As Republicans bandy their tax reform package, they are making sure that the wealthiest in our nation will pay dramatically lower taxes by funneling their money into corporations where the tax rate will drop to about half of what they are paying in federal taxes now. That won’t work for professionals – doctors, lawyers and other service providers who are expressly excluded from that trick – but for those who have businesses that are not about their personal services, whoa… Well over a trillion dollars of tax cuts for them over ten years.
But there is a huge deficit that comes with those cuts, over $1.5 trillion over a decade and rising beyond that. So something’s gotta give. Like eliminating a pile of subsidies combined with killing the mandate to have healthcare that currently existing Affordable Care Act (ACA also known as Obamacare) provides to the bottom end of folks who work for a living. That mandate creates the economies of scale to allow an overall lower per person healthcare insurance cost. The non-partisan Congressional Budget Office (CBO) tells us that this would probably cut around $338 billion out of that deficit, but it would also reflect around 13 million Americans who currently have health insurance who will lose it over that period… unable to afford the coverage anymore.
Other GOP congress-people are also strongly suggesting that cutting Medicare could shift more costs over to the elderly, a particularly vulnerable group, and cut that deficit even further. And screwing blue state voters – especially high-population urban states where personal state income tax rates are exceptionally high – can also help reduce that deficit. Strange that any cuts to middle class tax rates come with an expiration date, but those corporate rates are permanent. Smell something fishy? Why were Treasury Secretary and his wife (above) smiling as the visited the Bureau of Engraving and Printing on November 15th?
Rich folks need those tax cuts, right? After all, they are the “job creators,” right? So a rising tide will float all boats, right? As we learned the hard way during the Reagan years, and as the citizens of Kansas learned over the last few years, cutting taxes for the rich does not follow the “Laffer Curve” that equates more corporate cash with more and better jobs (see the above “fake” chart – the Laffer Curve itself – that “justifies” the GOP position). The Laffer Curve is so wrong, it is laughable. My June 11th blog, Moderate Republicans: Extinct or Rising?, pretty clearly debunks that GOP myth with hard economic facts. Want more hard numbers and descriptions of clearly failed attempts to justify that theory? Try my January 25th blog, Lingering Mythologies: Tax Cuts = More Jobs.
More money in corporate tills can generate accelerated corporate mergers and acquisitions as occurred with the Reagan corporate tax cuts and moratorium allowing companies to repatriate off-shore and untaxed into the U.S. But what happened when all those corporations combined… what always happens when companies combine into order to justify why the merged in the first place… was a press for new efficiencies in the merged entity. And that always means cutbacks and layoffs. Dumping overlapping overhead and job functions. Lots of them. Unemployment skyrocketed. Huh? The opposite of what was predicted. Sometimes companies use new-found cash to buy back their own stock, then implement the same efficiencies to make that stock soar.
Let’s face it, businesses don’t just start hiring when they get a pile of unexpected cash. They are business-people, making sure there is a market that needs filling. Also making sure that hiring new people is better than replacing people with the latest and best automated equipment available. My November 10th blog, Understanding Automation, pretty much tells you that most blue collar and an increasing number of white collar jobs are being sacrificed to automation. For example, 87% of recently-lost manufacturing jobs resulted from automation, not global competition. Updated oil rigs require one quarter of the working crew than were needed just five years ago. And obsolete jobs don’t come back. Welcome to coal country, for example.
Are we simply giving rich people a greater ability to replace more workers? Remember, when a worker loses a job to a machine, the money he/she used to earn now shifts to the owner of that machine. As a result of all these realities, income inequality in America is just plain getting worse. Writing for the November 15th Los Angeles Times, journalists Chuck Collins and Josh Hoxie put it all in perspective: “It can be hard to grasp just how much money is concentrated in just a few hands in our lopsided economy today. But here’s a start: The richest three people in the United States — Jeff Bezos, Bill Gates and Warren Buffett — together have more wealth than the entire bottom half of the country combined… To put an even finer point on it: That’s three people versus about 160 million people.
”To really comprehend just how insane the wealth concentration has become, consider Bezos, the head of Amazon. Worth about $90 billion, he recently was declared the richest man in the world. In October alone, his wealth jumped by $10 billion — or about $4 million per second.
“Given his massive wealth, one might imagine that his company has enough to pay its warehouse workers a minimum of $15 an hour. But apparently it doesn’t. Amazon pays some of it workers as little as $12.84 an hour.
“That’s pretty much the trend we’re seeing play out over and over across the U.S. economy— wealth funneling to a tiny group at the top while everyone else scrambles for crumbs.
“On the other end of the spectrum from Bezos, tens of millions of families are trying to make their paychecks last through the week. One in 5 households has zero or negative wealth today, meaning they have as much debt as they do assets. (That’s why the three-versus-160 million figure is so stark: Many people have nothing.)…
“The problem is getting worse, not better. Today, the poorest member of the Forbes 400 has $2 billion. This represents a tenfold jump from when the magazine first started its list in 1982. And that’s after adjusting for inflation… In fact, with a combined wealth of $2.68 trillion, the billionaires of the Forbes 400 have more wealth than the entire GDP of the United Kingdom, the world’s fifth-wealthiest country. This marks yet another tenfold increase from the 1980s.
“The rest of the country has not shared in the economic gains of the last three decades… In 1983, the first year the Federal Reserve started collecting consistent data, the median family had $83,000 in today’s terms. That number has now fallen to $80,000.” What we do not need is tax cuts for the rich. We do not need to make older people less solvent, poorer people unable to afford healthcare and companies imbued with more capital that can easily be used to replace more workers.
What we need is more, good paying jobs, something a massive commitment to infrastructure would generate… direct government investment, remembering that an investment, unlike acost, generates a hard-dollar rate of return. Upgrade training and education. More scientific research. Unless you are a right wing social conservative willing to let the rich get poorer and accept less money for yourself… or are just pain filthy rich… it’s clear that the Republican Party has finally abandoned you!!! Oh, and the House just passed the tax plan, sending it to the Senate. Greed and the GOP, the gift that just keeps on… er… taking?
I’m Peter Dekom, and it is deeply sad that Making America Great Again embraces a litany of policies that simply will erode our lifestyle, collapse our livelihoods and decimate our stature and influence around the world.
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