In the middle of the night on Dec. 2, the U.S. Senate passed a horrifying tax bill with a vote of 51-49.
As for fiscal responsibility, the Congressional Budget Office estimates it will add around $1.5 trillion to America’s debt by 2027. Even after taking into account the economic growth that may or may not be spurred by the tax cuts, the nonpartisan Joint Committee on Taxation’s estimate is $1 trillion.
Average voters support tax cuts in the abstract; but when they’re shown what the bill actually does, support drops precipitously. According to an average taken from five independent polling agencies, only 32 percent of voters approve of the Senate’s plan.
To use one egregious example, eliminating the estate tax would have cost us $239 billion in lost revenue (the exemption for the tax was instead was doubled, resulting in a loss in revenue of $72 billion).
Its supporters justify it by claiming it will grow the economy by helping small businesses. But of the roughly 5,200 estates that would be subject to the tax next year, the Tax Policy Center found that only 50 of those count as small farms or businesses. So we are paying that $72 billion for a tax cut that will help just 50 small businesses in the entire country. The other 5,150 estates receiving the cut are large companies and the wealthiest individuals.
Then there’s the legislative chicanery used to pass it.
Trump’s director of the Office of Management and Budget, Mick Mulvaney, told NBC himself the bill uses a “gimmick” to meet the requirements needed to pass the Senate with a simple majority. To do so, the tax plan has to come in under a certain cost; and to do that Republican lawmakers chose to “sunset” the middle-class tax cuts and have them totally expire by 2027.
However, the cuts to corporate taxes are permanent.
One may ask: If the economy is currently booming, as President Trump likes to repeat, why the urgency to pass these budget-busting tax cuts now?
There is scant evidence corporate tax cuts boost growth unless implemented in a recession. But today, corporations are already sitting on immense piles of cash. American companies’ liquid assets – in the form of foreign deposits, currency, money-market and mutual fund shares – hit a record of almost $2.3 trillion this year.
If they wanted to invest in hiring more employees and raising wages, they could be doing so at this very moment. But they are not, and giving them a few extra billion dollars will not incentivize them. Instead, the extra cash will go to executive pay, buying back stock, and paying dividends to shareholders.
And finally, there is the obscene haste with which they passed it. To cite another case as an example, before the Reagan administration passed its overhaul of the tax code in 1986, there were more than a dozen hearings in Congress and the process went on for over six months. In this case however, the Senate tax bill was introduced only a few weeks before approval, and the final version wasn’t even complete until 6 p.m. the night of the vote.
So why the mad rush to pass this travesty? Two reasons.
First, the president and Republicans in Congress are desperate for any kind of legislative victory after a year of accomplishing nothing. And second, the GOP’s donor class would be likely to close their wallets if their lawmakers had nothing to show after a year with control of the White House and majorities in both chambers of Congress.
It’s that simple.
So what will happen after this bill becomes law and our deficit rises exponentially along with our debt?
My guess is Republicans will set their sights on “entitlement reform,” their subtle euphemism for slashing the social safety net by cutting Medicare, Medicaid and Social Security for the poorest Americans who depend on those programs the most.
In case any doubt remained that the GOP is waging class warfare on lower- and middle-income Americans, this tax bill proves it.
The writer lives in Martinez.