Monday, November 27, 2017

Tax Cut Swindle

“The chief business of the American people is business.”      Calvin Coolidge, 30th President

Republican Calvin Coolidge was the ideological hero of our 40th President, Ronald Reagan. Coolidge was a pro-business Vermonter who believed in a conservative philosophy of limiting government in the affairs of business people and the everyday activities of citizens. Less than one year after leaving office, his “hands off” policies help lead to our decade-long Great Depression.  60 years later, Republican President Ronald Reagan espoused a similar pro-business agenda, passing a tax cut bill designed to “boost the economy.” He promised that the resulting shortfall in tax revenues would be made up by a spike in the economy from increased business profits which would generate new income. A short-term loss would be made up for by a long-term gain. Sounded good; everybody would win.

Except that it did not work. By the end of his second term, the deficit was soaring, paper profits were disappearing, and the savings and loan industry had collapsed. Republican President George H. W. Bush had to pass tax increases to try to close the resulting gap, which helped cost him reelection. It took Democratic President Bill Clinton and Republican Speaker Newt Gingrich to pass the first balanced budget in over a century – all subsequently undone by Republican President George W. Bush’s unfunded Iraq War and expansion of the Medicare prescription drug benefit, sealed by yet another housing recession. History repeats itself.

Fast forward to 2017. Republicans control Congress and the presidency, but by the end of the new president’s first “honeymoon” year little-to-nothing of substance has been accomplished legislatively. Desperate to show their voter base some accomplishment, they roll out yet again the promised land of tax reform. The strategy in January was a) fast-track repeal of Obamacare after seven years of promises, then b) a quick passage of tax reform – two major objectives in an impossibly short timeline. Nine months later, Obamacare repeal was dead, exposing the weaknesses in Republican governance. So tax reform became the do-or-die face-saving – to be done in two months in the face of all the corporate lobbyists stacked up on the playing field.

Like their disastrous approach to Obamacare repeal, Republicans excluded Democrats from negotiations, as well as most of their own party members – another secret process by party leaders. When the proposed legislation finally came out, “tax reform” (hard to do) had become “tax cuts” (easier to sell). The Christmas tree of “something for everyone” was open for gift giving. Fast-tracked token committee hearings were held to hide the secret bargains therein.

Great pains were taken to claim this was not a giveaway to the rich, but was targeted to Middle Americans. Except that is a lie (confirmed by the CBO). Repeal the estate tax, which benefits only the tiniest percentage of the richest Americans. Reduce corporate tax rates from 35% to 20% – but is any big corporation actually paying 35% (versus less than 10%) given their armies of tax lawyers and accountants?  New exemptions for private plane owners. Keep special low tax rules for Wall Street investment bankers, while eliminating tax exemptions for individuals. Permanent tax cuts for businesses; temporary tax cuts for individual citizens. On and on.

And the middle income folks that are supposedly the target of all of this? Double the standard exemption – absolutely no help to homeowners and others who itemize their deductions. Increase the child care credit – good for struggling parents, but no help to adults with grown or no children and senior citizens. Cut the tax rates for lower income taxpayers – at last, an actual shared benefit. Except for the other things you lose to offset that benefit: e.g. caps on medical expenses that continue to bankrupt families; cap or eliminate state and local tax deductions (just “coincidentally” a higher impact on “blue” states); limit deductions for student debt; add new taxes on underpaid graduate student tuition stipends. Cutting the tax rates while raising one’s taxable income is supposedly a win for the middle class?

And by the way, while we are at it, stick in an unrelated attempt to kill Obamacare by gutting the mandatory medical insurance requirement – which has nothing to do with tax legislation. That will put 13 million people into the uninsured ranks, and send them back to emergency rooms for “free” treatment when they get sick – a visit that in fact will be paid for by all insured people. The resulting premium increases for the insured will more than offset their promised tax cut.

The end result? 1.5 trillion dollars of new debt over the next 10 years. This from the party of supposed deficit hawks, who resent “welfare bums and their entitlements” but willingly support special-interest corporate entitlements as “good for the economy.” But not to worry. This exploding debt will be paid for by extraordinary (and unprecedented) GDP and income generation, resulting in new tax income to cover the new debt. Sound familiar? Reagan, 1981.It did not work then; it will not work now, Economists are shaking their heads; lobbyists are laughing all the way back to their corporate headquarters.

In numerous polls, people prioritize concerns over healthcare, jobs, immigration, North Korea, terrorists both domestic and foreign. Tax cuts are way down the list. Yet nothing is being done about those priority issues. Less than 20% of people support this Republican tax plan, yet Republican representatives and senators are trying to push it through. 90% of Americans supported expanded gun background checks after the Sandy Hook massacre, yet their wishes were ignored. Who is Congress listening to and working for? Need you ask?

Beware of these Republican representatives, senators, and president bearing gifts. Keep billfolds and purses locked safely away. What is being advertised is not truth in advertising. It is slick marketing hiding a faulty product, with the real benefits hidden safely out of view within the secret legislation. Originally, ALL middle income taxpayers were guaranteed to get a tax reduction – a promise now being fully backpedaled. The current estimate is an annual tax savings averaging $800 for incomes less than $40K. Less than $70/month. $17/week. That is one family dinner per week at McDonald’s. Certainly every dollar helps for a family in need; we should not make light of that. But does dinner at McDonald’s warrant $1.5 trillion in new debt, disproportionate tax breaks for the mega-wealthy, and more income for corporations who are enjoying record boom times and have jobs begging to be filled? How about focusing on real tax reform and job training to fill those vacancies we already have, instead of squeezing lower-oncome taxpayers even further for “benefits” they will never really see?

Our nation has a full menu of important issues and significant needs to be addressed. They require the contributions of those among us who can see the big picture within which these issues and needs fester, but who also have the depth of thinking and insight to provide concrete and genuine solutions. What we do not need is another superficial bandaid that simply distracts us from the real work that needs to be done, driven by a crass and cynical short-term pandering for votes rather than the genuine long-term economic betterment of the citizenry. This kind of blatant flim-flamery trivializes our real concerns and deserves our complete rejection. We should all remember the full quote of Calvin Coolidge from 1925:

“The chief business of the American people is business ...  Of course the accumulation of wealth cannot be justified as the chief end of existence … We make no concealment of the fact that we want wealth, but there are many other things that we want very much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction.”

©   2017   Randy Bell   

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