Stealth Wealth Redistribution

Despite the litany of supply-side failures to create more and better jobs – most recently Kansas GOP Governor Sam Brownback’s decimation of state services without moving the employment needle through his “cut taxes” for the “job creators” tactic – and notwithstanding the worst economic inequality in this nation’s history, wealth redistribution is the Republican Party’s central plank.

The United States used to be in the green income distribution areas (considered reasonable) that the rest of the developed democratic world maintains as reflected in the above chart. But as American upward mobility has all-but-died in recent years, the United States is sliding into pink-to-red “banana republic” income inequality statistical realties (a lot more for the richest in society and a lot less for everyone else). This chart applies the “Gini Index” (named for an Italian social statistician) to measure such wealth polarization. “The Gini coefficient (sometimes expressed as a Gini ratio or a normalized Gini index) (/dʒini/ jee-nee) is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measure of inequality.” Wikipedia.

GOP policies are very intentionally focused on enhancing the wealthy, even if that has a deeply negative impact on the rest of us. Their problem? How to make that look as if they were creating a program that is fair to everyone… when it just plain isn’t. For Republicans, just about everything is couched as either “we can’t afford it” (“it “almost always applied to social and regulatory programs, not stuff they want like “defense”) or that disproven mantra, “we need to incent the job creators.” OK, let’s drill down further into what’s really happening.

Regulations that protect consumers and rein in banks’ squeezing us all, that promote occupational safety or protect our air and water quality cost wealthy corporations with compliance costs but benefit most of us. So damn us “little guys.” Repeal or limit those regulations and make such companies more profitable. Will they create more, good-paying jobs as a result?

Well, for example, they certainly disincentivize companies that manufacture equipment to provide alternative energy or environmental controls – a vastly larger industry than the dying coal business. And companies don’t just hire more people when they make more money. They need a clear business projection showing that there is a clear business opportunity to hire more people… which is not driven by their tax policies. As we learned during the Reagan era, when tax rates for companies plummet, they tend to use a great deal of that windfall capital for mergers and acquisitions… and most of us know that when two corporations combine, they move to justify that combination – with increased efficiencies and profitability – and almost always implement significant layoffs. Job loss.

You really have to wonder, if job retention and creation is the Trump administration goal, why have they so totally focused on a dying industry like coal mining (which employs under 100,000 workers, half the number of those employed in the solar energy sector), while the fading retail sector – which employs 10% of the American workforce (around 15 million) – is falling like a stone with massive job losses. OK, then, let’s just cut taxes.

While we do not yet have a fully-fleshed out revision of the federal tax code, Treasury Secretary Steve Mnuchin has already flashed a general perception of fewer tax-rate tiers that push over 90% of the tax cuts to the wealthiest 5%, some estimating that the top 500 earners stand to get annual tax savings in seven or eight figures each. We could lose $10 trillion or more over ten years under such “reform,” and guess where that money is coming from?

We’re not cutting the defense budget (we’re raising it). We can’t cut the interest cost associated with our deficit; we just owe that. We’ve already postponed any promised infrastructure upgrade. Clearly, with that massive a reduction in gross tax revenues, something has to give. Regulatory agencies, educational support, scientific research, healthcare, Social Security, social safety nets and social services to the public in general are the sacrificial lambs. As my June 18^th blog – Shhhhhhhhhhhhh! – states, when it comes to implementing a massive tax cut while appeasing conservatives’ desire to contain the federate deficit, you cannot have both a solid healthcare plan and those tax cuts… so healthcare has to get cut to the bone to “incent the job creators.” It is truly an “either/or” choice.

The President has announced that Obamacare is over, that it has been a total failure. While clearly in need of a couple of fixes (like every major such program in American history), why did a program that was stabilizing, that was actually working, seem suddenly to crack at the seams, a crack that only developed after the Trump administration took control? My June 10^th blog – Sabotaging the Affordable Healthcare Act (Obamacare) – shows how the Trump administration has been implementing a deliberate policy of underfunding and failing to enforce the ACA mandates, purposely disincentivizing insurance carriers to remain in the system by sending destabilizing mixed messages. Ahhhh. If you can kill Obamacare, regardless of the tactics (Trump’s base just overlooks this little meddling), then Congress will have no choice but to “repeal and replace.” Got it.

But wait. Every once and a while, this move to shift wealth further to those “job creators” (where exactly are those resulting jobs again?) surfaces as a hard slam to the vast majority of Americans: Those same hard-working Americans (around 70%) who have faced two and half decades of constant, year-to-year reductions in inflation-adjusted earning power. And sometimes the “favor the wealthy over most of us” becomes so obvious that it actually threatens the electability of those Republicans actively moving to take away benefits to their constituents, even from Trump’s legendary and seemingly immovably-loyal base.

But what Republicans aren’t openly discussing is how Trump’s populist healthcare campaign promises are completely incompatible with their lean government, incenting the rich, central platform – what some might call irreconcilable differences. “All together [looking at the GOP-Congress’ take on healthcare reform], it shows how long-term conservative goals of cutting taxes and entitlement spending have overtaken Trump’s agenda, as the bill faces critical votes in the Senate as soon as next week [week starting 6/26] that could take it to the precipice of becoming law. Reducing taxes, Republicans argue, will boost the economy, and shrinking spending on programs such as Medicaid will slow the growth of the federal debt.” Washington Post, June 23^rd.

That the acceleration of America into nascent “banana republic” status in global income inequality measurements (see above), that trickle down (supply side/incent the job creators) economics has never really worked here… well we will just repeat those mantras enough until we finally make them true… Riiiiight!

But they cannot reverse the fact that what they are proposing is hardly a fulfillment of affordable, accessible and quality healthcare that Trump promised. It is very much the opposite. That nasty non-partisan Congressional Budget Office keeps reporting how the “repeal and replace” American Health Care Act (combined with the Senate’s Better Care Reconciliation Act of 2017) will save companies and the wealthy a ton of money, while slashing tens of millions of people from healthcare coverage, reducing what is covered under Trumpcare policies and threatening massively to increase deductibles and co-pays even for those who would be paying for coverage under the new plan, a plan that accelerates de facto reductions in coverage over time.

Hospitals, doctors and insurance carriers are screaming at the expected and massive negative social and economic consequences if Trumpcare passes and the ACA is extinguished. Few in the GOP are listening. The resulting disruption and suffering will be “uuuuge.” In the words of even Donald Trump himself, the impact of this legislation, if it passes, is just plain “mean.” God help you if you are getting older, have pre-existing conditions or, heaven forbid, are poor. Oh, and GOP leaders have also announced that Social Security and Medicare are “unaffordable” as configured. Hmmmm.

So as healthcare reform now sits in an unfortunate and clearly “rich win, middle and lower classes lose big” reconciliation bill (cited above) that was drafted in secret (now released, it’s a tough read, but scary when you understand what it really says), now approaching a Senate vote… super conservatives want more “repeal” and less “replace” while moderate Republicans fear the backlash when their constituents realize that they have been sold down the river with massive reductions in their current healthcare coverage. And because it is a “reconciliation” bill, they are not vulnerable to a “filibuster” (cloture) by Senate Democrats. Anything that happens in healthcare now is clearly going to be attributed solely to the Republicans, good or bad.

Unless they are prepared to violate one of their cardinal rules – don’t incur massive deficits – the GOP-controlled Senate has to pass a hugely reduced healthcare plan, cut social programs in general, in order to get to what the GOP really wants: massive tax cuts for the rich. But they seem to be unable to hide the fact that this bill is a huge slap-down to middle and working class Americans, and most certainly for the lowest income Americans. So bad that it actually is life-threatening to many. If their plan passes and really does hit those voters the hardest, the GOP secretly fears the potential negative ripple effect in upcoming elections.

What if Senate Majority Leader, Mitch McConnell (his Kentucky constituents would be hit hard by Trumpcare), secretly doesn’t want Trumpcare to pass? He currently does not have enough votes. But what if he wants it look like he tried but does not want Republicans to be held accountable for legislation that seems certain to backfire if passed? What if he wants to continue the existing ACA in some form in order to keep the liberals that passed it as “blame them” targets?

“Mr. McConnell plays his strategic cards so close to the vest that a queen of hearts must be tattooed on his tie. He may, of course, be convinced that the Senate can pass this bill. Perhaps after some moaning, and some changes to the bill through amendments, the 51 senators needed to get the bill over the line (or 50 if Vice President Mike Pence is summoned) will choose a good-enough effort over being tarred as the person who declined to make good on a seven-year promise to unravel President Barack Obama’s signature domestic policy achievement…

“When it comes to voting yes, a majority of members of Congress have a policy price, and leaders often will write the check. “There’s the natural frustrations that people have” at the start of a process that often ends in legislative victory, said Senator Bob Corker, Republican of Tennessee.

“But there are potential costs for senators like Mr. Heller and others in repealing a law that has grown in popularity over recent years, and Mr. McConnell has always taken pride in protecting his members. Trying to come to a meeting of the minds with the House — which crafted a far more conservative bill in many respects — would be time-consuming and unpleasant.

“Mr. McConnell and many of his aides are also eager to get to the business of changing the tax code, which they view as less difficult than health care, and have been working with the White House behind the scenes to get that effort started. For Mr. McConnell, cutting taxes is a much higher priority than health care, which time and President Trump have turned into quicksand for him and his fellow Republicans.

“Just hours after the presentation of the Senate health care bill, Mr. McConnell met with Speaker Paul D. Ryan and White House officials to talk taxes… Mr. McConnell is not fond of bringing bills to the floor that he does not think can pass. Should he be unable to pull together enough support on the health care bill over the next week, it would seem likely at first glance that he would make the dreaded call to the White House to let the president know that he lacked the votes.” New York Times, June 22^nd.

But if Trumpcare fails to pass, what happens to the ACA that Trump has seriously sabotaged? What can really happen? It just plain is not pretty, as insurance carriers have been deserting healthcare exchanges in droves based on Trump’s efforts. Can the Republicans fix this mess? And if they cannot get those massive cuts in healthcare, what impact does that have on their tax cutting plan? Stay tuned. Did I say, “not pretty,” I should have said, “downright ugly.”

I’m Peter Dekom, and shifting wealth further to the rich at the expense of everyone else has serious long-term consequences that might eventually become irreversible without… regime change, a truly terrifying prospect.