To Build Back Better, Curb Corporate Power and Focus on Structure of Public Investments

Some of America’s largest corporations and trade associations are sharpening their lobbying knives in an attempt to kill key parts of the wildly popular Build Back Better agenda.

The package, which provides much-needed public investments in care and climate mitigation and adaptation, would drive economic dynamism and combat racial, gender, and economic inequalities.

Why is corporate America fighting tooth-and-nail against Build Back Better? Because it simultaneously limits the power of corporate executives and wealthy shareholders in a few ways.

In its current form, the proposed reconciliation bill empowers the government to negotiate lower drug prices with pharmaceutical manufacturers, enhancing public leverage and reducing extractive profit-seeking that makes prescription drugs unaffordable for millions. 

The proposed corporate tax reforms would curb multinational corporate tax avoidance, increase tax equity between small and big business, and strengthen tax enforcement—all of which would weaken the exorbitant privilege of corporate finance departments. 

The investments in paid leave would empower folks to care for themselves and their loved ones, even if their employers are recalcitrant—in turn boosting worker power, especially for women of color. 

The investments in clean energy and the termination of fossil fuel subsidies, meanwhile, are structured to crowd out climate polluters, and end century-old handouts that have padded the pockets of oil lobbyists while perpetuating climate catastrophe. 

These and so many other large-scale public investments could help reshape the racial inequities baked into today’s shareholder-first economy, in which the lion’s share of corporate profits are distributed to wealthy, white households. 

To ensure they do, Congress and the Biden administration must think carefully about structure, with responsive and democratic program design that puts communities first while restraining corporate capture.

While including regulatory stipulations may or may not be possible through the budget reconciliation process, I’d offer two central ways to instill accountability in the reconciliation and infrastructure bills and beyond.

First, common-sense conditions are needed to ensure a public purpose of public money. A number of critical strings need to be attached to preempt corporate extraction of these critical public investments, while simultaneously empowering public and worker voice in the workplace. Large companies over a certain size receiving public funds should be required to ensure:

• Labor rights protections, including living wages, collective bargaining and union protections, and safe working conditions;
• Public returns over shareholder returns, including a ban on open market share buybacks during use of public funds and/or an enforceable cap on shareholder payouts; workers on boards and worker’s councils; and a limit on executive compensation hikes by, for example, mandating a cap on CEO–median worker pay ratio;
• Consumer protections, such as a prohibition on price-gouging or any unreasonable price hikes;
• Climate commitments, such as enforceable net zero commitments; and
• Tax transparency, in particular the publication of large companies’ country-by-country tax reporting.

Second, oversight, accountability, and community participation should be up-front principles guiding the program design of the Build Back Better investments. A tried-and-true way to prevent corporate capture is to embed countervailing democratic and worker power within the program design so that all voices can be heard in critical aspects of the orientation, prioritization, and monitoring of programs. In particular, we could establish:

• A federal equity and accountability watchdog with high-level oversight and investigative authorities, mandated to ensure geographic, racial, gender, and generational equity, with an established and active interface for the public, especially under-represented voices, to provide feedback, design suggestions, and monitoring.
• Community-led commissions to oversee, direct, and monitor the use of local investments to ensure they are in fact combating economic, racial, and gender divides while building a strong low-carbon, care economy with public purpose. The Federal Economic Opportunity Act of 1964, for example, included a commitment to “maximum feasible participation” of community and grassroots groups to help rebalance the power to determine who benefits from public investments. A similar principle could help expand the economic well-being, buy-in, and political power of communities left out of public benefits for generations.
• The proper staffing and enhanced resourcing of the Government Accountability Office (GAO) and standing inspectors general to enhance their investigative and oversight roles to address corporate abuse or appropriation of Build Back Better investments. Various other agencies set up to protect against corporate abuse, such as the Federal Trade Commission, should also receive enhanced resources commensurate with their responsibilities.

Why are these public conditions and mechanisms so important? Let’s take two examples where these basic guardrails could make all the difference to safeguard the low-carbon and high-care equality economy of the future.

Toward the public aim of a low-carbon economy, the Clean Electricity Performance Program (CEPP) has been proposed as a central workhorse to decarbonize our electricity use by 80 percent by 2030. If it works, this would be an essential common good—mitigating carbon emissions, creating new green jobs, and helping to ease environmental injustices. Yet how the program is structured matters immensely. The program is based on paying utility companies to bring in cleaner electricity, and penalizing those that don’t. However, the lion’s share of US electricity is supplied by investor-owned utilities, which are well known for distributing a large share of their earnings to wealthy shareholders. If proper conditions aren’t put in place to prevent excessive dividends/share buybacks, while also ensuring costs aren’t passed to consumers, utility company executives could skim off the CEPP payments to pay out investors, while leaving ratepayers to pick up the bill for clean electricity investments. The resulting inequities would sooner or later put the whole program in political jeopardy. Similarly, without proper strings, laggard utility corporations unwilling to meet the new standards could find work-arounds to pass down the penalties to their ratepayers in the form of higher costs—exacerbating economic and racial inequities while only entrenching environmental injustices. 

Affordable, high-quality, and well-paying childcare is another example of critical and sorely needed support to provide visibly public relief to working families, and dignity to childcare care workers. But as Roosevelt colleagues have rightly said, without proper guardrails, this quick infusion of cash into a chronically underfunded sector could provide opportunity for larger, more financialized “Big Childcare” firms—including those controlled by private equity investors—to potentially squeeze out the vast majority of today’s smaller local providers, who are  disproportionately Black and brown women. Concretely embedding principles of accountability, participation, and public purpose into needed childcare investments could help preempt consolidation of the childcare market, channeling resources where they’re most needed while raising the wages of the women who have long held up our nation’s underfunded childcare system.

Attaching public conditions and creating public oversight mechanisms are not new ideas. For all its flaws, the CARES Act showed that public money goes further when proper oversight mechanisms and conditions are put into place to ensure a public purpose. Preventing recipient corporations from share buybacks and executive pay hikes, for example, sent an important signal that the federal government would not allow taxpayer money to end up in the hands of the wealthiest. The special oversight mechanisms set up by the CARES Act, such as the Congressional Oversight Commission, also made companies aware that a watchdog was on the beat.

As corporate lobbyists circle the skies and fill the trenches here in DC in search of fresh revenue streams, we can’t forget that building back better means ensuring that investments are not only large enough but equitable, accountable, and participatory from the outset.