Ever since Trump’s abominable “Big Beautiful Bill” emerged from the House, we’ve been buried in analyses of what it will do–essentially, rob the poor to further enrich the obscenely wealthy. But I continue to think about the initial reaction of Paul Krugman. What did this Nobel-prize-winning economist think in the immediate aftermath of the House passage?
Krugman began by noting that he’d expected House Republicans to pass this “surpassingly cruel, utterly irresponsible budget” in the dead of night, in an effort to escape notice. And as he said, “they tried! Debate began at 1 A.M., and if you think that bizarre timing reflected real urgency, I have some $Melania coins you might want to buy.”
The House has now passed what must surely be the worst piece of legislation in modern U.S. history. Millions of Americans are about to see crucial government support snatched away. A significant number will die prematurely due to lack of adequate medical care or nutrition. Yet all this suffering won’t come close to offsetting the giant hole in the budget created by huge tax cuts for the rich. Long-term interest rates have already soared as America loses the last vestiges of its former reputation for fiscal responsibility.
What struck me most about Krugman’s reaction to this massively irresponsible–indeed, evil–budget was his enumeration of what that budget ought to look like. Krugman isn’t one of the “fiscal scolds” who want to eliminate all deficit spending, but he is worried that the U.S. is on an unsustainable fiscal path–a path that this horrific bill will worsen. He acknowledges that the path to fiscal sanity will require some hard choices and tradeoffs. But he also insists that we could immensely improve our current situation with a series of easy choices, “actions that would mainly spare the middle class and only hurt people most Americans probably believe deserve to feel a bit of pain.” He proceeds to list four of them.
First, get Americans — mainly wealthy Americans — to pay the taxes they owe. The net tax gap — taxes Americans are legally obliged to pay but don’t — is simply huge, on the order of $600 billion a year. We can never get all of that money back, but giving the IRS enough resources to crack down on wealthy tax cheats would be both fiscally and morally responsible, since letting people get away with cheating on their taxes rewards bad behavior and makes law-abiding taxpayers look and feel like chumps.
As he notes, Republicans are doing the opposite, by starving the IRS of resources and trying to make tax evasion great again.
Second, we could crack down on Medicare Advantage overpayments. The insurance companies running Medicare Advantage game the system and get overpaid; one recent estimate found that Medicare is at risk of overpaying Medicare Advantage plans between $1.3 trillion and $2 trillion over the next decade.
Third, Krugman advises going after corporate tax avoidance, especially by multinational firms using strategies to make profits that are earned in the United States look as though they were earned in low-tax nations like Ireland. “Such maneuvers cost the Treasury around $70 billion annually.
And finally,
We should just get rid of Donald Trump’s 2017 tax cut. That tax cut wasn’t a response to any economic needs, and there’s not a shred of evidence that it did the economy any good. All it did was transfer a lot of money to corporations and the wealthy. Let’s end those giveaways.
Would doing all these things be enough to put America on a sustainable fiscal path? Honestly, I don’t know. But they would make a good start toward putting our fiscal house in order. And none of them would involve the “hard choices” fiscal scolds tell us we need to make.
As Krugman concludes, the politicians who aren’t even willing to do these things have no business lecturing anyone about fiscal responsibility.
Krugman doesn’t speculate about why we don’t do the “easy” things, but I will. We don’t do them because we have elected people who don’t consider themselves representatives of the people who voted for them, but obedient servants of the plutocrats who funded them. And nothing will change until enough of those voters send an unmistakable message to the cowards and quislings that “time’s up.”
I’ve previously quoted a scholar whose research suggests that peaceful protests by 3% of a population are enough to send that message. That translates to something like ten million people. Our next chance to achieve that goal is No Kings Day, tomorrow.
Please participate. Time is running out to save the America we thought we inhabited….
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