Tax Cuts, Guns and COVID-19

“Fanaticism consists in redoubling your efforts when you have forgotten your aim.”

“Those who cannot remember the past are condemned to repeat it.”

Two famous quotes from Spanish philosopher George Santayana (1863-1952)

The recent run on gun sales says a lot about the United States and the expectations of a significant bloc of its citizens. Protecting what you’ve got from those you anticipate might take it from you by force… or organizing to impose your will on others. There are few others who buy guns for sporting purposes or hunting… but they’re not the ones buying guns now.

We’ve witnessed the rise of gated communities, added to those chi chi apartments in major cities with doormen and other reflections of fear and security, since the 1980s. By 1997, there were 20,000 new such communities in the United States, bringing the total to 30,000, containing an estimated 4 million people. Today, even conservative estimates place that number, hard to gauge because there are no objective statistics kept, at least at 8 million. Wikipedia. For those who are so gathered for safety, such gated communities just might highlight where desperate people can find the stash of wealth they seek… armed to the teeth in a society with well over 300 million guns, including (according to the NRA) at least 15 million semiautomatic AR-15 assault rifles. “One for all”? When exactly did that American core value die?

What is uplifting in all of this addresses those in the trenches dealing with COVID-19, contrasting themselves severely from those at the top making the situation so much worse. Healthcare professionals, putting themselves in harm’s way under government failures to provide them with treatment options and supplies or even the most basic self-protection equipment. First responders. Grocery stores. Folks keeping our power grid online, our water and sewer access working and our mail and package delivery systems running. Folks cheering each other with communications and funny emails and social media posts. It’s a long list… but our most senior federal government officials are not on that list.

Let’s start with that most uncommon sense: common sense. We have idiots in Washington, screaming against creeping “socialism” (not understanding the difference between social programs and the government owns everything socialism), finding ways to funnel massive economic benefits to corporations and the mega-rich that will be paid for by everybody. Look at that second Santayana quote above. And remember whenever you see a government policy based on tax cuts, run! They have never worked. There is a difference between tax cuts… and debt relief from unpaid taxes caused by crises not under the control of the taxpayer. A really important reality that some conflate with each other.

Even Donald Trump’s closest economic advisor, a former TV business anchor, knows tax cuts do not work. “We’re not going to panic over this at all, because the economy is sound, and we will get through this, and then the virus will end. Secondly, frankly, short-term fixes never work. You know, these temporary tax cuts or rebates and things of that sort. You look at the history – I mean I’ve lived with this for decades… they will never work.” President Trump’s closest economic advisor, Larry Kudlow, in Bloomberg Businessweek, March 9th. But still, tax cuts are the Trump administrations primary tool to battle COVID-19, at least what they think will reverse the economic devastation that could cost them the November elections.

The notion that if you reduce taxes for the rich, that “supply side” economic benefits will “trickledown” dollars to create jobs and overall social benefits, is one of the most disproven theories of modern economics. It failed during the Ronald Reagan era (he ultimately had to raise taxes), failed in Kansas when the corporate tax cut destroyed the public-school system (and the GOP legislature has to restore the taxes), the 2017 massive federal corporate tax cut produced buybacks and merger/acquisitions but very few solid jobs… just a massive deficit hit. Remember, tax cuts benefit those who pay the most taxes far and away more than anyone else. And those making lots of money are often obsessed with not paying taxes. Logic would tell you that if you want to create jobs, particularly in a time of crisis, why not just… er… create jobs? Why do lawmakers think that they have to subsidize rich people to create jobs indirectly? History tells us that such efforts just do not work.

At least pay the workers! “[The] Danish government told private companies hit by the effects of the pandemic that it would pay 75 percent of their employees’ salaries to avoid mass layoffs. The plan could require the government to spend as much as 13 percent of the national economy in three months. That is roughly the equivalent of a $2.5 trillion stimulus in the United States spread out over just 13 weeks.” The Atlantic, March 21st. The difference is the US federal focus on companies… versus the need to focus on people. Want some short term “obvious” solutions using this logic? During the COVID-19 crisis? Try MSNBC’s Stephanie Ruhle’s suggestion: let everyone skip one month paying all their bills. Simple. Stop overcomplicating! Government’s indirect “incentivizing” policies just might be a bigger part of the problem, not the solution.

Likewise, when the Federal Reserve keeps interest rates low, it benefits those who borrow the most – usually financial types who use leverage in lieu of increasing productivity as their basic financial value “growth” tool – and punish savers who depend on interest for long-term security. Just take a good hard look at who really benefits from the litany of pro-business, pro-rich governmental policies. It just might explain why income inequality in the United States has never ever been this extreme here and is the worst in the entire developed world.

COVID-19 will pass. Too many worldwide will die. Too many businesses will never return. Too many workers, staggering from income loss and perhaps residual debt, will step back into an economy that may or may not have a place for them in a recovery period. If we rely on tax cuts and federal lending rate reductions, too many of those folks will not find comparable post-coronavirus employment. All those programs favored by the GOP to bailout corporations, giving little more than token payments to average Americans, will only decimate the deficit even more than that inane 2017 tax cut.

We seem to forget that we were facing even bigger, longer-term threats to our existence before this pandemic. Climate change is accelerating. Try getting a 30-year mortgage on coastal homes in southern Florida. We are also facing a shift in job skills as artificial intelligence and the associated automation continue to redefine the value of labor, what high paying jobs will still be available. Time to rethink how to restore America after COVID-19. Not through tax cuts for sure. If the government is bailing out industries, time to put increasing ownership into the hands of the individual workers in those companies. But what we really need is an FDR-Great Depression solution New Deal. Here are two components of his plan, which clearly have to be modernized to contemporary standards and gender equality to work today:

1. “The Works Progress Administration (WPA) was an ambitious employment and infrastructure program created by President Roosevelt in 1935, during the bleakest years of the Great Depression. Over its eight years of existence, the WPA put roughly 8.5 million Americans to work.” History.com.

2. “The Civilian Conservation Corps (CCC) was a voluntary public work relief program that operated from 1933 to 1942 in the United States for unemployed, unmarried men. Originally for young men ages 18–25, it was eventually expanded to ages 17–28… The CCC was a major part of President Franklin D. Roosevelt's New Deal that provided manual labor jobs related to the conservation and development of natural resources in rural lands owned by federal, state, and local governments. The CCC was designed to provide jobs for young men and to relieve families who had difficulty finding jobs during the Great Depression in the United States. Maximum enrollment at any one time was 300,000. Through the course of its nine years in operation, 3 million young men participated in the CCC, which provided them with shelter, clothing, and food, together with a wage of $30 (equivalent to $590 in 2019) per month ($25 of which had to be sent home to their families).” Wikipedia.

Let’s upgrade, repair and expand our infrastructure. Let’s get more teachers in our public schools to reduce average class size to under 20. We have needs. Our people will have post-COVID-19 needs. Putting money into education and infrastructure are not expenditures; they are investments in our future with a really hard dollar economic rate of return. Just remember that all those massive hydroelectric power-generating dams built under that New Deal wound up being the tipping point to our victory in WWII. We could build military equipment and arms like no other because of our overabundance of electrical power. That same overabundance of electrical power also enabled our massive post-WWII economic explosion. Remember history!

 

            I’m Peter Dekom, and we’ve been here before, we know what has worked before, and if we just get the idiotic and failed governmental policies out of the way, we can survive and thrive after COVID-19 fades into the history books.