It seems just like yesterday when Republican President George W. Bush and his budget director, Ohio’s now-junior senator in Washington Rob Portman, were promising a bounty of good times and good jobs with high wages that would cascade down across all sectors of the economy if their trillion-dollar income tax cuts were approved.
After two unpaid-for rounds of lucrative and risky tax cuts, both in the trillions, what two terms of 43’s administration delivered was a net loss of 396,000 private sector jobs, marking one of the most sluggish job creation eras in modern times. A second bonus was an economic recession built on lax banking rules and shoddy regulation that nearly turned into a second Great Depression had drastic recovery methods not been taken by former President Barack Obama over objections by Republicans.
Bush’s income tax cuts, put on the national credit card boosted economic inequality to new heights and helped run the economy into a ditch so deep that parts of the nation still have miles to go before recovery returns to settle-in.
GOP Learns Nothing From Recent History
With all this 2020-hindsight proof of conservative pipe dreams dramatically underperforming boiler plate sales pitches by miles, it’s a wonder that GOP leaders, now including President Donald Trump and his bosom economic buddies Portman and term-limited Ohio Gov. John Kasich, would try this ruse again. But they are.
Catering to wealthy individuals and corporations to lift up common workers with bigger paychecks remains magical thinking. The idea that lower taxes creates more revenue, good jobs, and higher pay started with the “Great Communicator,” President Ronald Reagan, back in the 1980s. All that snake oil Republicans dished out then has failed so dramatically for so long, now it’s being repackaged as a boon to middle-income earners.
“Don’t get fooled again” could be the working subtitle for opening remarks made Monday in the U.S. Senate Finance Committee by Ohio Sen. Sherrod Brown. Long a voice for the common laborer, Brown doesn’t want to play this GOP pie-in-the-sky game again.
Instead, the two-term senator running for a third term next year, said, “We need a tax code that does the same – that responds to the needs of working families, not Wall Street. It’s not corporations that drive our economy – it’s workers. So let’s give a tax cut directly to them.”
In remarks prepared for delivery in committee, Brown said the bill gives wealthy individuals and corporations more than a trillion dollars. Some of these same corporations, he notes, send American jobs overseas, and believing that “somehow that money will end up increasing their wages” now when it’s failed to do so before doesn’t sit well with Brown, whose economic agenda for the common working man is simple and clear.
The Senate Republican tax overhaul is being promoted as needed relief for the middle class, but bipartisan analysis shows that it would increase taxes for about 13.8 million moderate-income American households, the AP reported.
As the first major revamp of the tax system in about 30 years gets underway, passage will depend on what the Senate’s bill contains versus what the House bill contains. The daylight between them so far is fairly large, and even though the House can muscle through a majority vote, the same cannot be said for what will happen in the Senate, where three Republicans turning against their leadership can deep six any bill at any time, as has twice shown to be the case when Affordable Care Act repeal-and-replacement bills got shot down.
According to AP analysis, differences in the two bills have emerged: The House bill allows homeowners to deduct up to $10,000 in property taxes while the Senate proposal eliminates the deduction entirely. Both versions propose to eliminate deductions for state and local income taxes and sales taxes.
The Joint Committee on Taxation‘s analysis found these outcomes: The Senate measure would increase taxes in 2019 for 13.8 million households earning less than $200,000 a year. Representing 10 percent of all U.S. taxpayers, these earners would confront tax increases of $100 to $500 in 2019. For taxpayers with incomes between $75,000 and $200,000, they would have to pay $500 and more. By 2025, tax hikes would come to 1.4 million households.
Brown isn’t the ranking member on Senate Finance, but Sen. Ron Wyden of Oregon is, and his statement that the legislation has become “a massive handout to multinational corporations and a bonanza for tax cheats and powerful political donors” is in sync with Brown’s view of the bill.
“Over the last 40 years, corporate profits have gone up, executive salaries have gone up, GDP has gone up. Corporations today have record amounts of cash and the stock market continues to hit record-breaking highs. But what about the wages and benefits of the American workers who created all that wealth? They are flat and in too many cases declining. If record corporate profits haven’t resulted in worker pay raises, why would corporate tax cuts be any different?” Brown said in committee.
Brown Not In Step with Dodd-Frank Rollback Bill
In separate but related news, Brown announced that he could not support a bill supported by nine Republicans and nine Democrats that would lift some of the stricter regulatory requirements approved for banks and credit unions after the 2008 financial crisis. Brown was working with Finance Committee Chairman Mike Crapo of Idaho on the bill, but stopped short of endorsing the bill in light of record profits made by banks last year.
“I understand my colleagues’ interest in agreeing to this legislation, but disagree on the wisdom of rolling back so many of Dodd-Frank’s protections with almost no gains for working families,” said Brown, the AP reported.