Left Side: The GOP Tax Plan
The GOP tax bill is nothing but a massive giveaway to the ultra rich—at the expense of the middle class
President Trump told a lot of whoppers during his first year in office, but the biggest lie of all was his claim, in mid-December, that the GOP tax plan was “one of the greatest Christmas gifts to the middle class.”
In private he was more honest. Shortly after signing the legislation, he celebrated with some of his wealthiest friends at his Mar-a-Lago Resort. “You all just got a lot richer,” he told the gathering, according to two people who were there.
An even more accurate statement would have been, “We just got a lot richer,” since the president himself will be one of the big beneficiaries, according to many analysts—among them, Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center.
“Trump will make out like a bandit …,” Rosenthal told New York Times columnist James B. Stewart.
The president denies this, of course. But his denials are foolish. The objective of the tax plan—to benefit the wealthiest 1 percent of the country’s population—is not only obvious; it is based on a long-cherished philosophy of the far right: the notion that lowering taxes for the ultra rich will stimulate the economy by encouraging investment. Prior to the Reagan era, mainstream Republicans rejected this idea. The most famous among them was George H.W. Bush, who memorably called the idea “voodoo economics.” Today, however, Reagan is regarded as a kind of demigod by the far right, and his “trickle-down” argument as supreme gospel. With this in mind, Trump would have lost no support had he publicly admitted who the true beneficiaries would be.
The trouble is, Bush was right. Reagan and his economists had argued that the “supply-side” approach would not increase the national debt since it would result in greater production. In fact, the national debt nearly tripled under Reagan, and the United States went from being the world’s largest creditor nation to the world’s largest debtor.
During the 1950s and early ’60s, by contrast, the top tax rate was 91 percent. And what happened as a result? The middle class flourished like never before or since—as did the economy overall.
In 1965, the top rate was lowered to 70 percent and remained in that vicinity until the Reagan era. By 1988, the top rate on regular income was a mere 28 percent.
The upshot of this was that income inequality grew dramatically during this period. By 2014, the richest 1 percent controlled more wealth than the bottom 90 percent.
The new tax bill will further aggravate this problem. For one thing, according to the Congressional Budget Office, it will add more than $1.4 trillion to the deficit over the next decade. The Republican response to this analysis is, “Don’t worry. Tax reform will more than make up the deficit by stimulating the economy.”
That promise fell flat in the ’80s, and it will fall flat again—at which point Republicans will once again step up their attacks on Medicare and Social Security as the “fiscally conservative” thing to do.
It is true—or appears to be—that some segments of the middle class will reap small benefits in the short term. But if the radical Republicans continue to have their way, countless people will suffer in the long run. An extra thousand bucks at tax time, after all, won’t amount to much if the social safety net is shredded and the country becomes an even bigger debtor.
The hypocrisy is mind-boggling. When Bernie Sanders was proposing Medicare for all, not to mention free college tuition, he was routinely drowned out by the cry, “How are you going to pay for it?!”
The answer is simple: Unlike tax schemes that lavish even more wealth on the ultra rich, creating a healthier and better educated populace will strengthen the economy. That anyone would dispute this is absurd. It is a self-evident truth.
But here’s the thing: I suspect that most Republicans in Congress know this. They have no interest in “making America great again”; they have one objective and one alone: to maintain wealth and power for themselves and their cronies. The most effective way to do that, in addition to giving themselves this “Christmas gift,” is by keeping the struggling masses in a constant state of apprehension, while rewarding them on occasion with promises of scraps. I can think of no better visual metaphor for this than the disgusting image of Trump tossing paper towels to hurricane survivors in Puerto Rico. He enjoys seeing people beg.
So, what’s the alternative? I hate to say it, but the current leadership of the Democratic Party doesn’t give me much encouragement. Ever since the Clinton Administration, the party—with its embrace of so-called neo-Liberalism—has been essentially Republican-lite. Dwight D. Eisenhower was practically a socialist by comparison.
If this country is ever to see the middle class grow and thrive again, we must reclaim the great tradition that was established by FDR: the wellbeing of our citizenry must come first. That means, among other things, raising the top tax rate to pre-Reagan levels. By doing so, we would reduce the national debt, thus making Sanders’ proposals—which, by the way, were first proposed by FDR in 1944 in his so-called “Second Bill of Rights”—easier to implement.
Indeed, it is worth considering FDR’s proposal in a little more detail.
“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence,” he said. “Necessitous men are not free men. People who are hungry and out of a job are the stuff of which dictatorships are made.”
With this in mind, he enumerated various rights that every American should have: “The right to a useful and remunerative job; the right to earn enough to provide adequate food and clothing and recreation; the right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies …; the right of every family to a decent home; the right to adequate medical care; the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment and the right to a good education.
“America's own rightful place in the world,” he said in closing, “depends in large part upon how fully these and similar rights have been carried into practice for all our citizens. For unless there is security here at home there cannot be lasting peace in the world.”