Republicans Are Doubling Down on Their Failed Tax Cuts
Up is down. Would is wouldn’t. “What you are seeing and what you are reading is not what’s happening.” And a new round of GOP tax cuts, proposed this week, definitely will not result in damage to Medicaid, Medicare, or Social Security!
Republicans live in an Alice-in-Wonderland World where they can pass $1.5 trillion in tax cuts that won’t cost anything. They’ll pay for themselves! Just like a worker’s mortgage does every month. Just pays for itself! And then the GOP can propose another $1 trillion in tax cuts that also won’t cost anything! They certainly won’t increase the federal deficit!
The reason Republicans believe in Magic Unicorn Money is that they never actually socialize with, or speak to, or even vaguely know minimum-wage workers, or middle-class workers or precariat workers who drive for Uber at night because their day jobs deny them full-time hours. These workers get paid in cold, hard currency that lacks the power of Unicorn Money to magically materialize whenever necessary to pay bills.
Up is down. When Republicans passed their massive tax cut for the rich and corporations in December, most credible economists, including nonpartisan ones in the government itself such as the Joint Committee on Taxation, estimated it would cost at least $1 trillion over 10 years. That is, the government would receive $1 trillion less in tax payments. Which means $1 trillion less to pay bills. Which means higher deficits. Especially since Republicans increased spending.
Republicans said that wasn’t true. It wouldn’t happen. No way. Just last month, Larry Kudlow, director of the President’s National Economic Council, told Fox News that the tax cuts caused the deficit to decline, “And it’s coming down rapidly,” he said.
Yeah, about that: Tax collections from corporations, which got the biggest, fattest tax cut of all, are near a 75-year low as a share of the economy. In the first six months of 2018, tax receipts from corporations fell by $50 billion when compared to the first half of 2017. That means the federal government received about a third less money from corporations. That drop-off is enlarging the federal deficit even faster than economists had predicted.
This decline in revenue for the feds is occurring even as corporations are rolling in cash. Their profits after taxes have hit all-time record highs. They’re spending that slush fund on stock buybacks, which raise stock prices, thus enriching already rich shareholders and CEOs. They’ve announced $436.6 billion in buybacks—the most ever and nearly double the old record.
Would is wouldn’t. Of course, those cash-fat corporations have awarded big raises to workers, just like Kevin Hassett, chair of the President’s Council of Economic Advisers, said they would. “I would expect to see an immediate jump in wage growth,” ranging between $4,000 and $9,000 for the typical worker, Hassett said in October, just before Congress passed the tax cuts.
Maybe what he meant to say was “wouldn’t” expect that jump in wage growth. Fewer than 500 of the nation’s 6 million employers gave workers a one-time bonus or a wage increase because of the massive corporate tax break, according to tracking by the group Americans For Tax Fairness. U.S. government data show that for nonsupervisory workers in the first quarter of 2018, real wages—that is, wages adjusted for inflation—fell 0.1 percent, and private data show them dropping even further in the second quarter.
That is the real, lived experience of workers. Higher costs and no additional money to pay them. Not only did corporations stiff them, but workers are not feeling that tax break in their paychecks either. Only a quarter of those surveyed in a recent Politico/Morning Consult poll said they’d seen more money in their paychecks as a result of the tax cut. By contrast, 52 percent said they saw nothing. Nada. No bump for the working chump. And those guys aren’t happy about it. The poll found only 37 percent supported the tax cuts.
But a worker can’t be trusted to really understand his or her own paycheck, right? “What you are seeing and what you are reading is not what’s happening.”
Republicans are trusting that statement to be right—that workers don’t actually know what’s happening. The House GOP announced this week they’re going to extend the individual tax cuts—the ones workers couldn’t find in their paychecks, the ones that gave the vast majority of benefits to the wealthiest 1 percenters.
That’s fat cats like U.S. Rep. Vern Buchanan, a Florida Republican who bought himself a $1 million yacht on the very day he voted to approve the tax cuts for the rich. And like U.S. Sen. Bob Corker, a Tennessee Republican who swore he’d never vote for a tax bill that added “one penny to the deficit,” then voted for this tax bill that added $1.5 trillion to the deficit after lawmakers added a special provision at the last minute to specifically benefit Corker, a provision immortalized by the title: Corker Kickback. The Center for American Progress estimates Corker got himself a tax cut of between $125,383 to $706,383 as a result. Buchanan’s tax reduction—between $371,752 and $2.1 million.
Last December, as Republicans in Congress passed the tax cut for the rich that they said would not balloon the federal deficit—but which did, in fact, balloon the federal deficit—they announced their project for 2018 would be to deflate the massive federal deficit. Confused? Don’t worry, “What you are seeing and what you are reading is not what’s happening.”
House Speaker Paul Ryan, Sen. Marco Rubio and Sen. Orrin Hatch all raised the deficit by voting with their fellow Republicans for the tax scam while at the same time saying they’d really like to cut the deficit by raiding Medicaid, Medicare and Social Security. That’s right. Tax breaks for the rich; heartbreak for the rest. No Magic Unicorn Money for the old, poor or sick.
But don’t say that out loud. Up is down. Would is wouldn’t.