The Republican tax bill is out- and it’s close to being the mess one feared, but not totally. The “idea” behind House Speaker Paul Ryan’s Folly remains a $5 trillion reallocation of wealth to corporations and rich individuals.
Part of the bonanza is to be redirected from today’s upper middle-class, a tiny bit will be raised by closing corporate loopholes, and the lion’s share will come from probably doubling the federal deficit. Which was already $666 billion in the just-ended fiscal year during the fat part of an economic cycle, the part of the cycle when Bill Clinton produced a $236 billion surplus.
The alternative minimum tax – gone, undoing the handiwork of left-winger Richard Nixon. The inheritance tax will be phased out. One change makes sure President Donald Trump pays virtually no tax – in the one tax return of his we’ve seen, most of the taxes he owed was AMT – and the other means his children will inherit billions tax-free, while complaining about people who want fictitious giveaways.
Business owners, including Trump, will be able to get personal income taxed at a 25% rate, as if it were business income, instead of rates up to 39.6%.
At least political sanity prevailed upon Republicans not to attack the tax treatment of 401(k) retirement plans, a staple of middle-class financial planning. The slashed deductibility of state and local taxes, a break that saves upper-middle-class folks thousands in federal taxes, would let people continue to write off $10,000 of yearly property taxes – a common property-tax levy in parts of Texas, where House Ways and Means Committee chair Kevin Brady lives. That’s not nothing.
The centerpiece, of course, is a corporate tax-rate cut that the Tax Policy Center has estimated will cost $2 trillion over 10 years – several times the amount of all the corporate loopholes in the tax code. Which undoes any pretense that this bill is a tax reform promoting efficiency or fairness, in case eliminating AMT and estate taxes didn’t make that clear.
All of this is in the service of a set of discredited ideas about where jobs come from. Instead of feeding consumer demand, the Republicans would once more toss succor to the so-called supply side. Instead of fiscal responsibility, we get the opposite. Instead of job creation, we get lectures about job creation from career politicians who inherited a full-employment economy from Barack Obama.
And when Republicans speak privately, they don’t even bother with that. Instead, they concede that their dominating motivation is to achieve any kind of legislative win to show voters and donors next year.
But let’s make a serious point for the time of President Donald Trump.
As bad as this bill is, as deep an intellectual rot and chaos in the Republican Party as it reveals, the rot isn’t Trump’s doing. This is the party he took over last year.
That’s at least the view from American Enterprise Institute scholar Norman Ornstein, an expert on Congress who co-authored a book called “It’s Even Worse than It Looks: How the American Constitutional System Collided with the New Politics of Extremism.” The op-ed based on the book put it more pithily: “Let’s Just Say It: Republicans Are the Problem.”
The bad news: Ornstein and Thomas Mann published the book in 2012.
There are a lot of reasons, Ornstein said in an interview (Disclosure note: I was Ornstein’s student in college). One is that the modern GOP has become less of a political faction and more of a tribal religion, whose tenets (including supply-side economics and climate-change denialism) are deemed beyond all questioning. There’s the hardening of GOP intellectual institutions in Washington – including, though he doesn’t say it, much of AEI – into partisan rationalizers that often do the bidding of funders, most prominently Koch Industries.
All that donor money works its way indirectly into more-comfortable lifestyles for GOP politicians and factotums willing to lay aside actual conservatism in the pursuit of factional advantage and wealth redistribution, he adds. With lobbying jobs to be had, and junkets to be enjoyed while still in office, who needs actual bribes?
Most of all, income inequality has raised the stakes for Washington’s intellectual corruption, because it takes much bigger giveaways to make any meaningful difference to today’s hyper-rich courtiers, Ornstein said.
With all those reasons to never ask questions, Republicans never asked themselves the most basic one of all, he says: How will we pay for this tax cut? Instead, they pretend it will accelerate growth enough to finance itself, which didn’t happen under Presidents Ronald Reagan or George W. Bush.
Anyone who says otherwise is a spoilsport.
“It becomes like a religion that has nothing to do with reality – in fact it denies reality”, Ornstein said. “We have a generation of CEOs who compare themselves to hedge-fund managers, more interested in their own income than their companies. All these things are on the table for reasons that have nothing to do with the real world.”
The question about the tax bill is whether more-grounded Republican senators, like Tennessee’s Bob Corker or Susan Collins of Maine, refuse to let this specific bill through, Ornstein says. The black-is-white, up-is-down premises of the modern GOP will remain – even when Trump is gone, thanks to prosecutors soon, voters in 2020 or term limits in 2025.
.But let’s tweak the president while we have him.
His contribution has been tweeting that Congress should use the tax bill to repeal the Affordable Care Act’s insurance mandates – an idea that already failed in Congress twice, thanks to public-approval ratings as low as 8%. (It didn’t make the draft). And he wants to name the bill the Tax Cut Cut Cut Act – because “Triple C” will be catchy with voters, he says, unaware that many folks’ taxes will rise so his can fall.
Reading the proposal, I thought CCC was where the president intended to leave the United States’ AAA bond rating. Kind of like Trump casino bonds.
