When the Trump Tower Tax Cut was signed I was among the many who predicted disaster. The evidence is clear that it will soon be upon us. Let’s explore.
History has a way of repeating itself. Let Republicans stay in power too long and an economic catastrophe will occur. Calvin Coolidge and Herbert Hoover brought us the Great Depression, George W. Bush brought us the Great Recession and soon we will have the Trump Recession. Last week Monday the news broke that the federal deficit for Trump’s second year was $779 billion. You can slice and dice it anyway you want but the only logical conclusion is that the federal government’s revenue has dropped because of the Trump Tower Tax Cut. We have not “made it up in volume” and there is no reason to believe that the growth (which is not as clear cut as Republicans would have you believe) is going to catch up in some mythical future. In fact the deficit is projected to exceed $1 trillion next year. Mistakes have a way of catching up with you in life and the Trump Tower Tax Cut was, at best, a mistake.
(If you are among the majority of Americans who get confused between the deficit and the National Debt here is a simple explanation. The deficit is a single year’s shortfall; the debt is the cumulative figure. A deficit doesn’t go away after the fiscal year ends; it simply enlarges the debt.)
Mitch McConnell, in a rare moment of honesty, said what the Republicans intend to do about the red ink. He (incorrectly) contends that the deficit has nothing to do with the Trump Tower Tax Cut; he says it is caused by entitlement spending; in other words, Social Security, Medicare and Medicaid. Those three programs have been the Republicans’ targets since their inceptions! Part of the idea of the unnecessary tax cut almost exclusively for their deep pocketed financiers was to give them a return on investment while simultaneously putting the Treasury in a deeper hole. When we inevitably got to the point we find ourselves at it presented the Republicans with a great opportunity to “justify’ cuts to the social safety net programs.
If I may go off script for a moment, the term “entitlement” has somehow been turned into a dirty word and that angers me. I am a senior citizen and paid into (really paid for) Social Security and Medicare for about 50 years. They are entitlements in that I paid for them and I’m entitled to them. In economic terms they are nothing more than deferred compensation and my savings! I very much paid for the employer contributions as well as my own. My employers paid their share with money derived from the fruits of my labor on their behalf. When they did their accounting the payroll tax payments were a cost just like paychecks. From a budgeting standpoint there is absolutely no difference, just a different ledger sheet.
The Trump Tower Tax Cut is spending without benefit. (Have no doubt: tax cuts are federal spending.) The right wing “economic gurus” would have us believe that with “job creators” getting this extra money they were going to turn around and spend it all on wage increases and increased capacity resulting in new jobs. Ronald Reagan tried something similar with that justification. Under his plan the extra dollars were spent mostly on stock buybacks. To no surprise, history repeated itself. That benefitted a very few at the very top and left the rest of us to eventually pay the bill. To add insult to injury they got to pay the taxes on their windfall at a lower rate; that is if their fancy accountants didn’t find a loophole that wiped out the tax liability entirely.
Under the Trump Tower Tax Cut Joe Lunchbucket does not benefit. In fact, Joe along with Joe, Jr. will be left with the bill and if “Mitch and the boys” (and they are mostly male) have their way Junior’s grandparents will be the first to feel the pain.
History does also show us a way out. Democrat Franklin Delano Roosevelt extricated us from the Great Depression, Democrat Barack Obama rescued America and the world from the Great Recession and in 2020 America will have the opportunity to elect a Democrat to head a much needed “cleanup crew” headquartered in the Oval Office. In between we can put a check on Trump and McConnell in place this November by electing Democrats to Congress.
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