Trump Top Priorities
Of course we know President Trump wants to build a border wall. Yesterday he threatened to shut down the government over funding for it. But that’s not his Administration’s only priority. Secretary of the Treasury Steve Mnuchin announced that they’re studying whether they can provide another $100 billion tax break to the richest Americans. They want to reduce the taxes on capital gains by adjusting the original purchase price of items like stocks or real estate for inflation when it is later sold. Now, if you sell stocks that originally cost $1 million for $10 million decades later, you pay taxes on the $9 million gain. The Trump Administration wants to adjust the original $1 million by an inflation factor – maybe that would raise it to $3 million, so you’d only pay taxes on $7 million.
Using “you” in that explanation was only a figure of speech, because it is not likely that too many of our readers are in the economic stratosphere that would benefit from such a change. Nearly two-thirds of the benefit would go to the top one-tenth of one percent (those individuals have average incomes exceeding $1 million; their net worth is over $43 million).
Secretary Mnuchin is exploring whether the Administration can make this change on its own, without Congressional action. That was considered and rejected as beyond its executive authority by the first Bush Administration in 1992. But whether or not it is constitutional, it is head-smackingly not what our economy needs right now.
According to the Wharton School of Business’ economic model, this proposal would cost $102 billion over a decade, with 86 percent going to the top one percent. (These individuals have income exceeding $300,000, on average, and net worth over $10 million; as the figures above for the top one-tenth of one percent show, the extra tax cut will be very heavily concentrated among the super-rich.) This is not a group that has lacked for tax breaks or income gains lately. The corporate tax cuts passed last year have largely gone to wealthy shareholders and CEO’s in the form of stock buybacks. Americans for Tax Fairness reports that 350 corporations have announced stock buybacks totaling $617 billion since the tax cuts passed.
Shoveling all this income to the super-rich was supposed to create economic growth that would help all of us. Not so far. Despite claims that workers’ wages would grow, that $617 billion in stock buybacks is 88 times the $7 billion promised to workers in pay increases. Wages have remained flat over the past year despite the 4 percent economic growth reported for the last quarter. There have been economic gains, but they have not been shared. They have increased wealth at the top, and now the Trump Administration wants to increase that wealth even more.
The Trump Administration has doubled down on the view that giving more to the wealthiest among us causes them (or their money) to work harder, while the poor work harder only if you give them less. While they are trying to give more unilaterally to shareholders, they are trying – also unilaterally – to give less to people receiving Medicaid. They’ve given approval to Kentucky and Arkansas to require those covered by Medicaid to document work activities or allowable exemptions. A court has ruled against that approval in Kentucky, finding that the work requirements were contrary to the basic purpose of Medicaid, which, unsurprisingly, is to provide medical care to qualifying low-income people. In Kentucky, initial estimates were that nearly 100,000 people would lose benefits as a result of the work requirement, which does sound plenty inconsistent with Medicaid’s basic purpose. Secretary of Health and Human Services Alex Azar has stated the Administration’s intent to reinstate Kentucky’s work requirements and to approve them elsewhere.
In Arkansas, the work requirements have not yet been ruled upon in court, and they have started to take effect. The Center on Budget and Policy Priorities reports that out of the 8,000 people not judged exempt from the work rules, fewer than 1,000 successfully documented their work in the first month. Many of them were working, but couldn’t get through to the state’s online system, which is the exclusive way recipients can communicate with the program. About half of Medicaid enrollees in Arkansas either do not have any internet access, or do not have broadband access. The state’s website is not mobile phone-friendly, so many enrollees cannot see the site clearly in order to respond. All those who did not respond are subject to a “three strikes and you’re out” policy, and this was their first strike.
So here’s the contrast: after close to $2 trillion in enacted tax cuts largely benefiting the wealthy, Trump wants to provide $100 billion more, overwhelmingly benefiting the wealthy. In the Medicaid program, Trump wants to deny Medicaid to non-elderly enrollees who are not otherwise deemed exempt if they cannot show enough hours of work. The Administration is not making additional funds available for training, apprenticeships, supported work, or child care.
What is the evidence for the likely impact of these priorities? Well, so far in addition to the multi-billion dollar gains for shareholders, we’ve seen a stunning 30 percent decline in corporate tax revenues and continued wage stagnation. The loss of revenues will deepen the deficit, leading to louder calls among Congressional Republicans for cuts in Medicaid, SNAP, and many other programs. On the other hand, the Economic Policy Institute cites data to show that nearly half of workers potentially subject to Medicaid work requirements have worked fewer than 80 hours in at least one month during the prior year. Unstable work hours are a fact of life for low-wage workers. If they lose Medicaid because of that instability, how does that help? Nothing about the loss of Medicaid (or SNAP, or housing subsidies) is likely to improve a worker’s chance of finding stable employment. But it is possible that the inability to get medical care, or food, or affordable housing, could lead to illnesses or life crises that interrupt already unstable work. When you are on call for work and are too sick to show up, you get called less often.
In the coming days, we’ll show you how you can comment on the impact of Medicaid work requirements. Or if you’re ready now, here’s the online portal to post comments on the Kentucky waiver request: https://public.medicaid.gov/connect.ti/public.comments/answerQuestionnaire?qid=1897699.