Recently both the U.S. Senate and House of Representatives, by very narrow margins, approved a budget to clear the way for what Republican leadership calls tax reform.
The budget itself is interesting. It projects increasing the deficit by $1.5 trillion over the next decade. So much for fiscal responsibility. It also proposes cutting Medicaid by $1 trillion and Medicare by $473 billion over that same period. Perhaps this comes as no great surprise, since Donald Trump has loudly promised to sabotage Obamacare by cutting subsidies that millions of Americans rely on to obtain insurance. Yet for seniors or folks on fixed incomes, the prospect if you get sick or just grow old gets a whole lot worse under this budget.
As for why this fiscally irresponsible budget was proposed in the first place, it paves the way for promised tax cuts.
And who will benefit from these cuts? According to the non-partisan Tax Policy Center, 50% of all the benefits will go to the top 1%; those with incomes of over $730,000 per year, who are already paying some of the lowest income taxes they’ve paid in the last fifty years. These folks could see their incomes go up by an average of 8.5% next year alone if proposed tax cuts are approved.
Meanwhile, folks in the bottom 95% may experience average tax cuts of just 1.2%. And 12% of middle income folks will likely experience increased taxes due to elimination of certain deductions.
Among the deductions targeted by the GOP are those for state and local taxes – something pretty important to residents of Illinois and Iowa. Likewise, Republican leaders propose repealing deductions for medical expenses including nursing home costs: some of the very expenses likely to go up for working families due to cuts in Medicare and Medicaid.
Then there is the proposed elimination of the estate tax. Now this tax already exempts couples with estates of nearly $12 million from any tax. The GOP plan would exempt billionaires as well. Apparently they figure it is better to tax income people EARN, rather than money people simply INHERIT. So much for rewarding hard work and initiative.
And the reason for all this “reverse Robin Hood”, of taking from the struggling to give to the rich?
Well, ironically that seems to be precisely the point. For while appealing to folks’ anger and resentment, Trump and the GOP are developing policy after policy to further enrich the wealthy and large corporations. From stripping away health and environmental safeguards, to reducing worker’s rights, to undercutting government support of health care; steps are being taken to improve the bottom line for big corporations and the wealthy – including, of course, Donald Trump. The theory is that by rewarding the rich and cutting their taxes, benefits will “trickle down” in new jobs and greater pay for everyone else.
Now the trickle down theory has been around for a while. Ronald Reagan first promoted it in the 1980s. His promise of increasing revenues by cutting taxes resulted in quadrupling the national debt and massive job losses, particularly here in the Midwest as some of us vividly recall. More recently, George W. Bush’s tax cuts and deregulation from 2000 to 2008 produced the Great Recession and more job losses. In 2012, Republicans in Kansas adopted sweeping tax cuts which triggered huge budget shortfalls and cuts to schools and social services. These ultimately led red-faced legislators to enact tax increases. And just across the river, Iowa’s recent tax cuts are now causing significant budget deficits, leaving political leaders scrambling to figure out how to pay the bills.
Trickle down economics just doesn’t work. As one critic wryly put it, it’s like “feeding the birds by giving oats to the horses”.
Democracy isn’t pretty and doesn’t come for free. It’s messy and costly. But it can only work when our leaders are honest in remembering the lessons of history, AND in looking after all the people, not just the richest in our land. Without such honesty and concern for the many, everyone – including the privileged few – will ultimately lose.