Business

Biden's policies hit his home state in the pocketbook, skewer Delaware's biggest industries



President Biden may be Delaware’s favorite son, but since taking office he’s aggressively pushed policies that stick it to the state’s largest industries that together generate roughly $10 billion in revenue for the First State.

The president has taken aim at the state’s two largest cash cows — corporations and poultry — by proposing raising corporate taxes and blaming chicken processors for high food prices. He has also advocated tightening regulations in the financial and chemical industries, despite Delaware bragging that it is the “capital of the world” for both sectors.

Even his supporters worry the rhetoric is going to cost jobs in Delaware.

Martin Willis, a Democrat candidate for the Delaware statehouse and a 2020 Democratic National Convention delegate for Mr. Biden, expressed concern over the president potentially breaking up the poultry and meat industries.

“The poultry business in the state of Delaware is a big business. It’s a really big business,” he said. “Trucking wise, it employs a lot of people. It brings a lot of revenue into the state of Delaware.”

However, Mr. Willis argued that Mr. Biden, who represented Delaware in the Senate for 37 years, has a track record of supporting Delaware businesses and that the mere prestige of being the president’s home has created an economic windfall for the state. 

The Delaware Tourism Office said last year that Mr. Biden has been a boon to tourism and hospitality businesses.

Critics who worry that Delaware might be hit hard by the administration’s policies say they aren’t surprised. They note that Mr. Biden has always put support for taxes and regulation over state concerns.

For example, in the early 2000s, Mr. Biden rebuffed a request from DuPont, the state’s largest employer at the time, to drop his support for legislation that would increase regulations for transporting hazardous materials by rail.

“The anti-business theme of this administration is very apparent,” said John Toedtman of the conservative Caesar Rodney Institute, a think tank in Delaware. “But now Biden’s trying to send a national message, not a state message.”

The White House did not respond to multiple requests for comment for this story.

Corporations

Delaware’s largest source of revenue is the fees generated from corporations that flock to the First State for its favorable tax laws. Those fees added nearly $1.5 billion to the state coffers in the 2020 Fiscal Year, accounting for roughly half the state’s revenue. Other economic benefits from corporations make the total as high as 75%.

That has not stopped Mr. Biden from blasting the state’s meal ticket.

“More corporations [are] incorporated in my state of Delaware than all states combined. And guess what? They ain’t paying enough,” Mr. Biden said during a visit to a General Motors plant in December.

Mr. Biden has proposed increasing taxes on corporations across the country to fund his ambitious $1.75 trillion social welfare and economic climate bill that has since been derailed. Nevertheless, the tax hikes threaten to force some corporations to leave Delaware and register in countries overseas with more favorable tax laws.

“I would think there would be naturally some effect of migration where a Delaware corporation says, ‘The heck with this, we are going to change our domicile to Ireland or the Caymans,’” said Larry Hamermesh, a professor of corporate law at Widener University Delaware Law School. “If U.S. [corporate] tax goes higher than other countries, that would be a problem for Delaware.”

Mr. Biden has sought to prevent corporations from flocking overseas by working with other nations to impose a global minimum tax on corporations. That would set a floor for corporate taxes, undercutting countries trying to lure businesses away from the U.S. with lower taxes. 

Kat Caudle, chair of the New Castle County Democratic Party, said she agrees with Mr. Biden’s move to raise taxes on corporations, asserting that the national impact should outweigh Delaware’s individual needs.

“I probably will be one of the few who will not side with the businesses here,” Ms. Caudle said. “I understand that it benefits the state to have them here and understand the laws that are in place benefit Delawareans … but I think that at the same time, if I’m going to be a Democrat, and I’m going to be a true Democrat, we need to hold businesses accountable for their actions, and make sure they’re paying their fair share.”

For now, Mr. Biden’s corporate tax proposals remain stalled in the Senate along with his big-spending agenda.

Poultry

Mr. Biden has also targeted the nation’s beef, pork and chicken processors, blaming them for skyrocketing food prices. The president said four meat companies have a near monopoly and are taking advantage of it to soak consumers.

The Delmarva Peninsula is home to several poultry producers, including Perdue Farms, Mountaire Farms, Allen Haim and Tyson Foods, which is one of the four companies Mr. Biden says is part of the meat monopoly. Perdue Farms is the state’s fifth-largest employer.

Delaware is the country’s eighth-largest producer of broiler or chickens raised for meat, generating $7.23 billion in economic activity throughout the state, according to data from the National Chicken Council.

“The rhetoric from the administration has been surprising given President Biden’s long history of support for the chicken industry [in] Delaware, a state where chickens outnumber people and where chicken is the number one agricultural commodity,” said Mike Brown, president of the National Chicken Council.

Mr. Brown has heard from several companies and farmers in Delaware who he said were “surprised and alarmed” by the president’s rhetoric.

Mr. Biden acknowledged the outsized role chickens play in Delaware at an event this month where his administration pledged $1 billion to support independent chicken processors who would compete with Delaware companies.

Mr. Biden has argued his proposals will help Delaware’s chicken industry because it will create more overall competition among chicken processors. 

While Mr. Biden hasn’t proposed any concrete steps to break up the purported monopoly, Mr. Brown says the uncertainty is just as concerning.

“Frankly, we don’t know what to expect will follow the heated rhetoric,” he said.

BANKING

Delaware has become a haven for banks, employing more than 40,000 workers and generating $95 million in revenue for the state.

Ranking just behind poultry and the corporate sector, financial services is Delaware’s third-largest industry.

JP Morgan Chase and Bank of America are the state’s second and third largest employers.

Mr. Toedtman says he is most worried about the administration’s impact on the state’s banking industry. Pointing to Mr. Biden’s nominees for the Federal Reserve, he worries they will impose regulation that will choke the industry’s growth.

“The banking industry is really in the crosshairs of this administration,” he said. “They are trying to stack the federal reserve with bomb-throwing liberals that hate the banks.”

Mr. Biden has picked several progressive darlings for top seats on the nation’s central bank, including Lael Brainard for vice-chair.

Progressives, including Sen. Elizabeth Warren, Massachusetts Democrat, had pushed for Ms. Brainard for the top spot, saying she’s more in line with the president’s economic agenda.

The Fed is expected to raise interest rates next year, which analysts say could impact Delaware’s credit card industry. Credit card payments have been up in recent years as low-interest rates and the government issues COVID-19 relief payments to stimulate spending.

CHEMICALS

Delaware was once synonymous with DuPont, an international chemical company that was the state’s largest employer for decades.

Although DuPont’s footprint in Delaware and across the globe has shrunk in recent years.

Still, the state is also home to several chemical companies including Chemours and BASF.

Upon taking office, Mr. Biden ordered a sweeping review of more than a dozen Environmental Protection Agency actions directly affecting the chemical industry.

His team also distributed a list of specific regulations the president wanted to be scrutinized, including procedures for evaluating chemical risks.

Mr. Toedtman said the increased regulations and fines for noncompliance will come at the expense of businesses, noting that chemicals were already the most heavily regulated sector in the country.

“The worst motivation you can have for a government organization is … arbitrarily fining people,” he said.





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