Tag Archives: deficits

Shamelessness And The Tax Bill

Jennifer Rubin is a conservative columnist. Like many of the pundits on the political Right–and unlike most GOP members of Congress– she is intellectually honest. (Here in Indiana, Paul Ogden falls into that category; I often disagree with his conclusions, but I have a high degree of respect for his intellectual integrity.)

Rubin doesn’t mince words about the GOP’s single legislative “accomplishment.”

Republicans will knock a giant hole in the budget with a tax cut of $1.5 trillion, most of which goes to the rich and corporations. Rather than acknowledge their hypocrisy on the debt, they choose to misrepresent the facts.

She then provides a couple of examples, one an exchange between George Stephanopolous and  Mitch McConnell, and one between Senator Susan Collins–ostensibly the Senate’s only GOP moderate–and Chuck Todd on Meet the Press. Forgive the length of this quote, but I think it is important not to summarize or characterize.

CHUCK TODD: Alright, if the debt is unsustainable at $14 trillion, how do you, how did you make yourself comfortable voting for something that’s going to increase the deficit? This tax bill we’re at 20.6 trillion now and the best estimates saying it’s going to even the best estimates of dynamic scoring that we could still find still add half a trillion dollars to the deficit.

SEN. SUSAN COLLINS: Economic growth produces more revenue and that will help to offset this tax cut and actually lower the debt.

CHUCK TODD: Where’s the evidence? Where, explain to me. Find a, find a study that actually says what you’re claiming.


CHUCK TODD: It doesn’t exist.

SEN. SUSAN COLLINS: Let me do that. First of all if you take the C.B.O.’s formula and apply it four to four tenths of one percent increase in the GDP generates revenues of a trillion dollars, a trillion dollars. Even the joint committee on taxation has projected that the tax bill would stimulate the economy to produce hundreds of billions of additional revenue. I’ve talked four economists, including the Dean of the Columbia School of Business and former chairs of the councils of economic advisors and they believe that it will have this impact. So I think if we can stimulate the economy, create more jobs that that does generate more revenue.

CHUCK TODD: But why isn’t there a single study? I’m going to show you three studies that we have, sort of a liberal one, a centrist one, and a conservative one right up there. The most conservative one, the most pro-economic growth argument, still adds $516 billion to the deficit over ten years.

SEN. SUSAN COLLINS: Well, talk to economists like Glenn Hubbard and Larry Lindsey and Douglas Holtz-Eakin, who used to be head of the C.B.O. And they will tell you otherwise. So I think you will find that economists just don’t agree on this.

Jennifer Rubin then did what credible reporters do; she contacted the quoted economists, who told her that they had not made the statements Collins attributed to them. Both Hubbard and Holtz-Eakin said they’d told Collins that the measures would “offset but not eliminate the static budget loss.”

After confirming that even conservative Republican economists deny that the tax cuts will come close to paying for themselves, Rubin writes

This raises the question as to whether Collins and McConnell misunderstand the advice they get, choose to cherry-pick what they are given or simply don’t want to fess up that they’ve abandoned fiscal sanity in search of a political win and to soothe donors. The most generous interpretation is that they are operating with unsupportable optimism that these cuts will do something no other tax cuts have ever done– pay for themselves.

They didn’t “misunderstand.” They’re shameless and they’re lying. As Talking Points Memo reports, economists and former government officials all predict the bill will drive up the federal deficit, shrink and destabilize the health care market, make our already historic income inequality worse, and–worst of all–give Congress cover to do what Paul Ryan and his ilk have long wanted to do:  make deep cuts to the social safety net and government programs.

I’ve said it before: I don’t know how these people sleep at night.




The Horrific Truth

The GOP’s tax “reform” bill has now been unveiled. Reform it isn’t.

I guess all sentient beings already knew what was coming…but Krugman’s accurate prediction distills its awfulness.

Republicans in Congress know perfectly well that Trump is utterly unfit for office and has been abusing his position for personal gain…

If they nonetheless circle the wagons around Trump… there will be one main reason: Trump offers their big opportunity to cut taxes for the very wealthy. Indeed, the nonpartisan Tax Policy Center estimates that almost 80 percent of the Trump tax cut would go to people with incomes over $1 million; these people would get an average cut of around $230,000 a year.

Now that Ryan and crew have unveiled the plan’s specifics, there is something for everyone to hate. According to Americans for Tax Fairness, the plan jeopardizes Social Security, Medicare, Medicaid and public education; it repeals the Alternative Minimum Tax (which insures that rich people with write-offs pay at least something), slashes corporate taxes and vastly increases the deficit (whatever happened to those GOP “deficit hawks”?)

Talking Points Memo zeroed in on what it identified as the five most controversial provisions; although I agree their chosen provisions are horrible, there are arguably others that are even worse. (I’m particularly incensed by the utterly insane attack on environmentally-friendly provisions; the bill eliminates tax credits for electric vehicles, and raises taxes on clean energy.)

TPM points out that changes to the treatment of mortgage interest and property taxes will have a negative effect on the value–and sales price–of homes. Those of us who factored in these deductions when we bought a home will be selling them to people who won’t get those deductions–and won’t be willing to pay as much.

The bill eliminates a deduction for medical bills that currently only benefits very sick people with high medical costs. It will hit senior citizens and the critically ill, giving new meaning to “kick ’em when they’re down.” It will also eliminate deductions for contributions to  certain medical savings accounts, and the tax credit for companies that make drugs that treat extremely rare diseases. (Without that tax credit, even fewer pharmaceutical companies will bother…)

The enormous amount of student loan debt has been identified as a major drag on the economy, so the “reform” bill makes it worse, eliminating the deductibility of interest on those loans.

We will no longer be able to take a deduction for state and local income taxes. I’ll just leave that one here for you to ponder.

And in the “fine print,” our happy theocrats buried repeal of the  “Johnson Amendment”—the 50-year-old policy that churches lose their tax exempt status if they endorse candidates or engage in partisan politicking from the pulpit.

Repealing the Johnson Amendment isn’t the only culture war provision hidden in the dry language of tax policy. Welcome to “Fetal Personhood.”

Congressional Republicans are using their new tax plan for more than tax breaks for corporations and the rich. Their plan gives fetuses federal benefits in an apparent attempt to codify the view that life begins at fertilization—and to take another swipe at legal abortion.

Let me go on record as favoring a first-trimester abortion for this bill, which was conceived through incestuous relations between America’s plutocrats and their legislative prostitutes.

“Tax” Is Not A Four-Letter Word

As Congress takes up consideration of the tax bill of 2017–what the President and GOP have labeled “tax reform,” and what impartial observers describe as tax cuts mostly for the wealthy–it’s time for a re-run of my rant on the subject of taxation.

I’ve been particularly incensed by the appearance in Indiana of a TV spot aimed at Senator Joe Donnelly. Donnelly is a Democrat (moderate, of the Hoosier variety) considered vulnerable in 2018. The spot features a lovely young woman talking about the importance of tax reform–no specifics, no definitions, just a plea to Donnelly to support “fair” taxation.

I’m all for fair taxation, and I’m willing to bet everyone reading this is, too. I’m also willing to bet that definitions of a “fair” tax system vary widely (the devil, as we all know, being in the details). The one thing we should all recognize, however–whatever our personal opinions about “fairness”–is the difference between tax reform and tax cuts. 

As Jared Bernstein recently wrote in an article in the American Prospect,

In D.C. tax-debate parlance, “tax reform” means something specific: cutting tax rates and broadening the tax base. Rate reductions lose revenue, but you make it up by closing loopholes, exemptions, and favorable treatments of one type of income over another, thus broadening the income upon which taxes are levied.

As Bernstein points out (and we all know), most loopholes are the result of lobbying by special interests, not some disinterested analysis of their utility, making them very hard to eliminate. Even more pernicious is the belief–an article of faith in the GOP–that lower rates will generate more economic activity and thus more tax revenue. There is absolutely no evidence supporting this theory, and considerable evidence rebutting it, but it refuses to die.

In the current tax debate—no surprise—the Trump administration and the Republican Congress are predicting that their tax cuts will return large growth effects. They claim their plan—and to be clear, there is, as of yet, no plan—will increase the real GDP growth rate by at least half, from around 2 percent to 3 percent or 4 percent, and that this increase will offset much of the costs of the cuts.

This was the same story told by Reagan, Bush I, and Bush II, and in every case the results belied the claims. The most recent example, from the state of Kansas, is particularly germane to this discussion, because it reveals flaws in the same ideas being bandied about by the current Congress.

Tax policy experts estimate that the measures being discussed would cost government $6.5 trillion in revenues over ten years, and dramatically increase the deficit the GOP pretends to care about.

The vast majority of the benefits of these measures accrue to the wealthiest households: Almost 50 percent of the cuts go to the top 1 percent, while 6 percent go to the middle fifth. About 27 percent of the gains go to the 120,000 families in the top tenth of the top 1 percent, whose average pretax income is $11 million.

If anything remotely like this package passes, it will exacerbate levels of inequality that already exceed those of the Gilded Age.

According to the Brookings Institute,

this tax reform plan gives a lift to growing inequality, and signals that the GOP is okay with persistent poverty and with the inability of one-third of us to feed our kids. It’s time to ask ourselves, how do we craft tax reform for the long term—reform that tackles American poverty and inequality and creates the conditions for inclusive economic growth?

I would suggest that genuine tax reform begins with the recognition that “tax” is not a four-letter word. Taxes are the dues we pay for social peace and stability, for the myriad of services that modern societies require and their citizens demand, and from which we all benefit.

We currently have a system that incentivizes the “haves” to evade their responsibility to pay a fair share, or even to discuss what a fair share would look like. Until we have that conversation, we may see tax cuts–mostly for the already privileged– but we won’t see anything resembling genuine tax reform.



Useful Fantasies

Yesterday, I noted with some alarm the fact-free nature of the GOP debate.

A recent report from the Brookings Institution offers a useful reminder that–inconvenient or not– facts really do matter, particularly when economic policy decisions must be made.

The dog days of August have given way to something much worse. Congress returned to session this week, and the rest of the year promises to be nightmarish. The House and Senate passed budget resolutions earlier this year calling for nearly $5 trillion in spending cuts by 2025. More than two-thirds of those cuts would come from programs that help people with low-and moderate-incomes. Health care spending would be halved. If such cuts are enacted, the president will likely veto them. At best, another partisan budget war will ensue after which the veto is sustained. At worst, the cuts become law.

The putative justification for these cuts is that the nation faces insupportable increases in public debt because of expanding budget deficits. Even if the projections were valid, it would be prudent to enact some tax increases in order to preserve needed public spending. But the projections of explosively growing debt are not valid. They are fantasy.

The remainder of the article–which is well worth reading in its entirety–explains that projections of deficits result from the use of “conventions” (assumptions) that do not reflect current reality, and are evidently not intended to do so.

I do not pretend to understand the utility of these conventions for budgetary purposes, but   to the extent they produce “projections” that do not reflect reality, their use as ammunition in the effort to reduce government to a size that can be “drowned in a bathtub”–to use Grover Norquist’s phrase–is pernicious.

But what if we did face persistent deficits?

The assumption seems to be that the only avenue open to policymakers would be budget cuts. It’s as if we have taken tax increases off the table–despite the fact that America’s tax rates are historically low, America’s wealthiest enjoy a wide range of unconscionable tax loopholes, and America’s most profitable corporations continue to evade taxes by parking their profits offshore.

I don’t understand the dogged determination of the “morality party” to ignore the facts in order to protect the perquisites of the already advantaged at the expense of those who have little or nothing.

Another Year

How does that old song go? “Another year older and deeper in debt”? That could be our new national anthem, since it captures both our moral and fiscal deficits.

As I write this, Senate Republicans have refused to allow a vote on repealing “Don’t Ask, Don’t Tell,” and prospects for bringing it back to the floor before the conclusion of the lame-duck session are iffy, at best. This intransigence has persisted despite the fact that the Secretary of Defense and most of the highest-ranking military officials have testified in favor of repeal, and despite the fact that polls show a sizeable majority of Americans in favor of allowing gays and lesbians to serve openly.

Before you shake your head about the persistence of homophobia, however, let me remind you that the gay community hasn’t been singled out. Senate Republicans have also refused, once again, to fund medical care for the brave men and women who were first responders on 9/11. I don’t use the word “hero” very often, but that’s what these firefighters, police officers and medics were. They braved the inferno that was the Twin Towers in order to rescue those inside, and they are now suffering from injuries and illnesses caused by that rescue operation.

The refusal to repeal DADT is excused by mumbling “unit cohesion.” The refusal to provide desperately-needed medical care to first responders has been justified by several Senators on the basis that the expense would add to the deficit.  They have cited the same excuse for their refusal to extend unemployment benefits for the millions of Americans who still cannot find work.

The elephant in this room filled with elephants is tax breaks for American families earning over 250,000 a year. As Obama correctly noted in a press conference where he tried to explain his capitulation on the issue, the Senate GOP was holding these measures—and many others—hostage to their insistence that the richest 2% of Americans retain the favorable tax rates they received from George W. Bush.

It is true that helping first responders and unemployed people would cost money. But extending the Bush tax cuts for the wealthy will add billions more to the deficit than those measures would. Furthermore, unemployment benefits put dollars in the hands of people who immediately spend those dollars, and thus stimulate the economy. (People defend our historically low tax rates for the rich by claiming those dollars will be spent to create jobs; however, the evidence shows otherwise.)

So here we are, ending the first decade of the 21st century facing moral and fiscal bankruptcy.

Our government is broken; it now takes sixty votes to get any measure through the U.S. Senate, making a mockery of democracy and majority rule, and allowing a cohesive and determined minority to hold the nation hostage to the demands of the greedy and privileged. The income gap between rich and poor is wider than it has been since the gilded age, and the strain that gap places on our civic fabric is immense.

This is the environment within which we enter the New Year, and this is the environment within which gay citizens must work to achieve equal rights. It isn’t just DADT repeal—history has plenty of examples of what happens to minority groups during periods of national upheaval and fiscal distress. When times are tough, people look around for someone to blame.  In Germany, before WWII, it was the Jews. In the U.S. today, it is gays and immigrants.

People have asked me, over the years, why I advocate for equal rights for gays and lesbians. My answer has always been the same: I’m selfish. I want equality for myself, and I understand that only in a country where everyone is equal can anyone be equal. But the flip side of that is equally true. Gays and lesbians cannot achieve equality in an unequal and inequitable system. We are all in this together.

Happy New Year. I guess.