On Today’s Show

More about Biden’s taxes, Buttigieg’s national service plan, Buttigieg’s Douglass Plan, and Yang releases his Q2 numbers.

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Show Transcript

Note: This is the speaking script for the show, so the audio as delivered will differ very slightly from the below. This script also does not include audio clips from third-party sources, or advertisements, which may appear at various points in the show.

More about Biden’s taxes

And now, a topic I’m sure you’re all excited to dig into: details about the corporate structures behind Joe Biden’s tax returns. In a Wall Street Journal article, Richard Rubin examined how the Bidens managed their money, and what those tax returns tell us. The title of the article is, “Joe Biden Used Tax-Code Loophole Obama Tried to Plug.”

So here’s the situation. The Bidens created two corporations, called CelticCapri and Giacoppa. These are both registered as S-Corporations, which means they are limited to having fewer than 100 shareholders, and all of those shareholders have to be individuals, plus a handful of other technical stuff and business limitations. The Bidens use those corporations to manage their income from their speaking engagement and their books. Okay, so…who cares? Well, people who pay attention to tax policy care. Reading from the Wall Street Journal piece:

“The U.S. imposes a 3.8% tax on high-income households—defined as individuals making above $200,000 [dollars] and married couples making above $250,000 [dollars]. Wage earners have part of the tax taken out of their paychecks and pay part of it on their returns. Self-employed business owners have to pay it, too. People with investment earnings pay a 3.8% tax as well.
But people with profits from their active involvement in businesses can declare those earnings to be neither compensation nor investment income. The Obama administration proposed closing that gap by requiring all such income to be subject to a 3.8% tax, and it was the largest item on a list of “loophole closers” in a plan Mr. Obama released during his last year in office. The administration estimated that proposal, which didn’t advance in Congress, would have raised $272 billion [dollars] from 2017 through 2026.”

To make a long tax-related story short, by using this corporate structure, the Bidens were able to avoid that 3.8% tax on a gigantic chunk of their multi-million dollar income. If they had not used the same corporate structure, at least according to the Journal’s analysis, they might have had to pay an additional $500,000 dollars in total taxes covering the years 2017 and 2018.

So the issue here is that Biden is using a well-known tax loophole that his own administration tried to get rid of. It’s sometimes called the “Gingrich-Edwards loophole,” referring to Newt Gingrich and John Edwards, who used the same approach. And it’s perfectly legal, but a lot of people don’t use it. For instance, Senators Sanders and Warren do pay regular self-employment tax on their book and speech income. The same is true of President Obama and Secretary Clinton.

In a statement, the campaign characterized the S-Corporations as a, “common method for taxpayers who have outside sources of income to consolidate their earnings and expenses.” This is true. Some folks use that structure, and some don’t. What makes it notable for Biden is that his administration explicitly called this loophole out and tried to get rid of it…and then right after leaving office, Biden used it.

Buttigieg’s national service plan

Next up, a policy that came out last week, but got lost in the holiday weekend shuffle. Mayor Pete Buttigieg released a new proposal called “A New Call to Service.” In the proposal, Buttigieg talks about how his military service changed his perspective, because it exposed him to a diverse set of Americans working together toward a common goal.

He then goes on to discuss some statistics that actually surprised me. The number of applicants to both AmeriCorps and the Peace Corps, AND the US military is way higher than any of those organizations can afford to accept. In other words, there are people—often young people—who, right now, want to engage in public service, but can’t, because the funding isn’t there.

Reading from the policy writeup:

“In the great unwinding of American civic society underway, and at a time when Americans are experiencing record-low trust in fellow citizens and American institutions, few — if any — single policy solutions carry the promise of democratic renewal more than national service. We have record youth interest in national service and a robust civic infrastructure already in place. American youth are clamoring to serve, yet the acceptance rates for all service opportunities are low: 13% for AmeriCorps, 25% for [the] Peace Corps, and 20% for the military.”

Buttigieg then lays out a three-step framework to solve this. Step one is to simply increase funding. The policy would:

“Fund the Serve America Act to increase paid service opportunities from 75,000 to 250,000 in the existing federal and AmeriCorps grantee organizations and through new Service Year Fellowships….”

To be clear, the call there is to raise the availability of what Buttigieg calls “service opportunities” to a quarter-million right away—or whenever the act is funded, anyway. The longer vision actually seeks to raise those opportunities all the way to ONE MILLION by the year 2026.

Step two calls to, “Create competitive grant funding for cities, counties, and communities to create ecosystems of service around regional issues. These grants would be built on the Cities of Service model (e.g., South Bend’s 2018 Love Your Block award).”  The idea there is not just to focus on national stuff, but put money into local communities as well.

And step three adds some detail to how exactly the one million service opportunities thing would work. Buttigieg sees that as its own three-part project, with a Community Health Corps working on wellbeing within local communities; plus an Intergenerational Corps, which encourages caregiving for seniors with mentorship in return (and money); and finally a Climate Corps that would be involved with both assisting first responders, and focusing on sustainability and disaster preparedness. He also calls for the creation of a new Chief Service Officer position in the federal government. This person would serve on the National Security Council and the White House Domestic Policy Council.

Buttigieg closes the proposal with this rousing statement.

“Our intention is for this proposal to create a pathway towards a universal, national expectation of service for all 4 million high school graduates every year, such that the first question asked of every college freshman or new hire is: “where did you serve?””

Okay, as with all policy proposals I ask how much will this cost and how does the candidate intend to pay for it? Well, there is no mention of either in the policy document itself.

However, in an Associated Press story, there is a brief mention of cost for some portion of the program, but it’s not clear where this figure came from or what it covers. Reading from the AP here.

“Buttigieg’s plan would add funding for existing federal programs like AmeriCorps and increase the number of opportunities from 75,000 to 250,000, which would cost $20 billion [dollars] over 10 years.”

So…essentially on the cost front, it’s deeply unclear. A Politico article by Catherine Kim noted that similar proposals around expanding AmeriCorps were made by Obama in 2008 and Clinton in 2016, though neither came to fruition. And in the current field, Buttigieg’s proposal joins national service plans proposed by Delaney, Gillibrand, and Moulton.

Buttigieg’s Douglass plan

Well, look, I finished up that last bit on the national service plan, and, boom, here comes Buttigieg with another, arguably far more important, plan. So we’re gonna talk about that too. Today, Buttigieg released what he calls The Douglass Plan, named after Frederick Douglass, and with a clear allusion to the Marshall Plan.

Buttigieg went on National Public Radio, or NPR, to discuss the plan. Reading from the summary article by Rachel Martin and Josh Axelrod:

“Countering skeptics who doubt he can win crucial African American voters in the 2020 Democratic primary, Buttigieg rolled out the details of his plan to combat systemic racial inequality, named for legendary abolitionist Frederick Douglass, on NPR's Morning Edition.
"If you're a white candidate, it is twice as important for you to be talking about racial inequity and not just describing the problem — which is fashionable in politics — but actually talking about what we're going to do about it and describing the outcomes we're trying to solve for," Buttigieg told NPR.
His "Douglass Plan" aims to establish a $10 billion [dollar] fund for black entrepreneurs over five years, invest $25 billion [dollars] in historically black colleges, legalize marijuana, expunge past drug convictions, reduce the prison population by half and pass a new Voting Rights Act to further empower the federal government to ensure voting access.
His campaign says it is equal in scale to the Marshall Plan, which used the equivalent of approximately $100 billion [dollars] at current value to rebuild Europe after World War II. Buttigieg says the program would be enacted alongside potential direct reparations for slavery, not in place of it.”

Okay, so there is a WHOLE LOT of material in the Douglass Plan. If you compare this plan, as a piece of policy, to the previous segment about national service, this thing is a giant hundred-year-old tree and that thing is a sapling. When I went to print out the Douglass Plan, it came to 67 pages. Now, I DID NOT print it, for obvious reasons, but this is among the most comprehensive and readable plans I’ve seen yet in the primary campaign so far—it’s actually very similar to the work that Governor Jay Inslee has been doing on climate, but here it’s about equity for people of color. Now, another thing that makes this document interesting is not just its vast scope, but the fact that Buttigieg includes a series of short videos—typically a minute or two—sprinkled throughout the document. In those, staffers from his campaign explain core ideas.

One way to take in this document, quite honestly, would be to skim through it and play the YouTube videos, because you’ll get a good chunk of it without, you know, reading 67 pages of policy.

In his NPR appearance, Buttigieg sat for an interview with Rachel Martin. I’ve got two short clips I want to play from that, but I strongly encourage you to go check the show notes for the full NPR interview—there’s a lot more there, and it’s roughly an eight-minute interview. This whole plan is part an ongoing narrative about Buttigieg and whether he will be able to appeal to voters of color. We’ve covered the police shooting in South Bend several times now, and of course, that also came up in the debates. Buttigieg has really bad polling numbers among black voters. It remains to be seen whether this plan will change this, but it certainly looks like Buttigieg has put in considerable effort and thought into what all the pieces of the puzzle are. Okay, listen in to this segment of the interview, to get a sense of the scope of this plan:

[BUTTIGIEG CLIP 1:
America basically rebuilt Europe after World War II, and what we need to do now is an investment of comparable ambition right here at home, because what we've learned is that the inequities that we have in our country were put in intentionally by generations, and sometimes centuries, of racist policy. They're not going to go away just because you replace a racist system with a neutral one.
We need to intentionally invest in health, in home ownership, in entrepreneurship, in access to democracy. If we don't do these things, we shouldn't be surprised that racial inequality persists because inequalities compound. Just like a dollar saved, a dollar stolen also compounds.]

Now, if you look through the document, there is all kinds of stuff in there. One thing that jumped out at me is statehood for the District of Columbia. DC statehood would enfranchise a whole bunch of black voters—and in the plan, Buttigieg notes that if DC were a state, 50 percent of its residents would be black, making it the ONLY state in which black Americans were NOT a racial minority. So DC statehood is in there, as is abolishing the Electoral College in favor of a national popular vote, which would further strengthen the voting power of people of color.

Okay, and the second clip here has to do with the death penalty. Listen in, oh, and Rachel Martin speaks first.

[BUTTIGIEG CLIP 2:
Rachel Martin: You are also arguing for a Constitutional amendment that would ban the death penalty. Why is this part of a plan to empower Black America?
Buttigieg: Because the death penalty has been one of many examples where racial discrimination has played out. You can see it in the simple fact that someone convicted of the same crime is more likely to face the death penalty if they are black. Not to mention the very ugly history of the way that judicial and extra-judicial killings have been used to enforce white supremacy through American history.
It's time to put an end to that. It's time to join the ranks of nations that have put the ugliness of capital punishment behind them. And while I'm pleased to see states taking this step, and I believe the federal government can and should take this step, too, at the end of the day it is the kind of thing that deserves to be in our Constitution.
Martin: You know that is highly unlikely.
Buttigieg: You know, people all the time tell me that Constitutional amendments we're talking about are unlikely. because this hasn't happened in my lifetime, we've started talking about it like it's impossible.
This is a country that changed the Constitution so you couldn't buy a drink and then changed its mind and changed it back. Are you really telling me that we are incapable of using one of the most elegant features of our constitutional system?
Yes, it might take time, it might take a long time. It might—the effort to do that might outlast a presidency. If that's true, all the more reason to begin this now so that we can see results in my lifetime.]

Okay, so there is SO MUCH MORE to this plan, it’s one of those things you really ought to go check the show notes and just read it—or watch the videos—or listen to the NPR interview, or just read the NPR transcript, because there’s just a TON of stuff here to get your head around.

Now, as always, how much would this cost? Well, Buttigieg told NPR it would cost about the same as the Marshall Plan did after World War II, in other words, $100 billion dollars in today’s money.

It’s unclear how exactly that figure was derived, given all the different moving parts here, but, okay, that’s a really big number and perhaps it’s the right one.

As for how he’d pay for it, there is no discussion of specific payment mechanisms within the policy. To be fair, there is a LOT of discussion around how investing in various specific measures within the plan would provide an economic stimulus, so perhaps that’s one way to look at the payment mechanism—it might grow the overall economic base such that existing taxation could pay back some of that investment simply because there would be more businesses, more people working, more people going to school, fewer people in prison, and so on. But I want to be clear, that is just my speculation, it is not part of the actual proposal.

Yang releases his Q2 numbers

And last up today, a quick story on Andrew Yang’s Q2 numbers, just released this morning. He raised $2.8 million dollars in the quarter. That puts him exactly even with Senator Michael Bennet and ahead of Montana Governor Steve Bullock. And, if the leaks are to be believed, it puts him well ahead of former Colorado Governor John Hickenlooper.

Yang’s campaign said that 99.6 percent of its donors gave less than $200 dollars, though we did not get numbers for cash on hand, the number of donors, or an average donation. We will see those next week.

At this point, Yang, like many candidates, is looking to pump up his polling support so he can qualify for the September debates and beyond. He has already passed the higher donor threshold, which puts him in relatively good shape, but he and some others, like Castro, need to get that polling squared away.

And a quick note on these Q2 numbers—the deadline for official FEC filing is midnight on July 15th, which is this coming Monday. While it’s always confusing to talk about which day a given “midnight” falls on, my understanding is that it’s end of day Monday, so we presumably will have official FEC releases on Tuesday, or perhaps Wednesday at the latest. In other words, the middle of next week will have lots of money talk, and I apologize in advance.

Outro

Well, that is it for one more episode of the Primary Ride Home. I have been your host, Chris Higgins. You can always find me on Twitter @chrishiggins. Well, yesterday I mentioned Hurricane Barry coming up through the Gulf right now—seeing the headlines this morning, it looks like a real threat to both Louisiana and Mississippi, and I am really dreading what could happen if the levees fail, or the rivers continue to rise. Stay safe, and please know that we are thinking about all of you down south. As always, thanks for listening and I will talk to y’all tomorrow.