheritance tax is more equitable, and paves the way to restoring more than token taxes on large fortunes, after decades of right-wing demonizing of the “death tax.”
Batchelder is expert on other obscure and abused parts of the tax code, such as the corporate depreciation allowance that results in large corporations paying little if any tax. Her research has debunked the idea that this tax preference actually promotes investment. When Elizabeth Warren first proposed her wealth tax, Batchelder pushed back against the claim that it would be easily evaded.
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There is also huge work to be done in reducing offshore tax evasion. Some of this can be done by better enforcement strategies and tougher regulation, as well as tax treaties. And there is the task of counter-reforming Trump’s tax cut. All of this will come under Batchelder’s purview.
Her résumé is far from that of a radical. She teaches tax law at NYU Law School, and is another veteran of the Obama White House, having been deputy director of the National Economic Council for tax and budget issues in 2014 and 2015. Before that, she was Democratic tax counsel of the Senate Finance Committee under Sen. Max Baucus, a budget hawk who was nobody’s idea of a lefty.
Batchelder is an interesting case of someone whose own instincts are more progressive than her résumé, but whose career path is nicely reassuring to the Clinton/Obama veterans at the senior level of the Biden administration. She also worked for Hillary Clinton in the 2016 presidential campaign.
It remains to be seen how much policy influence Batchelder will exercise. When Larry Summers was at the White House, the Treasury had little influence over tax policy. With a strong Treasury secretary in Janet Yellen, the Treasury Department is likely to be a more influential player.
At the same time, the person who has Batchelder’s old job on the National Economic Council, David Kamin, will probably have more direct influence over Biden’s policy priorities. Kamin, another NYU professor of tax law and an Obama veteran, is said to get along well with Batchelder, and have no major differences of policy or philosophy.
This pairing of stellar economic appointments with not-so-great ones has become a Biden signature.
Natasha Sarin, whose precise position was not named, is a whole other story. A law professor at Penn, Sarin is a close protégé and frequent co-author of Larry Summers. Though Summers is close to persona non grata at the Biden White House for publicly attacking Biden’s economic-relief package, his radioactivity has evidently not rubbed off on Sarin.
Sarin and Batchelder are an odd couple, in that Sarin went out of her way to attack Warren’s proposed wealth tax, and contended in an article with Summers that tax evasion would be easy.
To her credit, Sarin has called for upgrading the staff resources and budget of the IRS, which is an independent agency at Treasury. On an administrative level, Republicans have so stripped the IRS of audit capacity that tax scams by Wall Street insiders go unpunished because they are so complex that going after any volume would use up the entire audit force.
So like the drunk who looks for his keys under the lamppost because that’s where the light is, the IRS goes after the small fry, with disproportionate audits of recipients of the Earned Income Tax Credit, of all people. Reviving IRS capacity and morale will go hand in hand with reforming the tax code.
Thus the continuing story of the Biden economic team: one part exemplary, one part mixed. As these rivals try to form a team, this will be trench warfare between progressive and minimalist center-left. Let’s hope the sheer logic of tax reform and antitrust reform wins out over the undertow of compromised appointees, and that the president sides with the progressives. Lincoln’s team of rivals worked for only one reason—because of the greatness and resolve of Lincoln.
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