Can the GOP Maintain a Central Economic Policy that Only Represents the Richest of the Rich

 

“We’re going to make it economical to raise children again. Flatter rates will mean more reward for that extra effort, and vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.”                   Ronald Reagan on his tax reform act of 1986

There’s a solid reason the Republican Party has opened up a new emphasis on “culture wars.” The writing is on the wall as the new Census results conclude that the white population is aging and has fallen to its smallest share of the total population on record. The GOP track record on the pandemic may please a portion of that decreasing white population, but most of the nation believes that denial of medical science and climate change are wrong-headed. So, the GOP is focusing on word-driven cultural shibboleths that resonate with a contracting Trumpian base (as I have noted in earlier blogs): “creeping socialism,” “woke,” “cancel culture,” “critical race theory,” “patriotism” applied to domestic terrorists, “Trump clearly won,” “voter fraud” or “election security” and “Democrat radical leftists.” Other than a generic objection to government spending, the GOP is devoid of any semblance of an economic policy that would generate economic reforms to benefit everybody.

But isn’t/wasn’t Trump the uber-successful businessman/stable genius and the GOP the masters of the economy? The economy tanked during the Trump years, mostly by reason of the pandemic he did not cause but miserably mismanaged, and the 2017 massive corporate tax cut not only failed to produce the promised jobs even before the pandemic but instead slammed the economy with a trillion dollar plus deficit with no chance of recouping that loss. So, maybe a distraction into culture wars might divert the nation’s attention to get more Republicans elected. It’s what Trump wants to see. But what was the GOP claim to fame in economic policy? Many believe the modern GOP economic era began with Ronald Reagan.

In 1981, Reagan believed that cutting taxes was the only path to restart a very slow-moving economy. “Reagan inherited an economy mired in stagflation, a combination of double-digit economic contraction and double-digit inflation. He aggressively cut income taxes from 70% to 50% for the top tax bracket to combat the recession. He cut the corporate tax rate from 46% to 34%... He promised to slow the growth of government spending and to deregulate business industries. At the same time, he encouraged the Federal Reserve to combat inflation by reducing the money supply.” TheBalance.com. While the economy rose slightly, the massive resurgence the Reagan administration believed would occur… did not. 

And then there was an awareness that while the GDP rose, it was primarily because rich people were making a whole lot more, but poverty levels and working/middle-class income stagnation persisted. Many believe that these initial tax cuts were the beginning of the massive income inequality that has so infected the nation today; the top 1% of America owns as much at the bottom 60% combined with one of the lowest corporate income tax rates since corporate income tax was first imposed. Even Reagan began to notice this rising discrepancy in 1986.

“In the middle of his presidency, then-president Ronald Reagan learned that a number of big corporations, including his former employer, General Electric, were completely escaping paying federal corporate income taxes. ‘I didn’t realize things had gotten that far out of line,’ Reagan told his Treasury secretary, Donald T. Regan, according to his 1988 memoir.

“So Reagan undertook a comprehensive tax reform effort that actually raised the corporate taxes and closed numerous loopholes that allowed big firms to dodge their tax responsibilities. As part of these reforms, Reagan passed the 1986 Tax Reform Act. This law raised corporate taxes by $120 billion over five years and closed corporate tax loopholes worth about $300 billion over that same period.” From the Achieves of ThinkProgress.org. Reagan raised taxes? He sure did.

Like so many have learned since, including Reagan himself, reducing taxes to incent corporations and rich people to create instantly solid high paying jobs was simply not the way rich people dealt with windfall revenue. They called it “Reaganomics,” “Supply-side” or “Trickle down” economics, proselytizing that a “rising tide floats all boats.” It has since become the only constant economic plank in the Republican Party, and it has never worked anywhere. Ever. Still, it just sounds so good…

One of our most basic tax code issues resides with the fact that we tax dollar revenues but rather dramatically do not routinely tax wealth. There are a number of proposals from highly placed Democrats that insist that we correct that anomaly. Michael Grothaus, writing for the August 12th FastCompany.com, explores this notion within the context of income inequality that widened so much more during the pandemic:

“While the global COVID-19 pandemic has been devastating for most people in the world, for a select group of people it has been a boom time: billionaires. That group has seen their wealth skyrocket by a combined $5.5 trillion since the beginning of the pandemic, according to data from Oxfam, the Fight Inequality Alliance, the Institute for Policy Studies, and the Patriotic Millionaires. And it’s those groups that are now calling for a one-time tax on billionaires to help stem the devastating health and economic impact of the pandemic on the rest of the people on the planet.

“The groups are calling for a one-time 99% tax on the wealth that billionaires accumulated during the pandemic, which would raise $5.4 trillion, which in turn would cover the cost of fully vaccinating every person on the planet while also cover giving a $20,000 cash grant to everyone on the planet who has become unemployed during the pandemic.

“If a 99% tax on billionaires’ pandemic wealth gains seems like a lot, Oxfam and the other groups point out that even after the one-time tax, the world’s 2,690 billionaires would still be $55 billion richer than before the pandemic ravaged the globe.” Indeed, post-WWII rebuilding in war-ravaged countries generated a one-time wealth tax in many recovering nations. It was absolutely necessary. 

Given the numbers here in the U.S., it seems necessary and fair to begin to tax wealth, one-shot or every tax year. “[Even pro-tax-increase millionaires] point out that billionaires’ wealth has increased more over the past 17 months than during the last 15 years combined, and since the outbreak of the pandemic the world has minted 325 new billionaires.

“‘Billionaire Jeff Bezos could personally pay for enough vaccines for the whole world, yet he would rather spend his wealth on a thrill ride to space. COVID-19 is turning the gap between rich and poor into an unbridgeable chasm, Max Lawson, Oxfam International’s global inequality policy lead, said in a release calling for the creation of a one-time wealth tax. ‘The obscene levels of wealth gained from the pandemic by a handful of mega-rich individuals should immediately be taxed at 99%―enough to fully vaccinate everyone on Earth and help millions of workers who lost their jobs due to COVID-19. Only with this kind of radical and progressive policy making will we be able to fight inequality and end poverty.’” FastCompany.com. 

In the end, those with way, way too much, the ultimate beneficiaries of a capitalist-friendly form of government, really will not be seriously inconvenienced to cover the necessities for those with way, way too little. “Let them eat cake” is not sustainable. Do billionaires really feel safe living so far above the rest? 

I’m Peter Dekom, and it would seem to be in everyone’s best interest to reconfigure an economy that is so completely unfair to the vast majority of its citizens.