We The People Lost … Again

Late last Friday night, the abomination of a tax reform bill passed the Senate, 51-49, with only one conscionable republican senator, Bob Corker, voting against it.  The bill was shoved through with last minute changes that the democratic senators were denied a chance to study before the vote was demanded.  No citizen review was allowed.  It was literally rammed through, as republican senators strived to pay homage to both their wealthy campaign finance donors and to Donald Trump, who was making demands and threats.  It is not the way our government is supposed to work, but under this administration, this Congress, there is no longer any We The People, no constitutional protocol.

I could write at length about what this bill means, and I will no doubt do so in the coming days, but my purpose in this post is to look at what comes next:  the reconciliation process between the House and Senate versions of the bill.  Might there be enough significant differences to keep the bill stalled? To ultimately alter the bill in ways more favourable to common sense, less disastrous for the fate of the economy?  Let us take a look.

The major similarity between the two bills is the reduction of the corporate tax rate from 35% to 20%.  That is a huge difference, my friends, and I assure you that if you are in an income bracket anywhere above $46,000, you are paying more than 20%.  This is supposedly going to stimulate the economy.  Well, first off, the economy is not in need of a jump-start at this time, as it is doing quite well.  Second, as I have said before and I will now say again, the money the corporations save will not “trickle down”, but will remain in the pockets of the already-wealthy.  Trickle down economics is largely a myth.  And thirdly, if we are taking 15% of current-level corporate taxes out of the federal budget, how do we replace it?  Two ways … borrow, borrow, borrow, and cut programs that benefit people, such as food stamps, health care, education, the environment, social welfare, and others.

The most glaring difference between the two bills came as one of those last minute changes to the Senate bill.  The Senate bill keeps the Alternative Minimum Tax (AMT) that does just what the name implies:  sets a minimum tax floor for wealthy earners.  The House bill scraps the AMT, which has long been a deal-breaker among the GOP.  My best guess is that the Senate decided at the last minute to keep it in order to gain the votes of more moderate republicans, like McCain, Flake and Collins, and will now be willing to scrap it in the reconciliation process.  Yes, mine is a cynical view, but we have reason for cynicism, do we not?

There are other contentious issues, but the AMT may stand out as the main point of discord. For a fairly comprehensive, yet understandable listing of the differences between the two bills, check out this article on NPR . Both House and Senate will begin on Monday trying to meet somewhere, be it the middle or the far right.  Republicans seem confident, and even democrats concede that the two versions agree on enough major points that they have likely crossed the largest hurdles.  Mitch McConnell was nearly giddy as he made the rounds on the Sunday morning talk shows, saying “We’ll be able to get to an agreement. I’m very optimistic about it. And we think this will make a big difference in getting our economy moving again and providing jobs and opportunity for the American people.”  Sigh.  I am getting sick and damn tired of repeating myself here.  This bill will do more to harm an already-healthy economy than it will to help one that is not in need of help.  This bill is not even designed to help the economy, or the working class, or the poor … it is designed to help the rich get richer.  Wake up, Mr. McConnell, you with the $22.2 million net worth … wake up and smell the coffee that we little people are brewing as we munch on a piece of dry toast or slurp our 50-cent ramen noodles!!!

Once the disparities are resolved, a single bill is written, called the ‘conference report’, and it is this that will be presented to Trump for final approval.  There is no doubt in anybody’s mind but that he will approve it, for it will be his first legislative win of any consequence in nearly eleven months in office.  But it is his win, not ours, for we are the losers.  What, briefly, are some of the things that would apply to you and me?  Let’s look at just two of the most glaring potential changes:

  • Under the House bill, property owners would still be able to deduct property taxes, but not other sorts of state and local income taxes. Under the Senate bill, no deduction at all would be allowed for state or local taxes.
  • Have large medical expenses? Under the House bill, you can no longer deduct them.    Under the Senate bill, nothing changes and you can still deduct your excessive medical expenditures.

Under both the House and Senate bills, most other deductions for individuals would be eliminated, meaning you could no longer take deductions for unreimbursed employee expenses, student loan interest, moving expenses, home office expenses, and tax preparation expenses, to name a few.  Aren’t you glad to see they are looking out for us?

My hope is that they are unable to easily reconcile the two bills, but frankly, I think it is a futile hope and I expect them to have it reconciled by the end of the day on Friday.  Since there is no chance that Trump will refuse to sign it, expect it to become law.  What’s next, you ask?  Fasten your seat belt, folks, for next up is the spending bill, whereby they will no doubt further chop away at the things that benefit We The Ordinary People.  Stay tuned …

29 thoughts on “We The People Lost … Again

  1. Dear Jill,

    I have been tweeting and tweeting these words (a much shortened version), ” The US biggest middle/poor class tax increase $4.5 trillion dollars is being enacted to pay for the largest ever Donor class tax cut at $6 trillion dollars = the net of $1.5 trillion to be added to the US deficit unless the J.C.T. (Joint Commission on Taxation) numbers are accurate where only $ 1 trillion dollars will be added to our deficit because the reductions on corporate tax rates will promote an extra $500 billion dollars in revenues for the US Treasury.

    In the past Senator Mitch McConnell squashed a study which he had ordered during the Romney election cycle which formally, factually debunked the “trickle down” economic theory.

    Bruce Bartlett writes:

    “I know something about this subject. Forty years ago, while working for New York Rep. Jack Kemp, I helped originate the Republican obsession with slashing taxes that came to be called “supply-side economics.” While I believe this theory played a useful role in economic theory and policy in the late 1970s and early 1980s, it has long outlived its usefulness and is now nothing but dogma completely divorced from reality.”

    “It will be hard for many to believe, but once upon a time, Republicans genuinely cared about the budget deficit. From Dwight Eisenhower to George H.W. Bush, many of them were actually willing to raise taxes and oppose tax cuts to reduce it. And that includes Ronald Reagan, who cut taxes in 1981 but then supported 11 tax increases to offset a ballooning deficit.”

    As per a Quartz article , “The sealing of America’s fiscal fate began in 1974, over cocktails.”

    “As afternoon faded to evening on December 4, Dick Cheney and a young economist named Art Laffer shuffled into a booth at the Two Continents restaurant in the iconic Hotel Washington—it had appeared in scenes from the Godfather II just months earlier—two blocks from the US Treasury department. Cheney was US president Gerald Ford’s deputy chief of staff. He and his boss, Donald Rumsfeld, were looking for alternatives to Ford’s plan to raise taxes 5%. Raising taxes was a bad idea, said Laffer. If Ford really wanted to spur economic growth, and therefore government revenue, he should cut tax rates.”

    “Cheney wasn’t following. So Laffer grabbed a napkin, uncapped a Sharpie, and drew two perpendicular lines and a blimp-shaped curve, halved by a faint dotted line. With the tax rate on the y-axis and tax revenue on the x-axis, the chart showed that, except at its bend, there were always two points on the curve that generated the same amount of government funds: a higher rate on a smaller base of economic activity, and a lower rate on a larger base of economic activity.”

    And that is one story about how the myth of “trickle down economics got its start.

    Liked by 2 people

    • Gronda, Jill, this is an excellent comment. Bartlett should have mentioned that Laffer was copying an old theory called the Horse and Sparrow Theory invented to benefit the Robber Barons, who were aptly named. If you feed the horse, what it excretes will be eaten by the sparrows. In case it is not obvious, the Robber Barons are the horse. At the same time Republican lawmakers were on the Sunday shows arguing the merits of their Tax Bill, Warren Buffett was being interviewed where he said simply “trickle down economics doesn’t work.” I would listen to Buffett over Laffer or Cheney. By the way, it was Cheney who fired W’s Treasury Secretary Paul O’Neill when he said the Bush tax cuts were not needed. These cuts unwound the deficit neutral environment put in place by Bill Clinton and a GOP led Congress. Keith

      Liked by 2 people

      • Ah .. yes, I had forgotten about the Horse and Sparrow theory … much more colourful than “trickle down” or “supply side”! Thanks Keith. And yes, I would also listen to Buffett over any of these other clowns who don’t even believe their own rhetoric, but it is the party line, and one must toe the line, you know.

        Like

        • Jill, the next statement holds true with either descriptive name. If it worked better than it does, it would have a better done. Not much is trickling down and not many would want to eat what a horse excretes. It is kind of like a King throwing out food scraps to the poor or a President throwing out paper towels to Puerto Rican hurricane victims. Keith

          Liked by 1 person

    • Thank you for this excellent comment and the story of Cheney and Laffer and ‘trickle down’ economics. Sigh … round ‘n round we go, but where does this madness end? In a recent trip to Barnes & Noble, I saw a book titled “The Worst President in History” … it was about James Buchanan, and I found myself thinking that Buchanan would lose that title rather quickly … has already lost it, in fact. Thanks again for this comment! Hugs!!!

      Liked by 1 person

  2. I’m no economist, but it seems to me that the Republicans over your way and the Liberals in mine, both have this fundamental /belief/ in ‘trickle down’ economics. And that is all it is: a belief. It’s not backed up by statistics or by the lived reality of those most affected by it, namely you and me.
    These wealthy people live in a bubble. They only associate with others like themselves, and they all tell each other how clever they were to become so wealthy in the first place. Clearly, if the general populace were as clever, and determined, and ruthless as they are, the general populace would be wealthy too.
    According to that logic, the rich deserve to be rich and the poor deserve to be poor. But, of course, the wealthy are charitable and crumbs do fall from their table. How ungrateful of the masses, always wanting more…

    Liked by 1 person

    • Yes, it has been de-bunked so many times, and I am sick and tired of hearing it. It didn’t work in the early 80s when Reagan tried it, it has never worked and never will. It is like Marxism … on paper it makes perfect sense, but once you add in the human greed factor, it falls flat on its face! What does it take for people to see this????? 😱

      Like

      • There is hope, maybe. Just recently I came across something called ‘behavioural economics’ which purports to factor in the human element. I wish I could say I looked into it more deeply but…economics really isn’t my thing. :/

        Liked by 1 person

        • I’m a data analyst who deals with a lot of behavioral economics in research. It’s best for explaining why people keep voting for these assholes against their best interest, sadly, not for hope. Maybe someday Democrats will finally look to it to get their act together and successfully fight the destruction of our country at the ballot box. For now, though, my knowledge of it is why I have less hope, not more. I wrote a post once about how it’s hard to do the mental health bolstering trick of “challenging catastrophic thoughts” when your catastrophic thoughts are born from the same growth models used to derive the 1 trillion addition to the deficit…and you had a sick feeling already way back when Trump announced his candidacy that behavior economics said he might just win. The only thing I can think of right now to do is keep calling swing vote congressmen in both houses and say they’ve lost your vote – especially if you’re an independent – and encourage millions of others to do so. It almost worked with healthcare – at least until this bill removed the individual mandate to ensure the market collapsed on its own…

          Liked by 2 people

          • Thank you for your insight! I shall have to look more into this, when time permits. The Democratic Party certainly needs to back up and regroup, for they are disorganized and ineffectual at the moment, especially as they are up against the party of wealth and no conscience. I maintain hope that there are more good and sensible people out there who will do their part, even if that is naught more than a vote, to put things to right at some point, but I only believe that, I think, because I must, otherwise I feel that everything we do is meaningless, and that makes it hard to keep on doing what we do. Which is, of course an intentional understatement. Thanks again!

            Like

          • Apologies for taking so long to reply. Work has been crazy. I’ve always been interested in the behavioural psychology side of things and yes, the power of delusion is everywhere. Even when we know better, at an intellectual level.
            I wish I could offer some comfort as my own government has /finally/ done the right thing [for once], but that good will doesn’t extend as far as your Whitehouse. 😦
            I am an optimist though – even though I know better – so I’m hoping that a miracle will happen next year.
            -hugs-

            Liked by 2 people

  3. Jill, good post. We have both written a lot about this topic. If these bills merge into law, here is what we will gain as citizens:
    – not only not doing anything to rein in a runaway debt, but a larger one. Irrespective of the Tax Bill, our debt is forecasted to be over $30 trillion in 2027.
    – we have companies flush with cash and low interest rates. Giving them more cash is not going to incent stock buy backs, not investment. I just heard Warren Buffett repeat this view on Sunday, along with trickle down economics not working.
    – we have an economic distribution problem in the US with too many Americans in poverty or just out of it. Giving rich people more money and kicking folks off healthcare is not the answer. It is cruel and dilutive to the economy.

    At least that is my two cents. By the way, the new tax law will not be kind to me with my healthcare deductions and state/ property tax deductions. Keith

    Liked by 1 person

    • Thanks Keith! Your ‘two cents worth’ are always worth a lot more than two cents. Yes, we have both written much, and as I’m sure you already know, we aren’t finished yet. And next week, we’ll be hitting hard over the spending bill. I do not understand why the ‘trickle down’ theory, which has already been de-bunked not only by leading economists, but also be trial and error, prevails today. As I just told another reader, it is like Marxism … looks great on paper, but when you factor in the human greed element, it fails abysmally. Sigh. Well, back to the grind …

      Like

I would like to hear your opinion, so please comment if you feel so inclined.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s