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A TRICKLE DOWN LIFE
REPUBLICANS AFTER RAISING THE DEFICIT $1 TRILLION PLUS WILL THEN MOVE TO CUT SOCIAL SECURITY, MEDICARE AND MEDICAID TO BRING THE DEFICIT UNDER CONTROL, DESPITE THE TRUMP PLEDGE
Bob Weaver 2017
The Congressional Budget Office has released a report on the bill that showed the Republican plan would result in working and poor Americans losing billions of dollars in federal benefits, because the proposal also includes removing Obamacare's individual-coverage mandate.
The measure would also increase the federal budget deficit by $1 trillion plus over the next 10 years, according to the CBO report. The reduction of the deficit, until now, was a key policy of the Republican party.
The tax bills in both the House and the Senate give the lion's share of tax breaks to the top 1%.
Many of American Middle Class breaks are pretty good, but are not permanent, most will be reduced, diminished over years. Go figure.
The breaks, in the big picture, will not be meaningful to West Virginia's low income working class.
Eliminating the 100 year old estate tax would fill the pockets of less that 1/2 percent of US citizens and would cost the Treasury almost $700 billion over 20 years, a break long lobbied by political donors, and could likely mean about a $1 billion landfall for the Trump family, denied by Trump.
Sen. Lisa Murkowski now says she supports the Republicans' sweeping tax package, now that it would allow oil drilling in Alaska's Arctic National Wildlife Refuge. Murkowski got the provision added earlier this week. The bill has numerous "favors" to get support for the bill.
Advocates for seniors and the middle class have been warning for weeks that the Republican drive to cut taxes for the wealthy is the prelude to a larger attack on Social Security and Medicare.
Far from simplifying taxes, the bill opened up a whole range of tactics to lower the amount owed to the Internal Revenue Service.
Trickle down economics do not work, according to many leading US economists, but most West Virginia voters approve.
A grand deception adding to the US Tax Code, mostly given to special interests that is already thicker than the Holy Bible.
The only big winners are the wealthy â especially those who mainly collect income from their assets rather than working for a living â plus tax lawyers and accountants who would have a field day exploiting the many loopholes the legislation creates.
Banks and other financial institutions will still be able to avoid taxes by making payments to offshore subsidiaries.
The tax bill was cobbled and changed many times without any public review of its contents, so much for a democratic form of government.
The Republican party position was aptly put by Wood County Republican Chairman Rob Cornelius - "It's a tax cut period. And that's what helps everyone. Helps American job creators, helps workers, helps retired people. There's no better way to expand the economy than to cut taxes. Put more money in the hands of people that want to spend it, not in the hands of government. Do you want a bigger government, or a bigger pocketbook at home?"
America continues to be like a corporation that is ruled by an oligarchy, not by democratic choice, with the US Supreme Court giving personhood to corporations.
An oligarchy is a
a government in which a small group exercises control especially for corrupt and selfish purposes.
The bill will likely pass.
It seems the Republican Party only purpose is to comfort the already extremely comfortable.
God Bless trickle down.
By Peter S. Goodman and Patricia Cohen NYT
The tax plan has been marketed by President Trump and Republican leaders as a straightforward if enormous rebate for the masses, a $1.5 trillion package of cuts to spur hiring and economic growth. But as the bill has been rushed through Congress with scant debate, its far broader ramifications have come into focus, revealing a catchall legislative creation that could reshape major areas of American life, from education to health care.
Some of this re-engineering is straight out of the traditional Republican playbook. Corporate taxes, along with those on wealthy Americans, would be slashed on the presumption that when people in penthouses get relief, the benefits flow down to basement tenements.
Senate majority Leader Mitch McConnell (R-KY) (R) talks to reporters following the weekly Republican policy luncheon in the U.S. Capitol November 7, 2017 in Washington, DC.
Some measures are barely connected to the realm of taxation, such as the lifting of a 1954 ban on political activism by churches and the conferring of a new legal right for fetuses in the House bill â both on the wish list of the evangelical right.
With a potentially far-reaching dimension, elements in both the House and Senate bills could constrain the ability of states and local governments to levy their own taxes, pressuring them to limit spending on health care, education, public transportation and social services. In their longstanding battle to shrink government, Republicans have found in the tax bill a vehicle to broaden the fight beyond Washington.
The result is a behemoth piece of legislation that could widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people â especially in high-tax states like California and New York, which, not coincidentally, tend to vote Democratic.
All of this is taking shape at such extraordinary velocity, absent the usual analyses and hearings, that even the most savvy Washington lobbyist cannot be fully certain of the implications.
Mr. Trump and the Republican leadership in Congress â stymied in their efforts to repeal Obamacare, and short of legislative achievements â have signaled absolute resolve to get a tax bill passed by the end of the year. As the sense has taken hold that Washington is now a trading floor where any deal is worth entertaining so long as it brings votes, interest groups have fixed on the tax bill as a unique opportunity to further their agendas.
"There's a Christmas-tree aspect to the bill," said C. Eugene Steuerle, a Treasury official during the Reagan administration and now a senior fellow at the Urban Institute. As an example, he cited the provisions in the House bill designed to appeal to the religious right.
"People want to add certain things, and if they don't cost a lot, it's a way to buy in agreement," Mr. Steuerle said.
Economists and tax experts are overwhelmingly skeptical that the bills in the House and Senate can generate meaningful job growth and economic expansion.
Many view the legislation not as a product of genuine deliberation, but as a transfer of wealth to corporations and affluent individuals â both generous purveyors of campaign contributions. By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee and the Congressional Budget Office.
"When you put all these pieces together, what you're left with is we are squandering a giant sum of money," said Edward D. Kleinbard, a former chief of staff at the Congressional Joint Committee on Taxation who teaches law at the University of Southern California. "It's not aimed at growth. It is not aimed at the middle class. It is at every turn carefully engineered to deliver a kiss to the donor class."
In a recent University of Chicago survey of 38 prominent economists across the ideological spectrum, only one said the proposed tax cuts would yield substantial economic growth. Unanimously, the economists said the tax cuts would add to the long-term federal debt burden, now estimated at more than $20 trillion.
If the package does have a guiding philosophy, it is a return to trickle-down economics, an enduring story line in which the wealthy are supposed to spend and invest their tax breaks, creating jobs and commercial opportunities for everyone else.
As President Ronald Reagan slashed taxes in the 1980s, he argued that citizens, not bureaucrats, should decide how to spend their money. President George W. Bush bestowed enormous tax cuts on the affluent.
But the trickle-down story has yet to achieve its promised happy ending. Only the beginning reliably transpires, the part where wealthy people get relief. The spoils of resulting economic growth have largely been monopolized by those with the highest incomes. Pay for most American workers has been stagnant since the mid-1970s, after the rising costs of housing, health care and other basics are factored in.
Nonetheless, Republicans are staging a trickle-down revival.
"Either it's a religious belief, a belief where no amount of evidence would change that, or they are using the argument cynically and they just want more money for themselves," the economist Joseph E. Stiglitz, a Nobel laureate, said.
Mr. Stiglitz has long warned of the perils of growing inequality while deriding tax-cutting inclinations. Yet even those who have favored lighter tax burdens are critical of the current proposals.
In the late 1970s, Bruce Bartlett developed what would become the locus of the Reagan tax cuts while working for Representative Jack Kemp, a conservative Republican from New York. Those cuts helped cushion the pain from sharp increases in interest rates by the Federal Reserve, Mr. Bartlett maintains. But Reagan was lowering the highest tax rate on individuals from 70 percent down to 28 percent by 1986.
"What they have here is a big tax cut for the rich paid for with random increases in taxes for various constituencies," Mr. Bartlett said. "It's ridiculous. And it's telling that they are ramming this through without any debate. All of the empirical evidence goes against the tax cut."
The meat of the package is a permanent lowering of the corporate tax rate, to 20 percent from 35 percent, which business leaders have long wanted. Proponents assert that this would prompt multinational companies to expand operations in the United States.
"We've been bleeding corporate headquarters and production for a long time," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and now president of the American Action Forum, a nonprofit that promotes smaller government.
But recent history suggests that when corporations get tax relief, they find abundant uses for money that do not involve paying higher wages. They give dividends to shareholders and stock options to executives. They stash earnings in tax havens.
In 2004, Congress invited American corporations to bring home overseas earnings at a sharply reduced rate, pitching it as a means of bolstering investment. But the corporations spent as much as 90 percent of their windfall buying back their shares, according to Bureau of Economic Analysis research.
If Congress bestows fresh relief on major businesses, signs suggest a similar result. Many companies are enjoying record profits. Those in the Fortune 500 had $2.6 trillion salted away overseas as of last year.
"In our boardroom, the number-one thing we're talking about is not taxes," said Jeremy Stoppelman, chief executive of Yelp, the online review platform. "Having a strong middle class out there spending money is what's most important for our business."
A key feature of the Senate bill is the elimination of a federal deduction for state and local taxes. Conservative groups like the Heritage Foundation and American Legislative Exchange Council have sought to end the deduction as a means of reining in government spending.
In high-tax states like California, New York, New Jersey and Connecticut â where electorates have historically shown a willingness to finance ample safety-net programs â the measure could change the political calculus. It would magnify the costs to taxpayers, pressuring states to stay lean or risk the wrath of voters.
Some see in this tilt a reworking of basic principles that have prevailed in American life for generations.
Since the 1930s, when President Franklin D. Roosevelt created Social Security, unemployment benefits and other pillars of the safety net to combat the Great Depression, crises have been tempered by some measure of government support. Recent decades have brought cuts to social services, but the impact of the current bill could be especially consequential.
"This is a repudiation of the social contract that Franklin Roosevelt announced at the New Deal," Joseph J. Ellis, a Pulitzer Prize-winning American historian, said of trimming benefits for lower- and middle-income families to finance bigger rewards for the wealthy. Health coverage would shrink under the Republican plan while multimillion-dollar estates would not have to pay a penny in taxes.
The tax cut package, for instance, could trigger rules mandating cuts to Medicare, the government health care program for seniors, the Congressional Budget Office warned. Some 13 million people could lose health care via the elimination of a key plank of Obamacare. Insurance premiums are also expected to rise by 10 percent.
"This tax bill is a grand deception," said Arnold Hiatt, the former chief executive of Stride Rite, which makes children's shoes. "It hurts the most vulnerable, and hurts health care and education, which are essential for a healthy economy."
The proposals break from seven decades' worth of federal efforts to broaden access to higher education.
Since World War II, the guiding sense has been that "it is government's responsibility to provide higher education for all those who can benefit from it," said David Nasaw, a historian at the Graduate Center of the City University of New York. That idea was behind the G.I. Bill, which helped generations of veterans pay for college and training.
The House or Senate bill includes provisions ending the deductibility of tuition waivers for graduate students, repealing the deduction for interest paid on student loans and taxing university endowments.
The endowment tax, in particular, threatens the ability of low-income students to pursue college and graduate studies, said Ron Haskins, a senior fellow at the Brookings Institution. Proceeds from endowments subsidize students from lower-income families, while allowing students across the board to graduate with less debt.
"When the time of reckoning comes to fix huge deficits, social safety-net programs will be first on the chopping block," Julian E. Zelizer, a professor of history and public affairs at Princeton University, said.
"It's very far-reaching," he added, "but there hasn't been much of a debate."
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