President Biden’s proposed stock buyback tax is ‘possible, just not now’: Expert

Stifel Chief Washington Policy Strategist Brian Gardner joins Yahoo Finance Live to assess President Biden's State of the Union address, including his proposed stock buyback tax, Americans' sentiment on Biden's economic policies, and the outlook for the 2024 election.

Video Transcript

DAVE BRIGGS: We move on now as the economy was the focus of President Biden's State of the Union address. Biden touting strong jobs numbers while laying out his vision for a billionaire tax and quadrupling the tax on share buybacks. Let's hear what he had to say.

JOE BIDEN: Corporations ought to do the right thing. That's why I propose we quadruple the tax on corporate stock buybacks and encourage long-term investments.

[APPLAUSE]

They'll still make considerable profit. Let's finish the job and close the loopholes that allow very wealthy to avoid paying their taxes. Instead of cutting the number of audits for wealthy taxpayers, I just signed a law to reduce the deficit by $114 billion by cracking down on wealthy tax cheats. Passed my proposal for the billionaire minimum tax. You know, there's 1,000 billionaires in America. It's up from about 600 in the beginning of the term. But no billionaire should be paying a lower tax rate than a schoolteacher or firefighter.

DAVE BRIGGS: Hard to argue with the logic there. Stifel chief Washington policy strategist Brian Gardner with us now to discuss. Brian, do you think the president's tax proposals have any shot in this Congress?

BRIAN GARDNER: Almost none, Dave. Let's start with the buyback tax because I think that actually has the better shot of passing, maybe not in this congress, but in future congresses. What we were telling clients when it was included in the IRA, the Inflation Reduction Act, last year is, once you get that into law, then each party can look at it and dial the number that they want to raise revenues. And there are a number of Republicans who have been critical of buybacks. So I don't think the Republican Party is monolithic in its view on stock buybacks and taxing stock buybacks. So I think down the road, yeah, it's possible, just not now.

The billionaire tax, I think there's absolutely no way. I think it was done in there for-- put in the speech for political messaging. I don't think it was-- I don't think it's a serious proposal. Republicans will not touch it. I think a lot of Democrats on the Hill won't touch it. There is certainly a group of Democrats who support it. They're very loud about their support, but they're also fairly small in number. And so I just don't think there's widespread support for a billionaire unrealized capital gains tax.

SEANA SMITH: Brian, he struck this optimistic tone. He was trying to entice the GOP to work with the Democrats, highlighting some areas that he thinks they can work together. We know, though, that this Congress is so divided. Are you optimistic that the two sides will be able to come together on anything, and what would that be?

BRIAN GARDNER: No, so I'm not overly optimistic, sorry to say. I think part of that messaging last night was that the president is kind of inching towards a re-election announcement. And he's trying to position himself as being reasonable, above the fray, while Republicans have been fighting amongst themselves. They had a contentious vote for Speaker.

So there's a lot of politics, you'll be shocked to hear, going on with that part of the message. In terms of what can get done this year, I think it's really a handful of must do things-- the debt ceiling. I think that will get done, but it's going to be a really, really tough fight. I expect there's going to be a government shutdown in October. The government will eventually reopen, but that's going to be tough to do.

Then there are a handful of issues. He mentioned the insulin price cap. That's a possibility. I wouldn't give it overwhelming odds. But it's possible. And I trust both parties were working on that in the last Congress, a bill to regulate some social media and tech platforms that didn't get across the finish line. But it's not dead. It could come back. So I'm not totally pessimistic on some of those things. But they all face long odds because, look, it's just a very divided country. We're inching towards a re-election. And it's not in either party's interest to be helping the other side right now.

And my final point before we move on is just that we are in an era where politics is a zero-sum game. One side does not want to see the other side succeed when-- at all. If they're winning and even in a small way, then I'm losing. And that's not an environment, that's not an attitude that's conducive to producing political compromise.

DAVE BRIGGS: And nothing is more emblematic of that than the State of the Union when you've got the rise and the fall of the ovations and whatnot. He does have some strong talking points as the president on the economy. But this is perception versus reality. And when it comes to the reality of these polls, Gallup shows 50% of the American public say they are worse off despite, again, really robust job growth, GDP topped expectations. Can anything he said or the way he delivered it last night move the needle?

BRIAN GARDNER: No. You know, look, I think there is this anxiety among voters. It was showing up in polling prior to the midterm elections. And look, I kind of got things wrong a little bit in the midterms. I thought Republicans were going to do better because of these polling numbers. They were-- these poll numbers are not new. They've been out there for months. And yet, Democrats did better than that polling data would suggest, partly because Republicans aren't addressing, in voters' minds, issues important to them. They ran on grievance, not governance.

If Republicans can kind of shift that message and get back to a governing message, then I do think this issue with-- that the Biden administration has and the Biden campaign will have on people feeling anxious about the economy, that's going to come back and hurt them. And there's not a lot the president can say to convince people otherwise. People view their own circumstances as they view them. And they don't want anybody from Washington telling them otherwise.

SEANA SMITH: Well, Brian, speaking of that polling, the Washington Post ABC poll, 50% within his own party, within the Democratic Party, want a different candidate for 2024. What do you see as the future of the Democratic Party and whether or not Biden, do you think, will be able to kind of gain some more of that support over the next two years?

BRIAN GARDNER: So, for his prospects in '24, if he wants to run, there's nothing to stop him. And really, there's no viable Democrat that will step up and challenge him in a primary. No viable Democrat will have a chance to knock off a sitting incumbent president. The party will rally around him. And there is history in the back-- in the background. It's been a while since we've had some challenges to incumbents, but there are people in the party that are wise enough to know that that's a recipe for disaster. So he's not going to face a serious challenge. And he will be renominated if he wants to run.

Longer term, there are challenges for the party, which way they want to go. It used to be a very working class party, a party of labor halls. It's become a party of faculty lounges and kind of coastal elites making inroads with suburban voters, too, to be fair. But it is a party where we spend a lot of time talking about Republicans and their divide and where they're heading. Democrats have some thinking to do, too, about what kind of party they want to be, how they respond and reach out to working class voters, and kind of especially in this populist era that both parties are going to trying to tap into. And we saw a lot of that last night.

SEANA SMITH: All right, Brian Gardner, always great to get your reaction here. Stifel chief Washington policy strategist, thanks so much.