News & Politics

Paul Krugman Has a Brutal Message for American Taxpayers

If you think you're benefiting from the Trump tax cuts, think again.

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Last month, Rep. Paul Ryan (R-WI) came under fire for celebrating the $1.50 weekly raise a public school secretary stands to gain from the recently passed Tax Cuts and Jobs Act. Ryan's outrageous statement is even more preposterous if you actually crunch the numbers. As Paul Krugman writes in his Thursday column, "How’s that $75-a-year saving going to look when the [secretary] finds out that, partly because of that tax cut, her mother’s Medicare plan has been converted into an inadequate voucher system and Medicaid won’t pay for her father’s nursing home care?"

While a slim majority of Americans now holds a favorable opinion of the Republican legislation, Krugman is here to warn them that they are being taken for a ride. That's because the federal government has "no business" cutting taxes at all. 

"Why? The federal government, as an old line says, is a giant insurance company with an army," he writes. "Most of its costs come from Social Security, Medicare and Medicaid—and all three programs are becoming more expensive as ever more baby boomers reach retirement age. This means that unless we cut back sharply on benefits that middle-class Americans count on, we will need to raise more revenue than in the past."

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We know how this story ends. Even before the president signed their monstrous bill, Republicans were already discussing the possibility of "entitlement reform"—despite the fact that candidate Trump promised not to lay a finger on programs like Medicare and Medicaid. So who stands to benefit from these huge tax cuts? It most certainly isn't lower- and middle-income earners.

"Most of the tax cut actually consisted of huge tax breaks for corporations, which is in effect a big tax cut for stockholders," Krugman continues. "And while many Americans own a bit of stock via their retirement accounts, even if you include these indirect holdings, more than 80 percent of stocks are owned by the wealthiest 10 percent of the population...The wealthy are giving themselves a big gift, and sending the bill to the middle class."

Krugman is willing to acknowledge there's "probably something" to the theory that lower taxes will eventually benefit workers, but not much. The process could end up taking decades, and there's no guarantee corporations won't simply pocket their savings.

Ultimately, his message to American taxpayers is simple: "If you think you were helped by the tax cut, think again. Donald Trump and his allies pretended to give you a gift, but they gave themselves and their wealthy patrons much bigger gifts—and they’re going to stick you with the bill. You’ve been scammed." 

Read Paul Krugman's column at the New York Times.

Jacob Sugarman is a managing editor at AlterNet.