For President Trump and his allies in Congress, there is nothing more important than giving tax cuts to rich people and corporations

By

October 10, 2017

Tax cuts for the rich are more important than helping people in a disaster:  President Trump’s top budgeteer, Office of Management and Budget Director Mick Mulvaney, made a name for himself as an extremist when, as a member of Congress, he tried to insist that no aid for Hurricane Sandy victims be made available unless it was paid for by other cuts in the budget.  He said at the time, “The time has come and gone in this nation where we can walk in here one day and spend nine or 17 or 60 billion dollars and not think about who’s paying for it.”  But that time has apparently come back again, at least for Mr. Mulvaney.  Justifying tax cuts that increase the deficit, he said: “We need to have new deficits because of that. We need to have the growth…If we simply look at this as being deficit-neutral, you’re never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth.”  So billions in emergency funding for disaster relief isn’t something to increase the deficit over; trillions in tax cuts are.

Voicesblogicons

President Trump takes a similar tack.  In his paper towel-tossing visit to Puerto Rico, he said, “I hate to tell you, Puerto Rico, but you threw our budget a little out of whack. But that’s fine.”  He didn’t express concern about how much his multi-trillion dollar tax cut proposal would throw their budget out of whack.  It is undeniably good that President Trump says relief for Puerto Rico is “fine,” even if it does add to the deficit, but the proposed amounts so far are a very small fraction of the cost of the tax cuts.  Some of the right wing members in the House are very clear about their priorities:  Rep. Andy Harris (R-MD), on whether to pay for additional disaster relief: “Yes, absolutely, all of it…It’s not fair to pass that debt to our grandchildren.”

Tax cuts for the rich are more important than debt for our grandchildren: Rep. Harris, as noted above, worried about debt for our grandchildren when it comes to paying disaster relief.  So did Senate Finance Committee Chair Orrin Hatch, for instance in 2011 when he voted against a bipartisan deal to reduce the deficit, because it didn’t cut spending enough.  “We can’t live with that and have something left for our children and our grandchildren,” he said.  But now, he joins OMB Director Mulvaney in throwing over those concerns when it comes to tax cuts: “Sometimes it means we might have to have a deficit to create the economy that will explode.”  And so that’s what the Senate Budget Committee has just approved:  to pay for the all-important tax cuts in part with borrowed money: $1.5 trillion in increased deficits are okay, if it’s for tax cuts.

Tax cuts for the rich are more important than Medicaid, Medicare, education, aid to the poor and people with disabilities, housing assistance, public health and environmental protections…Both the House and Senate budgets would cut most domestic programs over the next ten years, while setting up a procedure to let trillions of dollars in tax cuts pass in the Senate with a simple majority vote.  These budget documents are more like outlines than detailed spending plans.  But their bottom lines are clear: The House budget that passed last week would cut Medicare and Medicaid by nearly $2 trillion through 2027, as compared to current law.  It would cut other basic living standards programs (including SNAP/food stamps, low-income tax credits, and assistance for people with disabilities) by nearly $2.5 trillion.  It would cut domestic/international appropriations (housing, education, job training, public health, environmental protection, etc.) by $1.3 trillion over the same period.  The House says its tax cuts will stimulate economic growth, and that will bring in more tax revenues.  But their numbers certainly do not show the tax cuts paying for themselves.  They need trillions in service cuts to get the budget to balance over ten years.

The Senate Budget Committee’s budget also proposes massive cuts: $4.3 trillion in programs like Medicaid, Medicare, SNAP, low-income tax credits, and $632 billion in domestic/international appropriations.  They cut programs a little less than the House because they are more honest about assuming an increased deficit.  But that should be cold comfort to people who care about meeting human needs.  President Trump and his followers in Congress may not care about the deficit when it comes to tax cuts, but they’ll be right back worrying about it when looking at spending.  Over the next decade, there will be repeated cries to cut services because of the looming debt.

Why are tax cuts more important than everything else?  President Trump denies it’s because he stands to gain so much.  After the new tax outline was released by the Administration and House and Senate Republican leadership, the President insisted “I don’t benefit, no…My plan is for the working people, and I think very, very strongly, there’s very little benefit [in it] for people of wealth.”  This of course is not true.  If nothing else, the repeal of the estate tax will provide billions to the richest families.  The Brookings-Urban Institute Tax Policy Center estimates that by 2027, about 80 percent of the whole plan’s benefits go to the top 1 percent (with incomes up to $912,100); their tax break will average $207,060.   The top one-tenth of 1 percent (with incomes exceeding $5 million) get nearly 40 percent of the tax cut, with their tax cut averaging more than $5 million.  While the middle class gets something, it’s not a lot:  the middle fifth, with incomes between $54,700 – $93,200, would get an average tax cut of $420 in 2027.  Maybe that would pay for one car repair from hitting a big pothole (made more numerous by federal cuts to road repair), although maybe it wouldn’t even cover that.  It wouldn’t cover a private school if you found the class sizes in your child’s public school too large.  And as for the bottom fifth (incomes up to $28,100), your average tax break is $50.  Not a big win for you.

This handout to the rich and to corporations is supposed to be of paramount importance because it will make the economy “explode” with growth, in Senator Hatch’s words.  Most economists are skeptical.  Lawrence Summers points out in the Washington Post that corporations now have very low capital costs with large hoards of cash in the U.S. (in addition to their large hoards of cash sheltered overseas).  They have very favorable conditions to invest in expansion now, and they’re not doing it.  In order to invest more, they need more customers and an educated work force.  Without public investments in the conditions for growth, bigger tax breaks for corporations will jack up their stock, increase dividends for shareholders, and raise CEO pay.  That’s not the economic growth we need.

But that’s what we’re headed towards if the full Senate votes for its budget plan during the week of October 16.  They only need a simple majority to pass the budget resolution, but, as we’ve seen over health insurance, they haven’t always been able to get a simple majority.  But, like the health care fight, stopping something really bad depends on constituents telling their senators, Hands off my health care/child care/schools/nutrition aid/road repair.  Don’t sacrifice these real investments in our prosperity by passing out trillions in tax breaks to people and corporations who don’t need them.  Tweet it, make a call, send an email, write a letter to the editor, attend a forum – any or all, your voice is needed to show you know there are a lot of things more important than an inequitable, unaffordable tax cut – and you’re paying attention to what your senators choose.



Categories: Budget and Appropriations, Tax Policy

Tags: , ,

Leave a Reply

No comments yet.