Former Secretary of Labor Robert Reich says middle and low-income U.S. taxpayers should not be paying wealthy Americans to finance debt Republicans are determined to heap upon them last week.
“I’m old enough to remember when the US’s super-rich financed the government with their tax payments,” Reich wrote in The Guardian. “Under Dwight Eisenhower … the highest marginal tax rate was 91%. … But since the Reagan, George W Bush and Trump 1 tax cuts, tax rates on the super-rich have plummeted. So instead of financing the government with their taxes, the super-rich have been financing the US government by lending it money.”
Reich points out that the majority of U.S. debt is not held by foreigners, that more than 70% of it is owned by Americans, and it is to these “super-rich” that taxpayers must pay incrementally more every year to cover the nation's ballooning debt.
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And “[t]hey’ll pay even more interest on the growing debt – to the super-rich,” if Republicans pass the budget bill coursing through Congress, he warns, and “they’ll pay higher interest rates on all other long-term debt.” This will inevitably mean higher borrowing costs on everything from mortgages to auto loans as higher rates on treasury bonds filter through the U.S. economy.
In addition, the rising debt crisis gives lawmakers “even more excuse to do what they’re always wanting to do: slash safety nets. So many Americans could lose benefits they rely on, such as Medicaid and food stamps.”
But that debt crisis is still a very real argument, claims Reich, pointing out that Moody’s ratings firm announced the government’s rising debt levels would grow further if Republicans extended Trump’s 2017 tax cuts.
“So-called ‘bond vigilantes’ have already been selling the U.S. government’s debt, as the Republican tax package moves through Congress,” Reich said, and “they’re expected to sell even more, driving long-term interest rates even higher to make up for the growing risk of holding US debt.”
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The solution? Reduce the federal debt by ending Trump tax cuts “that mainly benefit the wealthy and big corporations – and instead raise taxes on them.”
Read the full Guardian report here.