Washington watchers are waiting with great anticipation to hear what career Republican politicians bent on lowering taxes have to say now about President Donald Trump’s latest plan to slash tax rates, creating more economic inequality, slowing growth, and ballooning the nation’s debt.
During Barack Obama’s two terms as president, Republicans howled at the moon about deficits and debt. When Ronald Reagan or George W. Bush spent trillions on tax cuts, and put it unpaid on the national credit, so-called deficit hawk conservatives enjoyed the sounds of silence. Like crickets in a forest suddenly going silent at the sound of a breaking twig, Republicans across the board held their thoughts when GOP leaders were pushing the deficit higher with war costs and tax expenditures (tax cuts).
Some peg the cost of Trump’s plan to be upwards of $6 trillion, according to the AP. Ohio officials in Washington, including Republican U.S. Sen. Rob Portman and U.S. Rep. Pat Tiberi, have already voiced their approval of the plan even though numerous details are yet to be revealed.
The core of the White House’s plan is to condense seven income tax brackets for individuals and replace them with three – 12 percent, 25 percent, and 35 percent.
Tiberi, a former staffer for then-congressman John Kasich who took Kasich’s seat when he resigned in 2000 to run his first losing campaign for president, is on-board the vague plan, saying it “will help all Americans, especially those who have felt left behind in the slow and uneven economic recovery of the past decade,” the Columbus Dispatch reported.
Portman, a multi-millionaire who was saved the embarrassment of making a second wrong decision to support or oppose the third nasty version of Trumpcare when the bill was withdrawn from a vote, offered this statement on Trump’s proposed tax code revamps:
“Our current tax code encourages U.S. companies to take jobs and investments overseas. The United States is falling behind while other countries are attracting more investment and more jobs at our expense. That is unacceptable. Our reform effort will encourage more investment in America, bring jobs home, and give American workers a competitive advantage”
And then comes Buckeye State governor John Kasich, another multi-millionaire, who has no shame using taxpayer money to pay for his post-governor activities to land a job, including begging for one on TV. He’s baked his political career on pushing for a federal balanced budget amendment, a quixotic quest by any measure, that can only be achieved through a constitutional convention.
Should that phenomena occur, Kasich might get the surprise of his life if changes are not limited to just what Kasich wants changed, but what others might want to change as well – like maybe mandatory voting or universal health care for all, among other leading ideas that work in other parts of the world.
Writing in Forbes Magazine, the term-limited, lame-duck governor who worked as a Wall Street banker for Lehman Brothers keeps harping on federal debt today, like he did last year when he used a ticking debt clock as a prop at his many town hall events.
“With little notice, our national debt recently surged to a historic record – an eye-popping 20 trillion dollars. Yet chances are few Americans noticed. Most of us went about our business, unaware of this unprecedented economic time bomb that has put our children’s future, and their children’s future, at greater risk. It needs to be a wake-up call for Americans.”
When Dick Cheney was Vice President, he said flat out that Ronald Reagan showed deficits “don’t matter.” I don’t think many newspaper articles exist that quote Kasich taking on Cheney on his bold, defiant statement. So how do Republicans propose to pay for any of this without exploding the federal deficit, former labor secretary under President Bill Clinton Robert Reich asked?
“Easy. Just pretend the tax cuts will cause the economy to grow so fast – 3 percent a year on average – that they’ll pay for themselves, and the benefits will trickle down to everyone else.”
Reich must have researched Kasich’s voting record in congress, where he voted for Reagan’s budget-busting spending plans.
“Unfortunately for all the Republican tax cutters who used to be deficit hawks, we already have real-world historical evidence of what happens after massive tax cuts. Ronald Reagan and George W. Bush both cut taxes on the wealthy and ended up with huge budget deficits.”
For the record, Kasich boasts about lowering income tax rates, something he’s done with the help of a like-minded GOP legislature. Yet, for all his bluster on debts and deficits, he’s a little tongue tied when it comes to Ohio’s slow growth under his administration, which includes 57 straight months of under-performing the national job creation average.
Ohio’s CEO-style leader also evades any connection between less state revenue and the billion-dollar budget hole the legislature filled with spending cuts, since any increase in taxes on those most able to afford it is a nonstarter.
To help uninformed believers like Kasich, Portman, and Tiberi, who hold dear to their notion of the miracle of tax cuts that have never worked as sold before, real economists like Steven Pressman, a professor of economics at Colorado State University, warn that Trump’s giveaway plan will both slow growth and create more opportunity for tax-code gamesmanship that only the nation’s wealthiest can play.
Dean Baker, another respected economist, explains in simple language what mainstream media seems unable to explain to its readers. Baker writes at the Center for Economic and Policy Research and notes how “bizarre” it is that Trump’s plan is framed as good for so-called pass-through businesses. Reducing a top tax rate on the income from pass-through businesses to 25 percent, he says, is routinely reported as a cut in taxes on businesses when it isn’t.
“This makes zero sense as any fan of English and logic should be able to see right away. The tax cut is on income from ‘pass-through’ businesses, as in businesses that don’t pay taxes. The tax break is for the individual that gets the money, not the business, which already pays zero tax.
“Furthermore, since the overwhelming majority of the people who get income from pass-through businesses are not especially rich, they are already paying taxes at a 25 percent rate or less. The only people who would benefit from this lower tax rate are high income people who are in a higher tax bracket.
“It is bizarre that this is reported as a reduction in a tax on business. These businesses already pay zero tax. Their tax can’t be reduced further unless the government were to have a policy of subsidizing them.”
If passed as proposed, Trump’s plan is “pretty much a textbook example of bad tax policy,” Baker writes. He notes, “It gives a strong incentive for people to play games with the tax system. This is a pure waste of resources on unproductive activity. It will slow economic growth.”
Baker adds, for the benefit of career politicians like Kasich, Portman, and Tiberi, that “the people who run the tax gaming will also make lots of money since they will get a cut of the tax savings. Tax gaming is a major source of inequality since the people who run the tax games get rich. (Think of private equity partners.)”
To put a fine point on his point, Baker informs media they can do better: “Anyhow, there is no reason for the media to help this tax cut proposal gain public support by calling it a tax cut on business. It isn’t.”