Inevitability

Thank, God, for the base! It has enabled the most devastating measure against the common man in America’s tax policy history. A group quite willing to accept alternative facts and vote against their own best interests, a Republican dream. The economic distortions introduced by the “tax reform” bill now being “reconciled” between both houses of Congress will endure for a long time. Corporations are already imagining spending their windfalls on increasing dividends, instituting stock buybacks, drooling over possible mergers and acquisitions, the ability to make a whole lot more money without selling a single additional product or service. Wow!

But, as noted in my November 29^th blog, The Deep Dark Republican Hole, America’s business leaders do not plan using this windfall on massive new hires or equipment upgrades: “Gary Cohn, the top White House economic advisor, was onstage making the Trump administration’s case that a huge cut in corporate taxes would trigger a surge of business investments.

“Then came an off-the-cuff question to business leaders listening to Cohn at the Wall Street Journal CEO Council meeting [in mid-November]: How many will increase investments if the Republican tax plan is enacted?

“TV coverage showed about three dozen executives sitting near the stage. Only three of them appeared to raise their hands. An incredulous Cohn responded: ‘Why aren’t the other hands up?’

“A video clip of that moment, which has become popular viewing in Washington, illustrates what many economists regard as a flaw in the administration’s main selling point for the Republican tax proposal: the argument that a dramatic cut in the U.S. corporate tax rate will be a boon to America’s middle class.

“The White House Council of Economic Advisers promises that the corporate tax cut, to 20% from 35%, would lead to an increase of at least $4,000 a year in average household income… But that calculation depends on an assumption that workers would get a much bigger cut of the corporate tax savings than most economic studies — including those by the Treasury Department and Congressional Budget Office — have shown.” Los Angeles Times, November 25^th. In short, Republicans have selected only numbers that show their approach will work and rejected numbers that tell the truth. Plus any cuts to individual taxes automatically expire while cuts to corporations are permanent.

“In 2015, Republicans changed the budget rules in Congress so that official scorekeepers [the Joint Committee of Taxation in addition to the non-partisan Congressional Budget Office] would be required to analyze the potential economic impact of major legislation when determining how it would affect federal revenues.

“But on Thursday, hours before they were set to vote on the largest tax cut Congress has considered in years, Senate Republicans opened an assault on that scorekeeper, the Joint Committee on Taxation, and its analysis, which showed the Senate plan would not, as lawmakers contended, pay for itself but would add $1 trillion to the federal budget deficit.

“Public statements and messaging documents obtained by The New York Times show a concerted push by Republican lawmakers to discredit a nonpartisan agency they had long praised. Party leaders circulated two pages of ‘response points’ that declared ‘the substance, timing and growth assumptions of J.C.T.’s ‘dynamic’ score are suspect.’ Among their arguments was that the joint committee was using ‘consistently wrong’ growth models to assess the effect the tax cuts would have on hiring, wages and investment.

“The Republican response points go after revenue analyses by the committee and by the Congressional Budget Office, which scores other legislation, saying their findings ‘can be off to the tune of more than $1.5 trillion over ten years.’” New York Times, December 4^th. But even for companies willing to forego paying out dividends or stock purchases, for those few willing to invest in productivity upgrades, the news is still not-so-good for those wage and salary-earners who are likely to be displaced.

Effectively, the statute would even have a disincentive for a company to hire additional people if automated equipment is available to reduce labor costs. People are expensive, suck up overhead, wages and salaries, take up real estate, and accrue fringe benefits like pensions and vacations (healthcare?), while machines produce a whole lot more for a whole lot less over the long haul. Oh, and the government will generate proportionately less tax revenue.

Think of the government’s position on all this. The taxes productive individuals pay is generally 50% higher (or more) than the proposed 20% federal corporate rate. So when companies do in fact upgrade their equipment to cut back the number of workers on payroll - which is what happens after stock buybacks, mergers and acquisitions - the federal government will receive fewer tax dollars per unit of output because the new effective corporate tax rate taxes machines at a much lower rate than individuals. More layoffs. Fewer workers. Revenues generated by machines taxed at a lower rate. It doesn’t take a rocket scientist to figure out what happens.

And the GOP, knowing that even with the most powerful gerrymandering, they are ultimately going to have to accept that the demography of the United States is rapidly moving towards more urban centers, greater diversity and a continued slide in the white, rural voters. So every judicial appointment that can hold for decades (federal judges get lifetime appointments) and the current tax legislation, which has been able to pass because the GOP Senate pulled the “nuclear option” (preventing a cloture rule that required a 60 vote minimum to bring a bill to a Senate vote; a simple majority on tax reform is all that is required), will be unamendable unless and until Democrats hold a 60 vote majority in the Senate, a majority in the House and the Presidency.

In short, the GOP will control U.S. values and tax policies for a very long time, even well after they are voted out of office. Their self-fulfilling balanced budget initiative, likewise, will force government to cut social services with a meat axe to pay for these unamendable tax cuts. GOP House Speaker Paul Ryan and Senate GOP Majority Leader Mitch McConnell are openly joyful in telling the world that they intend to slice and dice both Social Security and Medicare, even as they make their constituents pay increasing premiums for what is left of the eviscerated Affordable Care Act. That, along with reduced corporate regulations, is making corporate America swoon with happiness.

With the 2016 election fueled by slogans, alternative facts, and unsubstantiated claims, with tons of “dark money” paying for the dissemination of misinformation without any limitation, even without the fully-substantiated Russian meddling, it is easy to see how the Supreme Court accelerated the great unraveling of our democracy to the highest bidders. “The United States Supreme Court held (5–4) on January 21, 2010 [in Citizens United vs. Federal Election Commission] that the free speech clause of the First Amendment to the Constitution prohibits the government from restricting independent expenditures for communications by nonprofit corporations, for-profit corporations, labor unions, and other associations.” Wikipedia.

Can this be undone? If it isn’t, it is very likely that we are witnessing the end of the United States as we know it. For those angry Trump constituents left behind by modernity, their overt joy at the collapse of traditional institutions is not good news for the rest of us. They are will-armed and want their past glory back “or else.”

Even Millennials are frustrated with government: “A strong majority of millennials — 71 percent — say the Republican and Democratic parties do such a poor job of representing the American people that a third major party is needed, according to the results of a new NBC News/GenForward poll.

“Sixty-three percent of millennials disapprove of the way President Donald Trump is handling his job as president. But millennials also hold a variety of political institutions in poor regard, and 65 percent think the country is on the wrong track overall.

“Six in ten disapprove of the way Congress is handling its job, while 59 percent have an unfavorable view of the Republican Party and 42 percent have an unfavorable view of the Democratic Party. On the whole, millennials overwhelmingly do not think either party cares about people like them.” AOL.com, December 1^st. Fewer and fewer people think our government is capable of fixing what is obviously wrong. Are you one of them? What do you think can save this country from all this polarization… effectively from itself?

I’m Peter Dekom, and if the majority of a nation’s citizens have lost faith in their government and given up hope for a better future, what do you think history teaches us?