Well, well, here comes the tax bill, all tied up in a nice red bow for Christmas. That’s “red” for the deficits its authors admit it will create (not to mention the much larger ones every other economist predicts it will generate). Also “red” as in “red-faced” for the duplicitous behavior of those behind this irresponsible law.
Not that the outcome was ever in doubt. As I have written before, tax cuts – especially for the wealthy and corporations – are the sine qua non of Republican governance: the essential reason the circus that is the Trump-McConnell-Ryan Express rolled into town. Unlike efforts to repeal the Affordable Care Act, the “affected industry” in this case was gung-ho for passage, a sentiment shared by something around 25% of the rest of the country.
There is a certain absurdist quality to the intensity and obsessiveness surrounding passage of the tax bill. After all, when the only congressional response to madmen using automatic weapons to slaughter scores of people is to ease the interstate ability to carry concealed handguns into states that do not allow such a practice, one could reasonably wonder if the entire Republican legislative agenda is not intended as some kind of sick joke.
Any serious analysis of the tax legislation must begin and end with an evaluation of its distributional effects: how concentrated are the benefits? Of course, in sheer dollar terms, any law that grants benefits to the middle class is going to spend a lot of money doing so; but the benefits accrued by the middle class (maybe enough to buy a wide screen TV monitor) are miniscule compared to the largesse piled on the plates of the 1% (enough to buy a house to put the TV in). Indeed, more than 83% of the benefits of this absurd bill will flow to the top 1%.
The second act of this farce will be the looming cuts to Social Security, Medicare and Medicaid, and a vast array of discretionary spending, compelled by the language of the tax bill in order to address the $1.5 trillion deficit it acknowledges will be created. And don’t go to the bank that the $1.5 trillion number is a ceiling; baked into it are rosy economic scenarios endorsed by a small number of serious economists; actually, by none. Never the mind, count on Republicans suddenly rediscovering their inner deficit reduction mania sometime after January 3. Sort of like an arsonist torching a building and then complaining the fire department took too long to arrive.
“Couldn’t be better,” an exultant Mitch McConnell declared after ramming the little analyzed bill through on a party lines vote. Actually, it could have been, if Mitch had been able to keep the sweetheart arrangement he surreptitiously dropped in to benefit a college in his own state, but that provision (like the very title of the bill) was ruled out of order by the Senate parliamentarian.
There are many big lies surrounding this legislation, but none moreso than to label it “tax reform.” It is a tax cut, pure and simple, ill-timed since the economy does not require priming, and inappropriate since it fails to address economic challenges like infrastructure development, the effects of expanding automation, or offshoring of U.S. jobs. Nor does it slam shut the “carried interest” loophole that allows a tiny fraction of hedge fund billionaires to escape fair taxation – a tax reform Donald Trump had promised during the 2016 campaign. Instead, like all other Republican tax schemes, this bill promises that growth will eradicate the deficits the new law will create. But take it from Bruce Bartlett, who authored the “supply side” scheme for Rep. Jack Kemp. “It’s not true,” Bartlett has admitted. “It’s nonsense, it’s BS.”
Well, considering the circus analogy I used earlier, “BS” probably is as good a way to describe the new tax cut as any, and the people walking behind the GOP elephants are the supposed Senate hardliners who were going to oppose the bill unless it cracked down on the deficit, protected health care and addressed DACA students: Susan Collins, Jeff Flake, Bob Corker, and John McCain. McConnell delivered nothing to any of them but a wink and a nod, and they went for it like a 5 year old swallows the magic trick in a sideshow. Don’t think for a minute these clowns are going to clean up the mess left behind the Republican elephants; the bill, while admittedly flawed in their views, was “good enough.”
The people who do deserve credit are congressional Democrats who unanimously opposed this fatally flawed legislation that they were given no role in fabricating. Since passage was assured with Republican-only votes, it would have been easy for House and Senate Democrats facing difficult races next year to relieve themselves of having to explain why they voted against a tax cut for their constituents. But they didn’t: whether for policy or politics, they stuck together, banking that the bill’s low approval rating and long term consequences will prove them right for having opposed it.
In the short term, however, there will be more celebrating by Republicans in the Congress and Donald Trump (himself an enormous beneficiary of the new law), and to some extent, they are entitled to crow. After all, no one can say they hadn’t explained their intentions; too many voters either weren’t paying attention or thought it would all work out well for them in the end. Well, it won’t, nor for the economy of the country. Politico called the new law a “once-in-a-generation success,” and let’s hope they are right; we can’t afford too many “successes” like this one.