Let me get right to the point. The recently passed Republican tax bill, not to put too fine a point on it, is a monstrosity.
The Republican Congress has passed a tax plan in which more than 80 percent of the long-term tax cuts are given to the wealthiest Americans. These tax cuts for the wealthiest are offset by a future tax increase on the poor and middle class. It leaves our future children with an additional deficit of between $1 trillion and $2 trillion dollars, which Republicans plan to reduce by making substantial cuts to government services such as Social Security, Medicare, and Medicaid.
If you think this statement is an exaggeration then follow my logic as I review this monstrosity with the following eight points.
Point 1. A Ballooning Deficit
First, I should note that I am by nature and political inclination a fiscal conservative, that is, I believe you always balance your budget, whether it’s your family budget or the nation’s budget, and you never spend more than you earn. This, for me, is the bedrock of fiscal conservatism. Apparently the Republican Congress, in passing the new tax bill, decided that balancing the budget was no longer applicable, especially when it came to rewarding their wealthy donors with a massive tax cut. The nation already owes $15 trillion to investors and foreigners, mostly the Chinese who use this to their fiscal advantage in order to maintain a lower currency exchange rate which, in turn, allows them to sell cheaper products to the United States.
Point 2. Voodoo Economics
I do not believe in the myth of trickle-down economics. That is simply voodoo economics that has been thoroughly disproven. Unfortunately, the Republican Congress apparently still believes that voodoo economics actually works and is convinced that if they give your money to the rich it will trickle down to the poor and middle class to create jobs and foster economic growth. The Republican Congress does not seem to understand that the chief executive officers of major corporations have no fiduciary interest in the poor or middle class, rather their fiduciary interest extends only to their stockholders who, it turns out, are the major donors to the Republican Party.
Point 3. Crumbs for the Poor
Now don’t get me wrong, there are some crumbs for the poor and middle class in this tax bill. For example, even though this bill is a transfer of income from the poor and middle class to the wealthy and big businesses, families earning less than $25,000 a year will receive an average tax cut of $60, that’s right, $60; families making between $50,000 and $75,000 will get an average cut of $890; and families making more than $1 million would get an average tax cut of nearly $70,000. These are not my figures but those of the nonpartisan Tax Policy Center.
But, hey, 60 bucks per year is better than nothing, especially if you are poor. Unfortunately, even the crumbs for the poor and middle class are temporary and are set to expire in 2025 and, without intervention, this bill would raise taxes on 53 percent of Americans which, of course, is needed to pay for the permanent tax cut for the wealthy.
It would have been nice, though, if the Republican tax bill had been skewed toward the poor and middle class instead of the wealthy.
Point 4. Bait and Switch
I am a great believer in the successful use of bait and switch for in one of my past careers I was interested in fraud and scams. If you don’t recall, bait and switch is a type fraud in which goods are advertised at an apparent bargain with the intention of substituting an inferior product. This is exactly the kind of snake oil that Trump and the Republicans have been marketing by attempting to sell this albatross of a tax bill as a tax cut for the middle class.
Point 5. Kill The Affordable Care Act
This tax bill will kill the Affordable Care Act requirement that nearly all Americans obtain some form of health coverage or pay a penalty. This part of the Affordable Care Act was put in place to assure everyone belonged to an insurance pool which, in turn, lowered insurance rates for the sick and elderly. This is one of the major legs on which the Affordable Care Act stands and around which the health-insurance companies framed their business model. The Republicans have always felt this provision was government overreach and have always wanted to kill this provision.
In announcing the new tax bill, Trump also announced that the Affordable Care Act was dead. Well, if it is not dead it is certainly severely weakened, especially since Trump has also slashed the budget for advertising the enrollment period and, in addition, has reduced the enrollment period by half. In additional attempt to further destabilize the insurance market occurred in October, 2017, when Trump also abruptly ended federal subsidies for insurance companies that helped lower-income people and people with extraordinarily high medical expenses.
Unfortunately, this willful act by Trump and the Republicans will also eventually leave 13 million more people with no health insurance and drive up the premiums for those still enrolled.
Maybe Trump, McConnell, Ryan, and the Republican Congress are right, and I simply don’t understand the economic relationship between supply and demand. In fact, maybe the corporation will not give their tax break as dividends to their shareholders. Maybe millions will enter the labor force and find work. Maybe economic growth will exceed 6 percent. Maybe wages will soar. Maybe this Republican $1.5 trillion tax bill will pay for itself.
Well, maybe Uncle Wilbur’s pigs can fly but then again, maybe not!
J.T. Oney lives in Mayking and is an Adjunct Professor at Southeast Kentucky Community and Technical College.