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The US Falls Down the GOP’s Tax Scam Memory Hole. Again.

When is a tax cut more than just a tax cut? When it’s a GOP tax cut. Because when the GOP cuts taxes, it’s never just an attempt to cut taxes because tax cuts are just one element of the GOP’s much larger agenda of creating a society run by and for the super-rich. And because few people, even Republican voters, actually want a society that’s run by and for the super-rich, massive amounts of propaganda and deception are part of the tax cut package too. It’s why GOP tax cuts tend to be so much more than just tax cuts for the rich. They’re Big Lies designed to fool society into dismantling itself.

So it should come as a surprise to no one that the current tax cut barreling its way through the GOP controlled congress is an abomination being sold to the public by a web of lies that represent an inversion of the truth. But what is genuinely surprising about the current GOP tax push is just how shoddy that web of lies is turning out to be this time. Perhaps it shouldn’t be surprising given the political disaster that the GOP’s multiple failed attempts to overturn Obamacare turned out to be, where less than 1 in 5 voters actually approved of ‘Trumpcare’ once they learned about Trumpcare’s details and this was the case for both the House and Senate versions of Trumpcare. The GOP clearly has problems crafting legislation that it can at least try and pretend is ‘for the people’ these days so troubles crafting the tax cuts aren’t particularly surprising. But as we’re going to see, the Trump tax cut are turning out to be so politically toxic that it’s very possible that the GOP’s tax bill will end up being even more politically poisonous than ‘Trumpcare’. And that is genuinely surprising. It’s almost as if the failure to pass Trumpcare only increased the resolve of America’s right-wing oligarchs to vindictively pass legislation that’s even more awful:

Associated Press

Ultra-Rich Win Big Under GOP Tax Bill; Taxes Rise For Everyone Else

By MARCY GORDON
Published November 18, 2017 9:28 am

WASHINGTON (AP) — The ultra-wealthy, especially those with dynastic businesses — like President Donald Trump and his family — do very well under a major Republican tax bill moving in the Senate, as they do under legislation passed this week by the House.

Want to toast the anticipated tax win with champagne or a beer — or maybe you’re feeling Shakespearean and prefer to quaff mead from a pewter mug? That would cheer producers of beer, wine, liquor — and mead, the ancient beverage fermented from honey. Tax rates on their sales would be reduced under the Senate bill.

On the other hand, people living in high-tax states, who deduct their local property, income and sales taxes from what they owe Uncle Sam, could lose out from the complete or partial repeal of the deductions. And an estimated 13 million Americans could lose health insurance coverage over 10 years under the Senate bill.

Some winners and losers:
__

WINNERS

Wealthy individuals and their heirs win big. The hottest class-warfare debate around the tax overhaul legislation involves the inheritance tax on multimillion-dollar estates. Democrats wave the legislation’s targeting of the tax as a red flag in the face of Republicans, as proof that they’re out to benefit wealthy donors. The House bill initially doubles the limits — to $11 million for individuals and $22 million for couples — on how much money in the estate can be exempted from the inheritance tax, then repeals it entirely after 2023. The Senate version also doubles the limits but doesn’t repeal the tax.

Then there’s the alternative minimum tax, a levy aimed at ensuring that higher-earning people pay at least some tax. It disappears in both bills.

And the House measure cuts tax rates for many of the millions of “pass-through” businesses big and small — including partnerships and specially organized corporations — whose profits are taxed at the owners’ personal income rate. That’s potential cha-ching for Trump’s far-flung property empire and the holdings of his daughter Ivanka and her husband, Jared Kushner. The Senate bill lets pass-through owners deduct some of the earnings and then pay at their personal income rate on the remainder.

— Corporations win all around, with a tax rate slashed from 35 percent to 20 percent in both bills — though they’d have to wait a year for it under the Senate measure. Trump and the administration view it as an untouchable centerpiece of the legislation.

— U.S. oil companies with foreign operations would pay reduced taxes under the Senate bill on their income from sales of oil and natural gas abroad.

— Beer, wine and liquor producers would reap tax reductions under the Senate measure.

— Companies that provide management services like maintenance for aircraft get an updated win. The Senate bill clarifies that under current law, the management companies would be exempt from paying taxes on payments they receive from owners of private jets as well as from commercial airlines. That was a request from Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, whose state is home to NetJets, a big aircraft management company.

Portman voted for the overall bill. Brown opposed it.
__

LOSERS

— An estimated 13 million Americans could lose health insurance coverage under the Senate bill, which would repeal the “Obamacare” requirement that everyone in the U.S. have health insurance. The projection comes from the nonpartisan Congressional Budget Office. Eliminating the fines is expected to mean fewer people would obtain federally subsidized health policies.

— People living in high-tax states would be hit by repeal of federal deductions for state and local taxes under the Senate bill, and partial repeal under the House measure. That result of a compromise allows the deduction for up to $10,000 in property taxes.

— Many families making less than $30,000 a year would face tax increases starting in 2021 under the Senate bill, according to Congress’ nonpartisan Joint Committee on Taxation. By 2027, families earning less than $75,000 would see their tax bills rise while those making more would enjoy reductions, the analysts find. The individual income-tax reductions in the Senate bill would end in 2026.

———-

“Ultra-Rich Win Big Under GOP Tax Bill; Taxes Rise For Everyone Else” by MARCY GORDON; Associated Press; 11/18/2017

Wealthy individuals and their heirs win big. The hottest class-warfare debate around the tax overhaul legislation involves the inheritance tax on multimillion-dollar estates. Democrats wave the legislation’s targeting of the tax as a red flag in the face of Republicans, as proof that they’re out to benefit wealthy donors. The House bill initially doubles the limits — to $11 million for individuals and $22 million for couples — on how much money in the estate can be exempted from the inheritance tax, then repeals it entirely after 2023. The Senate version also doubles the limits but doesn’t repeal the tax.”

As we can see, the wealthy and their heirs are the big winners in both the House and Senate versions of the bills. Surprise!

But don’t forget that it’s not just things like the elimination of the estate tax or cuts to the individual rates for the wealthy that are going to make this tax cut a giant gift to the wealthy. The massive cut to the corporate tax, from 35 to 20 percent, also counts as a massive tax cut for the rich given the reality that 80 percent of the stock market wealth in the US is owned by the wealthiest 10 percent and the top 1% of Americans own 38 percent the US’s wealth overall. When the rich own almost everything you can’t cut corporate taxes without cutting taxes disproportionately for the rich and that permanent corporate tax cut down to 20 percent is part of both the House and Senate bills.

But while it’s clear that both the House and Senate versions of the bill represent a massive redistribution of wealth towards the already-wealthy, there are still a number of differences between the House and Senate versions and at some point those differences are going to have to be resolved. And as we’re going to see, the resolution of those differences isn’t going to be easy for two key interrelated reasons:

1. The Senate’s “Byrd rule” needs to be followed to in order to pass legislation in the Senate with a simple majority vote of 51 Senators, avoiding the 60-vote threshold to overcome a filibuster. And the Byrd rule stipulates that new spending legislation must be budget-neutral over the next 10 years. That’s a pretty big ‘catch’ to the Byrd rule when you’re planning a massive tax giveaway for corporations and the wealthy.

and

2. The GOP’s tax cuts are not remotely budget-neutral…unless you decide to drink the ‘trickle-down’ supply-side economics Kool-Aid and choose to believe the fantasy that massive tax cuts for the wealthy will permanently turbo-charge the US economy. The vast majority of economists believe no such fantasy, and with good reason given that historical evidence doesn’t support it (it’s not like this will be the first time the US has given the rich a massive tax cut). But unless the GOP can successfully sell the US on the notion that massive tax cuts for the rich and corporations will result in a large and permanent increase in the growth of the US economy it’s going to be very difficult for the GOP to construct a tax plan that cuts taxes on the wealthy and corporations that’s budget neutral. The math just won’t work without the ‘trickle-down’ Kool-Aid.

And that Byrd rule requirement that the Senate alone faces is key driver for the differences we’re going to see between the House and Senate versions of the tax cuts: the House doesn’t need to adhere to the Byrd rule, so its version of the bill involves a lot more cuts with a higher explosion of public debt. The Senate version, on the other hand, has to somehow find a way to balance out the tax cuts for the wealthy with new revenues that somehow all balance out within a decade. And in order find that balance the Senate bill actually ends up raising taxes on the poor and middle-class and Democratic-leaning states. And also encourages poor-people to drop their subsidized health insurance. Yep, that’s how the Senate version of the bill passes the Byrd rule. By passing the cost of the tax cuts for the wealthy on to the middle-class, the poor, and ‘Blue states’.

So with that critical distinction between the House and Senate bills in mind – the Senate needs to follow the Byrd rule and avoid exploding the deficit, the House doesn’t – it’s worth taking a closer look at the various similarities and differences between the House and Senate versions of the bill. They are both extremely generous to the wealthy and corporations, but the House version tends to be somewhat more generous without trying to cover the cost of that generosity: Both versions also eliminate the the alternative minimum tax (meaning a lot of wealthy people will be allowed to pay almost nothing in taxes) and both versions double the the inheritance tax exemption from estates worth $11 million up to $22 million right away, but only in the House version has the entire estate tax expire in 2023. Also, both versions cuts in the tax rate for “pass-through” businesses – where profits are taxed at the personal income tax rate (which tends to be higher than the corporate tax rate for wealth individuals) – but the House version is particularly nice to the wealthy who own pass-through corporations:


Then there’s the alternative minimum tax, a levy aimed at ensuring that higher-earning people pay at least some tax. It disappears in both bills.

And the House measure cuts tax rates for many of the millions of “pass-through” businesses big and small — including partnerships and specially organized corporations — whose profits are taxed at the owners’ personal income rate. That’s potential cha-ching for Trump’s far-flung property empire and the holdings of his daughter Ivanka and her husband, Jared Kushner. The Senate bill lets pass-through owners deduct some of the earnings and then pay at their personal income rate on the remainder.

An elimination of the estate tax and and a with a 25 percent tax rate for “pass-through” corporations. Yeah, the House version of the bill is going to be mighty nice for people like Ivanka Trump and Jared Kushner. And it’s not like the Senate version isn’t still wildly generous to Jared and Ivanka. It’s not quite as generous.

And look one of the major ways the Senate version helps pay for cost all these goodies for the wealthy: by repealing the “Obamacare” mandate, the requirement that US adults purchase health insurance or face a small annual fine. The Senate version complies with the Byrd rule by assuming that repealing the Obamacare mandate will result in an estimate 13 million Americans dropping their health insurance coverage. Coverage that is typically government subsidized. The tax cuts for the rich are paid for with less health care for the poor. That’s how the Senate bill is literally designed. And that’s on top of the Senate’s plan to have taxes on people making less than $75,000 actually rise at the end of 10 years:


An estimated 13 million Americans could lose health insurance coverage under the Senate bill, which would repeal the “Obamacare” requirement that everyone in the U.S. have health insurance. The projection comes from the nonpartisan Congressional Budget Office. Eliminating the fines is expected to mean fewer people would obtain federally subsidized health policies.

— People living in high-tax states would be hit by repeal of federal deductions for state and local taxes under the Senate bill, and partial repeal under the House measure. That result of a compromise allows the deduction for up to $10,000 in property taxes.

— Many families making less than $30,000 a year would face tax increases starting in 2021 under the Senate bill, according to Congress’ nonpartisan Joint Committee on Taxation. By 2027, families earning less than $75,000 would see their tax bills rise while those making more would enjoy reductions, the analysts find. The individual income-tax reductions in the Senate bill would end in 2026.

The Senate GOP’s giant tax cut is set to raise taxes on the poor to pay for tax cuts for the rich and corporations. It’s that bad and that blatant. With the House version we don’t find as many tax hikes on the poor and middle-class, but it just ends up blowing up the national debt more instead. But the the middle-class and poor don’t fair much better with the House bill, where middle-class tax cuts expire and only 40 percent of Americans will still see lower taxes by 2023, along with popular deductions like the mortgage deduction in the House version.

House Leadership to GOPers: Don’t Trash the Senate Bill (Because it’s Probably Closer to the Final Bill)

But despite all the similarities between the two versions of the bill – they both shower corporations and the wealthy with tax treats and make the poor and middle-class pay for them – there are still significant differences. So which version should we expect to win out? Well, since the Byrd rule still applies to the final version of the bill that the Senate has to vote on – the version the House and the Senate create in conference after the different versions of the bill are passed by each chamber – it’s hard to see how the Senate’s version isn’t going to be a lot closer to the final version of the bill because that’s the only way the final version can still comply with the Byrd rule. And that’s why it’s no surprise that we have reports that the House leadership told lawmakers not to bash the Senate tax bill which is making some House members feel like the eventual plan for the House is to make their version of the tax cut look a lot more like the Senate version:

Vox

The House just passed its tax reform plan. It’s drastically different from the Senate’s.

by Tara Golshan Nov 16, 2017, 1:51pm EST Updated

House Republicans passed their tax reform plan Thursday afternoon 227-205 — on a day marked by a visit from President Donald Trump — with only 13 Republicans voting against it.

It was a big day for House Speaker Paul Ryan. On the surface, the proposal, which dramatically cuts taxes for corporations, doubles the standard deduction, and consolidates the individual tax rates, among other changes, has moved swiftly through the House without much drama. “This is Ryan’s bill,” Rep. Pete Sessions (R-TX) told reporters.

But behind the cheers and celebration, there’s a clear sense that this vote doesn’t say much about the state of tax reform as a whole — a debate that, despite the insistence of Republican leadership and their allies, is still unresolved.

As the House passed its bill, on the other side of the Capitol Building the Senate continues to mark up its own tax reform proposal — one that looks very different from the House’s.

“It is interesting to me that the ‘Big Six’ worked for nine months on getting on the same sheet of music on tax reform, and [to] have it be this dynamically different as it is rolled out — it’s a bit of a surprise,” Rep. Mark Meadows (R-NC) told Vox of the group of top senators, House members, and Trump administration officials who brainstormed a framework for tax reform.

Going into the vote, House leadership told lawmakers not to bash the Senate tax bill — a move that has made some feel like the plan is to adopt a lot more of the Senate bill. Already, some of the differences are making House Republicans grumble. The Senate fully repeals the state and local income and property tax deduction, cuts health care, and sunsets tax relief for individual Americans in order to pay for corporate tax cuts.

“You’re rewriting a tax code for a generation, and you are doing it in 10 days, and then to be dismantling health care without any debate at all could have unintended consequences,” Rep. Peter King (R-NY), who voted against the House bill, said. “In [1986] it took two years to put together a tax reform bill; they’re doing it in 10 days.”

We still don’t know exactly what tax reform will look like — but Republicans are moving fast

“It seems to be pretty significant differences,” King told Vox Wednesday of the House and Senate tax reform proposals.

“Especially because you have to get it done in such a short amount of time. Any changes to the tax bill has significant consequences,” he continued.

The day before the House vote, some members cast last-minute doubts on the math, HuffPost reported, questioning whether the typical family of four would actually get an average cut of $1,182, as Republican leadership keeps touting.

There’s no question that Republicans have been grappling with a major math problem with their tax bill, searching for budget gimmicks and rosy analyses to make the proposal add up and comply with the Senate budget rules. The House’s bill fails to hew to crucial Senate budget rules — making the proposal untenable in the upper chamber. Members seem to be aware of this dilemma.

“My must-changes are I just want the math to work,” Rep. David Schweikert (R-AZ) said of bringing the House and Senate bills together.

The math solutions in the Senate have proved politically difficult.

The Senate bill leaves many of the deductions the House repeals untouched, and instead repeals Obamacare’s individual mandate, phases in the corporate tax cut, increases the child tax credit, fully repeals the state and local tax deduction, keeps the seven tax brackets — instead of the House’s four — and sunsets almost all of the tax relief for individual Americans by 2025.

By Wednesday, one senator, Ron Johnson (R-WI), had already come out against the Senate’s bill, saying it helped corporations more than small businesses and families. Several more crucial senators have been tight-lipped about their feelings. A recent distributional analysis from the Joint Committee on Taxation found that the Senate’s proposal, which sunsets the individual tax reforms to pay for a corporate tax cut, would raise taxes on the poor by 2021 and across the board in 2027.

Are corporate tax cuts enough to keep Republicans together? It’s starting to look like it.

There is one policy that is unifying the Republican ranks: They really want to cut the corporate tax rate. It’s the centerpiece of every plan they have released in both the House and the Senate, and they’ve spent weeks floating wildly unpopular ways to pay for it.

“It’s in all of our best interest to have these tax cuts for corporations so that they will have more money to invest in their business and pay their workers,” Rep. Mike Conaway (R-TX) told Vox.

Lowering the corporate tax from its current 35 percent to 20 percent, as Republicans are proposing, is costly — in the context of the current bill, the Joint Committee on Taxation estimates it would cost $1.33 trillion over 10 years. Republicans argue that this cost will be partially offset through incredible economic growth — pushing corporations to invest more in their workers and bring more jobs back to the United States. And most economists believe that temporary corporate cuts do little or nothing to boost economic growth, because corporations can’t count on the cuts in the future.

So even the most vulnerable Republican lawmakers from states like New York, New Jersey, and California that are adversely impacted by both the House and Senate proposals to pay for the permanent corporate tax cut are prioritizing doing so.

“Overall there is much more substantive tax policy that is in agreement,” Rep. Tom Reed (R-NY) said of the ideology behind the Senate and House bills, making a case for a permanent corporate tax cut. “From a growth perspective on the business side, the less you can rely on having a long-term planning capability and making those investments long term, I would say that has a little more negative impact.”

Still, corporate rate cuts also have a lot of potential to be politically expensive.

Sixty percent of registered voters think corporations pay “too little” in taxes, according to a September poll from Morning Consult and Politico surveying a little under 2,000 Americans. A more recent Morning Consult/Politico survey from October found only 39 percent of Americans think lowering the corporate tax rate should be part of the tax plan — with 59 percent of Republican voters supporting it. Another poll from Pew Research Center showed that 53 percent of Republicans think corporate tax rates should either be raised or stay the same.


———-

“The House just passed its tax reform plan. It’s drastically different from the Senate’s.” by Tara Golshan; Vox; 11/16/2017

Going into the vote, House leadership told lawmakers not to bash the Senate tax bill — a move that has made some feel like the plan is to adopt a lot more of the Senate bill. Already, some of the differences are making House Republicans grumble. The Senate fully repeals the state and local income and property tax deduction, cuts health care, and sunsets tax relief for individual Americans in order to pay for corporate tax cuts.”

‘Don’t bash the bill we might have to vote for!’ That was the implied message from House GOP leaders following the passage of the House’s own bill. And that means a lot of the highly unpopular features of the Senate’s version – like the full repeal of state and local taxes deductions and property tax deductions – are probably going to be things the House GOPers eventually have to vote for. Best not to bash the ideas you’re going to have to vote for:


There’s no question that Republicans have been grappling with a major math problem with their tax bill, searching for budget gimmicks and rosy analyses to make the proposal add up and comply with the Senate budget rules. The House’s bill fails to hew to crucial Senate budget rules — making the proposal untenable in the upper chamber. Members seem to be aware of this dilemma.

“My must-changes are I just want the math to work,” Rep. David Schweikert (R-AZ) said of bringing the House and Senate bills together.

The math solutions in the Senate have proved politically difficult.

The Senate bill leaves many of the deductions the House repeals untouched, and instead repeals Obamacare’s individual mandate, phases in the corporate tax cut, increases the child tax credit, fully repeals the state and local tax deduction, keeps the seven tax brackets — instead of the House’s four — and sunsets almost all of the tax relief for individual Americans by 2025.

Fully repealing state and local tax deductions and property tax deductions – something that will hammer people living higher-tax ‘Blue’ states where property values also tend to be higher – is something that all GOPers in the House and Senate are probably going to end up having to vote for in order to pay for permanent cuts to the taxes for the wealthy and corporations. Including the GOPers from those Blue states that are about to get hammered. It’s not exactly great politics.

And yet it appears that ‘Blue state’ and ‘Red state’ Republicans are largely united behind this tax cut push. United by a desire to slash corporate taxes, the centerpiece of both bills:


Are corporate tax cuts enough to keep Republicans together? It’s starting to look like it.

There is one policy that is unifying the Republican ranks: They really want to cut the corporate tax rate. It’s the centerpiece of every plan they have released in both the House and the Senate, and they’ve spent weeks floating wildly unpopular ways to pay for it.

“It’s in all of our best interest to have these tax cuts for corporations so that they will have more money to invest in their business and pay their workers,” Rep. Mike Conaway (R-TX) told Vox.

Lowering the corporate tax from its current 35 percent to 20 percent, as Republicans are proposing, is costly — in the context of the current bill, the Joint Committee on Taxation estimates it would cost $1.33 trillion over 10 years. Republicans argue that this cost will be partially offset through incredible economic growth — pushing corporations to invest more in their workers and bring more jobs back to the United States. And most economists believe that temporary corporate cuts do little or nothing to boost economic growth, because corporations can’t count on the cuts in the future.

So even the most vulnerable Republican lawmakers from states like New York, New Jersey, and California that are adversely impacted by both the House and Senate proposals to pay for the permanent corporate tax cut are prioritizing doing so.

“There is one policy that is unifying the Republican ranks: They really want to cut the corporate tax rate. It’s the centerpiece of every plan they have released in both the House and the Senate, and they’ve spent weeks floating wildly unpopular ways to pay for it.”

Permanently slashing corporate tax rates from 35 to 20 percent: It’s the one element that both the House and Senate GOPers insist upon for any final version of the bill. The tax cuts for the wealthy or tax hikes on everyone else are up for the debate but those corporate tax rates of 20 percent must be there in in the final version. And it’s that unified desire to delivery corporations this massive tax goodie that is guaranteeing so much pain elsewhere. Because as the following article notes, there is simply no way to make this corporate tax cut pay for itself, even if you eliminate every corporate tax loophole:

Vox

The Republican tax plan’s original sin
A giant, unpopular, unworkable business tax cut.

Updated by Matthew Yglesias
Nov 6, 2017, 9:00am EST

Paul Ryan, speaking to CNN about the tax overhaul bill the passed earlier this month, says “the whole purpose of this is a middle-class tax cut.” That’s in line with the rhetoric Donald Trump deployed on the campaign trail, in line with public opinion polling about what voters want, and reflects a kind of common sense conservatism on economic policy that says what typical Americans could most use from the government is to keep more of their hard-earned cash rather than some big new government programs.

Ryan and his team have even cooked up a model family — a mom, dad, and two kids getting by on the national median household income — who stand to reap a windfall of $1,182 per year from the plan.

Unfortunately for the American middle class, Ryan is lying. The hypothetical family his top spokesperson AshLee Strong described would get a tax cut of almost $1,200 — for one year. It gets smaller in year two, smaller still in year three, smaller still in year four, and smaller still in year five. It nearly vanishes in the sixth year of the Ryan tax plan, and in years seven, eight, nine, and 10 the family would be paying higher taxes than under current law. That tax hike is not only permanent, it actually grows over time because of a change to the inflation indexing of tax brackets.

On average, over the entire 10-year scoring window, the family would get a total tax cut of $3,550. Yet over the same time period, the national debt would grow by $4,644 per person — or about $18,500 for a family of four.

There’s nothing wrong with running a budget deficit if you’re accomplishing something worthwhile. But to go $18,500 in debt in order to secure a $3,550 tax cut is preposterous. And yet something like that is an inevitable consequence of the Republican tax plan’s original decision — an unpopular and unworkable scheme to reduce the corporate income tax rate from 35 percent to 20 percent.

Real corporate tax reform is a reasonable idea

The basic story with the corporate income tax in the United States is that the statutory rate of 35 percent is one of the highest of any rich country, but there are so many corporate tax loopholes that companies on average only actually pay in the mid-to-high 20s.

Under the circumstances, there’s a strong case for corporate income tax reform. By eliminating a bunch of deductions you should able to significantly reduce corporate tax rates without increasing the budget deficit. That would make the conduct of business in the United States both fairer and more efficient by treating all forms of business activity more equally. That, in turn, should provide a modest boost to economic growth as well as eliminating some hassles and wasted time in terms of tax compliance.

The Obama administration looked at this and concluded that there was a reasonable reform path to cutting from 35 percent to 28 percent while raising some revenue.

Mitt Romney’s presidential campaign in 2012 looked at it and concluded more aggressively that there was a reform path to cutting from 35 percent to 25 percent while probably losing some revenue.

Republicans copied a number from another plan

But House Republicans looked at Romney’s plan and decided to cut 5 percentage points lower — all the way down to 20 percent — even though there’s no way to make that work. Remember, the effective corporate income tax rate paid in the United States is somewhere in the high 20s, varying a bit from year to year. Even if you closed every single deduction you couldn’t get down to 20. And nobody really wants to close every single deduction anyway. So in the long run, the 20 percent target simply isn’t workable without raising taxes on individuals — which is why Strong’s favorite family’s tax cut eventually goes away and becomes a tax hike.

A year ago, the people involved in drafting the plan were completely aware of the mathematical realities. That’s why they weren’t proposing a 20 percent corporate income tax rate. Instead, they proposed eliminating the corporate income tax as we know it altogether and replacing it instead with a destination-based cash flow tax (DBCFT).

This was basically a broad 20 percent national consumption tax — similar to a retail sales tax except levied on services as well as goods — partially offset by a big payroll tax cut. The result, on net, would be a tax on consumption that was financed out of past savings. This was an idea with some merit that ended up being derailed by public and congressional confusion about its border adjustment provisions, though I think it would have died anyway once members of Congress understood its implications for non-poor retirees. The key point, however, is that the 20 percent DBCFT was not the same thing as a 20 percent corporate income tax.

Indeed, I assume that if Republicans had thought they were the same thing, they wouldn’t have gone through the trouble of inventing a whole new kind of tax! But having dropped the DBCFT idea, Republicans didn’t rethink the rest of their plan. They just copied the number “20” over from one tax plan to another and tried to make the math work based on a 20 percent corporate income tax rate.

But the math doesn’t work. The business tax cuts in the GOP plan add $1 trillion to the deficit over 10 years, accounting for two-thirds of the total net tax cutting. And with plenty of tax cuts for rich people also in the plan, that leaves Republicans raising taxes on many families and increasing the deficit.

Now they’re stuck with an unpopular, unworkable nightmare

There are at least two big problems with the approach House Republicans ended up taking. One is that it’s ridiculously unpopular. Only 24 percent of the public says we should have a corporate tax cut, and that’s without considering any tradeoffs.

A lot of the individual contentious measures in the GOP plan are defensible in at least some contexts. But to eliminate a tax credit for adopting a child while raising taxes on PhD programs and curtailing the homebuilding industry is a tough sell if the purpose of it all is to pass a big unpopular corporate tax cut.

But it gets worse. Even with a bunch of popular tax breaks going away, and even with Strong’s sample family eventually facing a future of endlessly escalating tax increases, the corporate tax cut is so huge that it blows a hole in the long-term budget deficit in a way that violates Senate rules. So the House bill not only has a profoundly unpopular trade-off at its heart — it literally cannot pass the Senate without substantial changes. Which means if they’re smart, House Republicans will stop and make some serious changes of their own rather than just plowing ahead.

If.

———-

“The Republican tax plan’s original sin” by Matthew Yglesias; Vox; 11/06/2017

Unfortunately for the American middle class, Ryan is lying. The hypothetical family his top spokesperson AshLee Strong described would get a tax cut of almost $1,200 — for one year. It gets smaller in year two, smaller still in year three, smaller still in year four, and smaller still in year five. It nearly vanishes in the sixth year of the Ryan tax plan, and in years seven, eight, nine, and 10 the family would be paying higher taxes than under current law. That tax hike is not only permanent, it actually grows over time because of a change to the inflation indexing of tax brackets.”

Yep, House Speaker Paul Ryan is blatantly lying when he claims that this tax cut bill is all about tax cuts for the American middle-class. The way the House version works, the tax cuts start eroding after the first year, are nearly completely gone by year six, and taxes rise for middle-class families after year seven. And just keep on rising. So that hypothetical middle-class family of four will get a total tax cut of $3,550 (which expires), while the national debt rises $4,644 per person (including the two kids in this family of four). It’s a giant scam. And it’s the kind of scam that is utterly unavoidable given the corporate tax cut:


On average, over the entire 10-year scoring window, the family would get a total tax cut of $3,550. Yet over the same time period, the national debt would grow by $4,644 per person — or about $18,500 for a family of four.

There’s nothing wrong with running a budget deficit if you’re accomplishing something worthwhile. But to go $18,500 in debt in order to secure a $3,550 tax cut is preposterous. And yet something like that is an inevitable consequence of the Republican tax plan’s original decision — an unpopular and unworkable scheme to reduce the corporate income tax rate from 35 percent to 20 percent.

“There’s nothing wrong with running a budget deficit if you’re accomplishing something worthwhile. But to go $18,500 in debt in order to secure a $3,550 tax cut is preposterous. And yet something like that is an inevitable consequence of the Republican tax plan’s original decision — an unpopular and unworkable scheme to reduce the corporate income tax rate from 35 percent to 20 percent.

And notice how it would have been possible for the GOP to cut corporate taxes pretty significantly without requiring these stealth middle-class tax hikes simply by closing corporate tax loopholes. Mitt Romney only proposed a cut to 25 percent during his 2012 election and even the Obama administration concluded that corporate taxes could have dropped from 35 to 28 percent without any drop of tax revenues simply by closing loopholes. But the GOP now feels compelled to drop it all the to 20 percent instead, hence the need for those middle-class tax hikes:


Under the circumstances, there’s a strong case for corporate income tax reform. By eliminating a bunch of deductions you should able to significantly reduce corporate tax rates without increasing the budget deficit. That would make the conduct of business in the United States both fairer and more efficient by treating all forms of business activity more equally. That, in turn, should provide a modest boost to economic growth as well as eliminating some hassles and wasted time in terms of tax compliance.

The Obama administration looked at this and concluded that there was a reasonable reform path to cutting from 35 percent to 28 percent while raising some revenue.

Mitt Romney’s presidential campaign in 2012 looked at it and concluded more aggressively that there was a reform path to cutting from 35 percent to 25 percent while probably losing some revenue.

Republicans copied a number from another plan

But House Republicans looked at Romney’s plan and decided to cut 5 percentage points lower — all the way down to 20 percent — even though there’s no way to make that work. Remember, the effective corporate income tax rate paid in the United States is somewhere in the high 20s, varying a bit from year to year. Even if you closed every single deduction you couldn’t get down to 20. And nobody really wants to close every single deduction anyway. So in the long run, the 20 percent target simply isn’t workable without raising taxes on individuals — which is why Strong’s favorite family’s tax cut eventually goes away and becomes a tax hike.

“But House Republicans looked at Romney’s plan and decided to cut 5 percentage points lower — all the way down to 20 percent — even though there’s no way to make that work. Remember, the effective corporate income tax rate paid in the United States is somewhere in the high 20s, varying a bit from year to year. Even if you closed every single deduction you couldn’t get down to 20. And nobody really wants to close every single deduction anyway. So in the long run, the 20 percent target simply isn’t workable without raising taxes on individuals — which is why Strong’s favorite family’s tax cut eventually goes away and becomes a tax hike.”

And even with those middle-class tax cuts, the cost of the corporate tax cuts still aren’t covered. Hence the House version’s deficit explosion, a violation of the Senate Byrd rule:


But it gets worse. Even with a bunch of popular tax breaks going away, and even with Strong’s sample family eventually facing a future of endlessly escalating tax increases, the corporate tax cut is so huge that it blows a hole in the long-term budget deficit in a way that violates Senate rules. So the House bill not only has a profoundly unpopular trade-off at its heart — it literally cannot pass the Senate without substantial changes. Which means if they’re smart, House Republicans will stop and make some serious changes of their own rather than just plowing ahead.

And that gives a better idea of just how politically awful the Senate version of the tax bill is: the deficit explodes even with the House version’s tax hike in the middle-class, violating the Byrd rule. The Senate addresses fiscal hole this by extracting even more money from the poor and middle-class.

The Sequester Cuts. Including Medicare Cuts

And there’s the Medicare cuts. Yep, even though Medicare cuts aren’t mentioned anyone in the House or Senate versions of the tax bill, Medicare will still face a $25 billion cut. Why? Because of special “sequester” rules the Tea Party conservatives mandated during the 2010 budget showdown that forces across-the-board cuts to federal programs whenever Congress passes a bill that increases the deficit. And while Medicaid, Social Security, and food stamps are protected from the sequester, Medicare isn’t. So of the ~$136 billion in sequester cuts that the House tax bill will force on federal government programs in 2018 alone, $25 billion of that will come from cuts in Medicare:

Talking Points Memo

House GOP’s Tax Bill Would Trigger A $25 Billion Cut To Medicare

By Alice Ollstein
Published November 17, 2017 6:00 am

Two weeks after its introduction and following zero hearings, the House of Representatives passed an approximately $1.5 trillion dollar tax cut on Thursday. Most of the focus has been on the bill’s tax benefits for the wealthy and corporations, but some lawmakers are sounding the alarm that passage of the bill will also trigger an estimated $25 billion cut to Medicare.

With the Senate expected to take up its own bill after the Thanksgiving recess, Democrats struggling to mount an opposition to the bill see an opening in its controversial health care impacts—including the Medicare cuts, the repeal of Obamacare’s individual mandate, and the elimination of the medical expenses deduction in the House bill.

The Medicare cut—announced by the non-partisan Congressional Budget Office on Tuesday—can only be waived by a majority of the House and a 60-vote supermajority of the Senate.

Thanks to laws created by the Tea Party’s infamous 2010 sequester showdown over government spending, automatic cuts spring into action anytime Congress passes a bill that balloons the federal deficit, as the tax bill would. The approximately $136 billion in cuts spurred by the GOP tax bill would hit a number of government programs—including farm subsidies and the Border Patrol—but would cut most deeply into Medicare. Medicaid, Social Security, and food stamps are protected.

These cuts would violate President Trump’s repeated campaign promises not to touch Medicare and other social safety net programs. But for House Speaker Paul Ryan (R-WI) and other lawmakers who have for decades longed for an opportunity to cut to Medicare and other federal benefits, the cuts would be a feature rather than a bug.

The CBO’s announcement this week has also raised the hackles of the influential AARP, who wrote to Congress on behalf of their 38 million members in opposition to the bill.

“The large increase in the deficit will inevitably lead to calls for greater spending cuts, which are likely to include dramatic cuts to Medicare, Medicaid and other critical programs serving older Americans,” they warned. “The Congressional Budget Office has now published a letter stating that unless Congress takes action, H.R. 1 will result in automatic federal funding cuts of $136 billion in fiscal year 2018, $25 billion of which must come from Medicare.”

Congress could avoid these cuts by waiving the so-called “pay-as-you-go” rules, but it’s unclear whether Republicans or Democrats would see that as being in their political interest. Senators from both parties would have to support the waiver to see it pass the upper chamber. Republicans who regularly rail against runaway government spending may not want to vote against the cuts, and Democrats have suggested they have little interest in bailing out Republicans’ deficit-busting tax bill.

Yet some, including Sen. Chris Van Hollen (D-MD), are already sounding the alarm. In a letter to the House Freedom Caucus on Thursday, he demanded to know if they would vote to waive the budget rules if the tax bill became law.

———-

“House GOP’s Tax Bill Would Trigger A $25 Billion Cut To Medicare” by Alice Ollstein; Talking Points Memo; 11/17/2017

“Thanks to laws created by the Tea Party’s infamous 2010 sequester showdown over government spending, automatic cuts spring into action anytime Congress passes a bill that balloons the federal deficit, as the tax bill would. The approximately $136 billion in cuts spurred by the GOP tax bill would hit a number of government programs—including farm subsidies and the Border Patrol—but would cut most deeply into Medicare. Medicaid, Social Security, and food stamps are protected.”

In case it wasn’t completely obvious that this tax cut would lead directly to cuts in federal programs, the sequester is a good reminder of this because it’s literally a rule that mandates cuts to federal programs when Congress increases the deficit. Federal cuts aren’t an option unless the sequester is ended.

And let’s not forget that, while President Trump pledged to leave Medicare untouched during his campaign, gutting Medicare is a long-term dream for the GOP at large:


These cuts would violate President Trump’s repeated campaign promises not to touch Medicare and other social safety net programs. But for House Speaker Paul Ryan (R-WI) and other lawmakers who have for decades longed for an opportunity to cut to Medicare and other federal benefits, the cuts would be a feature rather than a bug

So it’s looking very possible that Paul Ryan’s dream of cutting Medicare is about to happen. Soon. Because that $25 billion cut will be mandated to happen in 2018:


The CBO’s announcement this week has also raised the hackles of the influential AARP, who wrote to Congress on behalf of their 38 million members in opposition to the bill.

“The large increase in the deficit will inevitably lead to calls for greater spending cuts, which are likely to include dramatic cuts to Medicare, Medicaid and other critical programs serving older Americans,” they warned. “The Congressional Budget Office has now published a letter stating that unless Congress takes action, H.R. 1 will result in automatic federal funding cuts of $136 billion in fiscal year 2018, $25 billion of which must come from Medicare.”

Also note that the cuts to Medicare are capped at 4 percent per year, which comes out to $25 billion. So if the sequester mandates that Medicare should be cut even more than $25 billion, those additional cuts are going to have to come from elsewhere in the federal budget. In other words, these tax cuts for corporations and the rich aren’t just being paid for with higher taxes on the poor and middle-class. All beneficiaries of federal spending are also going to experience a cut.

And the only way to avoid these cuts will be for the GOP to repeal the sequester, which would be pretty remarkable if it happened when you consider that the sequester was demanded by the GOP over fears of rising national debt.

Is it a Tax Hike on the Poor, or a Premium Hike for the Poor’s Health Insurance? How About Both

Of course, since the the $25 billion annual cut to Medicare and the rest of the sequestration cuts triggered by the House’s version of the tax cut are triggered due to the explosion in the federal deficit, the sequester cuts might not be quite as large for the Senate version simply because the Senate version has to follow the Byrd rule and isn’t allowed to blow up the deficit quite as much. But as we already saw, it’s not like health care will go untouched under the Senate’s version thanks to the repeal of the Obamacare mandate.

And as we’ll see below, that Obamacare mandate repeal result in a pretty remarkable estimate for the impact of the Senate’s tax bill on the poorest Americans: the Joint Committee on Taxation (JTC) – the congressional committee consisting of House and Senate members tasked with estimating the costs of proposed legislation – estimated the tax bill for the poorest Americans would rise over 25 percent by 2027! And this spike in taxes for the poor was largely due to the repeal of the Obamacare mandate.

Now, as we’ll also see, that 25 percent rise in the tax burden for the poor is based on the fact that the government won’t be paying health insurance subsidies to 13 million Americans who assumed to drop their health insurance coverage if the mandate is repealed. So it’s the loss of health insurance subsidies that’s driving the 25 percent spike in the tax burden for the poor, a fact that the GOP is angrily latching onto to in this debate to make it look like this tax bill isn’t predicated on the poor paying the bill for the wealthy’s tax cuts. And yet it’s hard to ignore the reality that the Senate’s tax bill is paying for itself by assuming that the federal government spends a lot less money on health care for the poor, which sure looks a lot like the poor paying for tax cuts for the rich:

The Hill

Tax cuts in Senate bill would evaporate in a decade: JCT

By Niv Elis and Peter Sullivan – 11/16/17 10:40 AM EST

Tax cuts for individuals in the Senate’s latest tax plan would disappear by 2027, according to an analysis by the Joint Committee on Taxation (JCT), with some even seeing a tax increase.

While taxpayers would see their tax bills drop by 7.4 percent on average in 2019 under the bill, by 2027, their taxes would rise by an average of 0.2 percent.

The poor would be hardest hit, with those making between $20,000 and $30,000 seeing their tax bills rise starting in 2021. By 2027, they would see a 25.4 percent increase in their tax bill.

Those making over $75,000 would still see their taxes go down, albeit by less than 1 percent by the final year, while everyone making under $75,000 would see some level of tax increase.

The drop-off is likely attributable to a series of expiring tax cuts introduced in Finance Committee Chairman Orrin Hatch’s (R-Utah) latest update to the bill. The legislation would also eliminate the individual mandate for ObamaCare and lower some individual tax rates.

The JCT analysis looked at averages for each income group and did not break out how many people at each level would see their taxes go up or down.

Hatch said that the sharp tax increase on low-income families found by the analysis was the result of the individual mandate being repealed. Without the mandate, millions of people are expected to go without health insurance.

“JCT began with an assumption that some people in the lower income brackets will opt to not purchase health insurance and thus not take advantage of available tax credit subsidies. Without those credits, they see an overall uptick in their tax liability,” Hatch said at the opening of Thursday’s finance committee markup of the tax bill.

Low-income people would retain the option of accessing those subsidies if they chose to buy health insurance, he added. The JCT simply reflected the assumption that many would choose not to.

“Obviously, we have no intention of raising taxes on these families,” he added.

Republican senators at Thursday’s markup generally agreed that the numbers reflected fewer people receiving ObamaCare subsidies, which take the form of tax credits, when the individual mandate is removed.


———-

“Tax cuts in Senate bill would evaporate in a decade: JCT” by Niv Elis and Peter Sullivan; The Hill; 11/16/2017

“The poor would be hardest hit, with those making between $20,000 and $30,000 seeing their tax bills rise starting in 2021. By 2027, they would see a 25.4 percent increase in their tax bill.”

A 25 percent increase in taxes for the poor in the GOP’s big tax cut bill. It’s not a great look.

But as the GOP tries to explain, this 25 percent increase is more or less voluntary because the poor can still access subsidized health insurance (thanks to the GOP’s repeated failures to repeal Obamacare this year):


Hatch said that the sharp tax increase on low-income families found by the analysis was the result of the individual mandate being repealed. Without the mandate, millions of people are expected to go without health insurance.

“JCT began with an assumption that some people in the lower income brackets will opt to not purchase health insurance and thus not take advantage of available tax credit subsidies. Without those credits, they see an overall uptick in their tax liability,” Hatch said at the opening of Thursday’s finance committee markup of the tax bill.

Low-income people would retain the option of accessing those subsidies if they chose to buy health insurance, he added. The JCT simply reflected the assumption that many would choose not to.

“Obviously, we have no intention of raising taxes on these families,” he added.

And while it’s true that the people who decide to forgo health insurance once the mandate is repealed would be doing this voluntarily, that ignores one of the more significant indirect effects of the mandate repeal: the 13 million people expected to go without health insurance if the mandate is repealed are also expected to be relatively young and healthy people. And when you encourage 13 million young and healthy people to drop out of the individual insurance markets, you’re inevitably going to see a spike in premiums.

And that’s the Congressional Budget Office (CBO) projected if that Obamacare mandate is repealed: a 10 percent hike in premiums for the individual health insurance market most years:

Bloomberg Politics

The Senate Tax Bill’s Chances Just Got Better

By Steven T. Dennis and Sahil Kapur
November 22, 2017, 7:47 AM CST Updated on November 22, 2017, 10:03 AM CST

* Murkowski agrees to kill Obamacare’s individual mandate
* Hurdles remain, including concerns about deficit effects

Alaska Senator Lisa Murkowski’s decision to agree to smash Obamacare’s individual mandate may remove one obstacle to passing the Senate Republican tax bill next week.

“I believe that the federal government should not force anyone to buy something they do not wish to buy in order to avoid being taxed,” she wrote in an op-ed in Alaska’s Daily News-Miner newspaper posted online Tuesday.

Murkowski didn’t mention the tax bill in the article. But she previously said she preferred not to mix it with health care, and she was one of three mavericks who killed the GOP’s Obamacare repeal efforts earlier this year.

Her announcement came after she said last week that Congress should act to stabilize health-insurance markets in conjunction with eliminating the individual mandate — a requirement that individuals get health insurance or pay a federal penalty — in the tax legislation. In the op-ed, Murkowski reiterated her support for proposed legislation to do just that but didn’t indicate it was a precondition for her to support the tax bill.

The mandate repeal now appears much more likely to stay in the tax bill, where it helps offset more than $300 billion in other tax cuts — revenue needed to bring the bill into compliance with Senate budget rules. It’s also crucial to President Donald Trump’s goal of making corporate tax cuts permanent under those rules.

There are still other hurdles for the tax bill to get to 50 votes. Republican Senators John McCain of Arizona and Susan Collins of Maine — who joined Murkowski in torpedoing efforts to repeal the Affordable Care Act earlier this year — have yet to sign on. And Wisconsin Senator Ron Johnson also threatened to vote against the bill without more tax relief for partnerships, limited liability companies and other so-called pass-through businesses. Senate leaders have said they’re trying to address Johnson’s concerns.

Deficit Questions

Three Republican senators, Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma, have raised specific concerns about the bill’s effect on the deficit. On Wednesday, a new independent analysis of the bill found that it would continue to reduce federal revenue each year after 2027 — a potential complication for Senate tax writers.

Murkowski’s vote has long been wooed by the Senate Majority Leader Mitch McConnell. The bill notably includes a provision opening up Alaska’s Arctic National Wildlife Refuge to oil drilling — a priority for Alaska lawmakers for decades.

In recent weeks, Murkowski has been openly conflicted on how to vote on the mandate, saying she was concerned that higher premiums from repealing it could cancel out the tax cuts for some in the middle class. But in her op-ed, she drops those concerns, saying repealing the mandate would simply restore people’s freedom to choose and noting the sky-high insurance costs under the ACA in her state.

“A silver plan for a family of four, with a $9,000 deductible, will cost about $2,160 per month in 2018,” she wrote. For families who make too much for subsidies, that amounts to nearly $35,000 out of pocket before insurance kicks in, she added.

Insurance-Market Effect

She said in the op-ed that she still wants Congress to pass bipartisan legislation that aims to fix Obamacare “as fast as possible to stabilize our markets.”

Legislative staff members for Senator Patty Murray, a Washington Democrat who joined Tennessee Republican Lamar Alexander to sponsor a stabilization bill, said in a memo Tuesday that the legislation wouldn’t be enough to protect the system if the individual mandate is repealed.

“Republicans are seriously mistaken if they think passing Alexander-Murray will lessen the blow of repealing the coverage requirement included in the Affordable Care Act,” the memo said.

The Congressional Budget Office has estimated that the $300 billion in savings from repealing the mandate would come from about 13 million Americans dropping their coverage by 2027 — eliminating the need for federal subsidies that help them afford it. Because many of them would be younger, healthier people, insurance premiums would rise 10 percent in most years, the nonpartisan fiscal scorekeeper found.

On Tuesday, a national actuaries’ group said in a letter to Senate leaders that repealing the individual mandate would raise costs for consumers and harm insurance markets.

Fiscal Study

Apart from health-care concerns, senators will have to grapple with the bill’s long-term effects on federal deficits. A new study released Wednesday may spell potential trouble on that score.

A report from the Penn Wharton Budget Model at the University of Pennsylvania found that the bill would reduce federal revenue in each year between 2027 and 2033. That finding would mean the bill doesn’t comply with a key budget rule that Senate Republican leaders want to use to pass the legislation with a simple majority over Democrats’ objections.

The rule holds that any bills approved via the fast-track process that GOP leaders intend cannot add to the deficit outside a 10-year budget window.

The official scorekeeper, Congress’s Joint Committee on Taxation, has already found that the bill would generate a surplus in its 10th year due to expiring tax breaks for businesses and individuals. But JCT hasn’t publicly weighed in on the revenue effects in subsequent years.

———-

“The Senate Tax Bill’s Chances Just Got Better” by Steven T. Dennis and Sahil Kapur; Bloomberg Politics; 11/22/2017

“The Congressional Budget Office has estimated that the $300 billion in savings from repealing the mandate would come from about 13 million Americans dropping their coverage by 2027 — eliminating the need for federal subsidies that help them afford it. Because many of them would be younger, healthier people, insurance premiums would rise 10 percent in most years, the nonpartisan fiscal scorekeeper found.

So the Senate’s tax plan doesn’t just involve raising $300 billion – to be spent on tax cuts for corporations and the wealthy – by dropping 13 million mostly young and healthy Americans off of federally subsidized health insurance. It’s also a plan to destabilize the individual health insurance markets because that’s what happens when you do something that’s expected to suck the young and healthy out of the insurance markets:


In recent weeks, Murkowski has been openly conflicted on how to vote on the mandate, saying she was concerned that higher premiums from repealing it could cancel out the tax cuts for some in the middle class. But in her op-ed, she drops those concerns, saying repealing the mandate would simply restore people’s freedom to choose and noting the sky-high insurance costs under the ACA in her state.

It’s a remind that the subsidies for the young and healthy to buy insurance weren’t simply subsidies for those individuals who choose to buy subsidized insurance. They were subsidies for everyone in the individual insurance markets because having the young and healthy in those markets help bring down rates for everyone.

It’s that dynamic of lower coverage leading to higher premiums that’s led Lisa Murkowski, Alaska’s moderate GOP senator, to openly fret about the impact of repealing the mandate. And yet it sounds like she’s suddenly decided that repealing the Obamacare mandate is a great idea. Because it will enhance freedom (apparently the light fine for not getting health insurance harmed Americans’ freedom). And given that Murkowski is one of a handful of GOP Senator’s to express concerns about the Senate version of the tax bill, so hear her suddenly come around to repealing the mandate is a very ominous sign:


Alaska Senator Lisa Murkowski’s decision to agree to smash Obamacare’s individual mandate may remove one obstacle to passing the Senate Republican tax bill next week.

“I believe that the federal government should not force anyone to buy something they do not wish to buy in order to avoid being taxed,” she wrote in an op-ed in Alaska’s Daily News-Miner newspaper posted online Tuesday.

Murkowski didn’t mention the tax bill in the article. But she previously said she preferred not to mix it with health care, and she was one of three mavericks who killed the GOP’s Obamacare repeal efforts earlier this year.

Murkowski’s vote has long been wooed by the Senate Majority Leader Mitch McConnell. The bill notably includes a provision opening up Alaska’s Arctic National Wildlife Refuge to oil drilling — a priority for Alaska lawmakers for decades.

In recent weeks, Murkowski has been openly conflicted on how to vote on the mandate, saying she was concerned that higher premiums from repealing it could cancel out the tax cuts for some in the middle class. But in her op-ed, she drops those concerns, saying repealing the mandate would simply restore people’s freedom to choose and noting the sky-high insurance costs under the ACA in her state.

“In recent weeks, Murkowski has been openly conflicted on how to vote on the mandate, saying she was concerned that higher premiums from repealing it could cancel out the tax cuts for some in the middle class. But in her op-ed, she drops those concerns, saying repealing the mandate would simply restore people’s freedom to choose and noting the sky-high insurance costs under the ACA in her state.”

And there we have it: Senator Murkowski notes the high insurance costs for Obamacare in her state in her statement supporting the repeal of the mandate, a move that she has previously been concerned with lead to higher insurance costs.

So now the chances of the tax cut bill actually passing in the Senate are A LOT higher than they would have been without Murkowski’s support. But there was one rather significant recent set back for the bill: According to a study by the Wharton school at the University of Pennsylvania, despite all the tax hikes on the middle-class and poor, the Senate tax bill still violates the Byrd rule:


Apart from health-care concerns, senators will have to grapple with the bill’s long-term effects on federal deficits. A new study released Wednesday may spell potential trouble on that score.

A report from the Penn Wharton Budget Model at the University of Pennsylvania found that the bill would reduce federal revenue in each year between 2027 and 2033. That finding would mean the bill doesn’t comply with a key budget rule that Senate Republican leaders want to use to pass the legislation with a simple majority over Democrats’ objections.

The rule holds that any bills approved via the fast-track process that GOP leaders intend cannot add to the deficit outside a 10-year budget window.

But that’s still just an independent report. It’s going to be up to the congresses’ official scorekeeper, the Joint Committee on Taxation (JTC), to make the determination as to whether or not the Senate bill really does pass the Byrd rule. And the JTC has yet to weigh in on that:


The official scorekeeper, Congress’s Joint Committee on Taxation, has already found that the bill would generate a surplus in its 10th year due to expiring tax breaks for businesses and individuals. But JCT hasn’t publicly weighed in on the revenue effects in subsequent years.

So while we don’t yet know what the JCT will decide, we do know that outside analysts don’t see the Senate’s version of the bill fulfilling the Byrd rule.

GOP Scheme to Trickle Its Way Into Byrd Rule Compliance

And that skepticism over the Senate bill’s compliance with the Byrd rule isn’t limited to University of Pennsylvania analysis. The Tax Policy Center recently put out its own analysis on the Senate bill. And that analysis assumed the tax cuts would indeed boost the overall economic growth. In other words, the analysis assumed the tax cuts for the rich and corporations would pay for themselves by boosting economic growth, a central tenet to the GOP’s tax-cutting orthodoxy. But even with that enhanced growth, the analysis found that the still didn’t pass the Byrd rule:

Talking Points Memo
DC

Study: Even With Dynamic Scoring, GOP Tax Bill Still Blows Up The Deficit

By Alice Ollstein Published November 20, 2017 2:52 pm

On Monday, the Tax Policy Center released a new analysis of the House tax bill that disproves claims from GOP leadership and the Trump administration that the deep tax cuts for corporations and the wealthy will create so much economic growth that the bill will pay for itself.

Treasury Secretary Steve Mnuchin recently insisted that “not only will this tax plan pay for itself, but it will pay down debt.” White House economic adviser Gary Cohn agreed, saying that “we can pay for the entire tax cut through growth over the cycle.”

Yet the new study by the Tax Policy Center finds that while the bill would somewhat boost the nation’s economic output, leading to more revenue for the government, it would not be enough to offset the revenue lost by the tax cuts. The net effect of the bill would be to increase the deficit by $1.27 trillion over 10 years.

The estimated growth would be lower than promised and the impact would diminish over time. The Tax Policy Center estimates that the tax cuts would increase the U.S. GDP by 0.6 percent in 2018, 0.3 percent in 2027, and 0.2 percent in 2037.

The revenue generated by the growth would be about $169 billion over 10 years—a drop in the bucket to the revenue the government would lose over that same period.

This study echoes the findings of other analyses—including one conducted by President Trump’s alma mater, the Wharton School of Business—showing that even when taking growth into account through so-called dynamic scoring, the tax bill would still balloon the deficit.


———-

“Study: Even With Dynamic Scoring, GOP Tax Bill Still Blows Up The Deficit” by Alice Ollstein; Talking Points Memo; 11/20/2017

“Yet the new study by the Tax Policy Center finds that while the bill would somewhat boost the nation’s economic output, leading to more revenue for the government, it would not be enough to offset the revenue lost by the tax cuts. The net effect of the bill would be to increase the deficit by $1.27 trillion over 10 years

Even with assumed increases in economic growth as a result of these tax cuts, the Tax Policy Center study found the net effect on the deficit would be an increase of $1.27 trillion over 10 years.

So if the Joint Committee on Taxation is going to conclude that the Senate bill does actually follow the Byrd rule, it’s going to have to assume that these tax cuts result in far greater enhanced economic growth than what the Tax Policy Center was assuming. Spectular growth. The kind of growth that the GOP has been promising from its various tax cuts for the rich for decades that never seem to material. That kind of growth.

Which is perhaps why it’s not surprising to see statements like this coming from the Trump administration:


Treasury Secretary Steve Mnuchin recently insisted that “not only will this tax plan pay for itself, but it will pay down debt.” White House economic adviser Gary Cohn agreed, saying that “we can pay for the entire tax cut through growth over the cycle.”

That’s right, Trump’s Treasury Secretary actually argued that the tax cuts will not only pay for itself but actually bring in more revenue than it costs. Super trick-down! And the White House economic advisor Gary Cohn agreed! All those projections that the Senate tax cut bill will result in over a trillion dollars in new deficits over the next decade are completely wrong because the tax cuts will completely pay for themselves through economic growth according to the Trump White House:

CNBC

Trump advisor Gary Cohn says we can pay for the entire tax cut through economic growth

* Tax cuts Republicans proposed this week will be paid for through economic growth, chief White House economic advisor Gary Cohn tells CNBC.
* Cohn says the cuts will drive growth that will exceed 3 percent.

Jeff Cox
Published 8:05 AM ET Thu, 28 Sept 2017 Updated 9:11 AM ET Thu, 28 Sept 2017

Tax cuts Republicans proposed this week will be paid for entirely through economic growth, chief White House economic advisor Gary Cohn said Thursday.

Republicans issued the tax overhaul plan Wednesday that simplifies the tax code, breaking rates down into three categories and cutting corporate rates. The plan also seeks to give companies a break for profits stashed overseas while doubling the standard deduction for most filers.

The tax cuts are projected to cost at least $1.5 trillion and up to $2.2 trillion, according to one analysis. Tax reform, along with reduced regulation and infrastructure spending, was the cornerstone of President Donald Trump’s 2016 election campaign.

Cohn said the cuts won’t increase the budget deficit.

“We think we can drive a lot of business back to America, we can drive jobs back to America, we can make ourselves very competitive,” Cohn told CNBC in a live interview. “We think we can pay for the entire tax cut through growth over the cycle.”

Cohn predicted that economic growth would be “substantially over 3 percent” due to tax reform and deregulation.

The GOP plan proposes lowering the corporate tax rate from the current 35 percent, the highest in the world, to 20 percent. The administration originally had wanted 15 percent, and Cohn said the White House will not budge on the 20 percent level.

———-

“Trump advisor Gary Cohn says we can pay for the entire tax cut through economic growth” by Jeff Cox; CNBC; 09/28/2017

“”We think we can drive a lot of business back to America, we can drive jobs back to America, we can make ourselves very competitive,” Cohn told CNBC in a live interview. “We think we can pay for the entire tax cut through growth over the cycle.

This is seriously the White House’s line on this debate: there is no problem with the Senate’s compliance with the Byrd rule because the massive tax cut for the rich and corporations will completely pay for itself.

America’s CEO’s Didn’t Get the Trickle Down Memo

So given that the White House is making some sort of Super Tricke-Down argument to the public, it raises the question as to whether or not that’s the same argument the GOP is planning on making to the JCT. Is Super Trickle-Down going to be official justification for this tax bill? Well, if so, someone needs to inform America’s CEOs. Because if American companies expected to go on an investment and hiring binge after this tax cut goes into effect, America’s CEOs don’t appear to be aware of this plan:

Business Insider

Gary Cohn had an awkward moment when CEOs appeared to shoot down one of the biggest arguments for the GOP tax plan

Bob Bryan
Nov. 14, 2017, 1:58 PM

* The Trump administration has argued that the proposed GOP tax cuts will lead to a boom in private investment.
* During an event with the top White House economic adviser, Gary Cohn, CEOs were asked whether they would increase investment if the GOP’s tax overhaul passed.
* Few did, prompting Cohn to ask, “Why aren’t the other hands up?”

A group of CEOs on Tuesday appeared to cast doubt on one of the White House’s biggest arguments for overhauling the tax code — right in front of the economic adviser Gary Cohn.

At a meeting of The Wall Street Journal’s CEO Council, an interview with Cohn — the National Economic Council director who previously worked as an executive at Goldman Sachs — prompted discussion about the amount of investment the GOP tax bill, the Tax Cuts and Jobs Act, would generate.

Republicans and the Trump administration have argued that tax cuts for businesses would lead companies to investment more and raise wages for workers.

The moderator then asked those in attendance whether they were planning to increase their business investment if the tax bill became law. The CEOs in attendance did not seem to be on the same wavelength as Cohn.

While there was a smattering of raised hands in the auditorium, it was clearly not as many as Cohn would have liked.

“Why aren’t the other hands up?” Cohn asked before moving on to another question.

———-

“Gary Cohn had an awkward moment when CEOs appeared to shoot down one of the biggest arguments for the GOP tax plan” by Bob Bryan; Business Insider; 11/14/2017

“The moderator then asked those in attendance whether they were planning to increase their business investment if the tax bill became law. The CEOs in attendance did not seem to be on the same wavelength as Cohn.”

A smattering of raised hands. That was the response from an auditorium filled with CEOs at the Wall Street Journal’s CEO Council when asked who was planning on using this tax cut to hire more people:


While there was a smattering of raised hands in the auditorium, it was clearly not as many as Cohn would have liked.

“Why aren’t the other hands up?” Cohn asked before moving on to another question.

“Why aren’t the other hands up?” It’s a question America is probably going to ask itself for years to come if that tax plan becomes reality. While deficits explode and wealth inequality skyrockets.

The Byrd Rule is Really Just a Suggestion in the Long Run

But another question America is probably going to be asking itself is, “how on Earth did we believe the deficits would only spike by $1 to 2 trillion?” Because in addition to the Super Trickle-Down arguments that we’re hearing from the White House, the GOP is trotting out another set of arguments to answer critics who point out the temporary tax cuts are for the poor and middle-class while all the permanent tax cuts are for corporations and the wealthy: don’t worry, those temporary tax cuts for the poor and middle-class aren’t actually temporary, because Congress will almost surely extend them in the future. In other words, all this talk about making the Senate tax plan comply with the Byrd rule and remain deficit-neutral is purely for expediency, and the real plan is to actually blow up the deficit much, much more than even more than currently projected:

The New York Times
The Conscience of a Liberal

Schroedinger’s Tax Hike

Paul Krugman
November 24, 2017 12:26 pm November 24, 2017 12:26 pm

Yes, I know that’s supposed to be an umlaut in the title. I just can’t persuade WordPress to do it.

So: There are many amazing things about the Republican tax pitch, where by “amazing” I mean terrible. But possible the most amazing of all is the attempt to have it both ways on the question of middle-class taxes.

The Senate bill, as written, tries to be long-run deficit-neutral — allowing use of the Byrd rule to bypass a filibuster — by offsetting huge corporate tax cuts with higher taxes on individuals, so that by 2027 half the population, and most of the middle-class, would see taxes go up. But those tax hikes are initially offset by a variety of temporary tax breaks.

Now, Republicans are arguing that those tax breaks won’t actually be temporary, that future Congresses will extend them. But they also need to assume that those tax breaks really will expire in order to meet their budget numbers. So the temporary tax breaks need, for political purposes, to be both alive and dead.

If they succeed in this exercise in quantum budgeting, we’ll eventually open the box, collapsing the wave function, and discover whether the budget promise or the tax claim was a lie. But for now, they want to hold it all in suspension. Once upon a time you wouldn’t have imagined they could get away with it. Now …

———-

“Schroedinger’s Tax Hike” by Paul Krugman; The New York Times; 11/24/2017

Now, Republicans are arguing that those tax breaks won’t actually be temporary, that future Congresses will extend them. But they also need to assume that those tax breaks really will expire in order to meet their budget numbers. So the temporary tax breaks need, for political purposes, to be both alive and dead.”

Don’t worry about the deficit because enough of tax cuts are temporary. And don’t worry about the unfairness of the temporary tax cuts because they aren’t actually going to be temporary. This is the messaging coming from the GOP right now, which is why even some conservatives are getting anxious. You might be tempted to assume that lots of GOPers would be getting nervous about this since focusing on the deficit is a cudgel the GOP has been using for years to keep government spending down. But it turns out there aren’t actually very many Republicans in Congress who care about higher deficits if those deficits are a consequence of a tax cut. But for that handful of genuine GOP deficit hawks, all this talk about extending the temporary tax cuts is making them nervous:

Politico

GOP deficit hawks fear tax plan is secret budget-buster

Key Senate Republicans worry tax cuts slated to expire will eventually be extended — boosting the true cost of the bill.

By SEUNG MIN KIM

11/24/2017 07:42 AM EST

The GOP has yet to resolve an internal clash over whether expiring tax cuts will really expire, potentially threatening the party’s push for a desperately-needed legislative achievement.

On one side are the White House and top congressional Republicans, who argue that ultimately all the tax cuts in their plan will be extended, even the ones slated to lapse. But that’s exactly what the party’s small, but mighty, bloc of deficit hawks is afraid of.

And as the Senate steams toward a vote next week on its massive tax overhaul, the fight over the bill’s true sticker price may be the deciding factor for the bill.

It was bad enough, in the deficit hawks’ view, that key provisions in the House bill expire in five years and that lawmakers already assume they’ll get extended. But their concerns multiplied after the revised Senate GOP tax plan proposed winding down a host of popular tax cuts for individuals after 2025. The tax cuts were made temporary to trim the official cost of the bill, but deficit hawks fear Congress will simply extend them — further adding to the government’s red ink.

“The savings, the score, it just isn’t valid because you know that they’re not going to follow through,” Sen. Jeff Flake (R-Ariz.), an avowed fiscal conservative, said in a recent interview. “You can’t assume that we’ll grow a backbone later. If we can’t do it now, then it’s tough to do it later.”

The collision between what most Republicans see as simple political reality — keeping popular tax cuts for voters — and deep deficit worries from influential GOP senators could derail the tax reform efforts, particularly if and when the chambers try to meld their tax proposals in the coming weeks.

The deficit hawks decry what they see as gimmicks in the plan, particularly writing in an expiration date for tax breaks with no intention of letting them die. While the official price tag for the Senate tax plan may be $1.4 trillion, extending all the expiring provisions would bump up that cost by another half a trillion dollars, according to the fiscal watchdog group Committee for a Responsible Federal Budget.

Republicans leading the tax charge have said that the tax cuts expire merely to fit within the parameters set up by complicated Senate rules. And they brush off attacks from Democrats who note that the cuts are permanent for corporations but temporary for regular people. Republicans say Democrats should help them make those cuts permanent, which would require 60 votes on the floor — something Democrats are unlikely to do.

Speaker Paul Ryan (R-Wis.) has publicly blamed the Senate rules as the reason some provisions in the House bill, like a family tax credit, expire after five years. He recently told reporters he thinks future Congresses will extend them.

That’s the White House line, too.

“Of course, the hope for everybody is that when the time comes for these things to expire, that they get extended,” Kevin Hassett, chairman of the White House Council of Economic Advisers, said last week.

Flake and Tennessee Sen. Bob Corker, another independent-minded Republican not running for reelection next year, have been among the most outspoken with their deficit concerns. So too, has Sen. John McCain of Arizona, a major wildcard for GOP leadership in the tax fight.

But other Republicans have gradually become more vocal about their own deficit worries, with Sens. Todd Young of Indiana and James Lankford of Oklahoma among them. GOP leaders can only lose two votes before the tax bill tanks.

Other GOP senators have raised different objections to the tax bill; Sen. Ron Johnson of Wisconsin doesn’t like the way the plan treats small businesses and Sen. Susan Collins of Maine takes issue with repealing Obamacare’s individual mandate in the plan, among other concerns.

Democrats have seized on the bill’s contradictions, and Senate Minority Leader Chuck Schumer of New York has been particularly eager to exploit the Republican divide.

“I say to my colleagues, particularly the deficit hawks, you can’t have it both ways,” Schumer said in a recent floor speech. “You cannot say we’re going to protect the middle class after 2025 and we’re going to reduce the deficit. This bill is a deficit budget buster. We all know what will happen.”

Indeed, Congress has a good track record of keeping expiring tax cuts around.

Lawmakers faced a “fiscal cliff” at the end of 2012 composed mainly of the expiring Bush tax cuts. Congress, backed by the Obama administration, ultimately voted to make the vast majority of tax cuts permanent. Capitol Hill also routinely voted to maintain temporary tax “extenders” year after year, before passing legislation in December 2015 that made most of them permanent.

The Senate tax measure includes dozens of provisions that are set to expire yet would likely be politically untenable to actually kill; chief among them are their plans to boost the child tax credit, cut individual tax rates and increase the standard deduction.

Corker has been one of the loudest critics of ballooning the deficit. But he’s been careful not to openly disparage the tax plans moving through Congress, and Senate tax-writers, as well as leadership, are aware of his concerns. The Tennessee Republican said he has been discussing ways to resolve deficit worries with other senators — Flake among them — but declined to elaborate further.

Whether Senate Republicans can ultimately win over the GOP skeptics is unclear.

When asked about the cost of extending expiring provisions, McCain stressed: “I’m always worried about the deficit.”

———-

“GOP deficit hawks fear tax plan is secret budget-buste” by SEUNG MIN KIM; Politico; 11/24/2017

“The deficit hawks decry what they see as gimmicks in the plan, particularly writing in an expiration date for tax breaks with no intention of letting them die. While the official price tag for the Senate tax plan may be $1.4 trillion, extending all the expiring provisions would bump up that cost by another half a trillion dollars, according to the fiscal watchdog group Committee for a Responsible Federal Budget.”

Extending the tax expiring tax cuts for the poor and middle-class is expected to raise the cost of the Senate’s plan from $1.4 trillion to close to $2 trillion, spiking the cost by over a third. And that $1.4 trillion is just the costs for the first 10 years. The long term costs of extending the expiring tax cuts for the middle-class will of course be substantially higher if these tax cuts get the same treatment the corporate tax cuts are given and are extended permanently.

So will the GOP’s ‘deficit hawks’ balk at the prospect of massively exploding the deficit for decades to come, something that would guarantee the forced cuts in entitlement programs? We’ll see, but it’s worth noting that the three deficit hawks interviewed for the above article are three GOPers set to retire from the Senate: Bob Corker, Jeff Flake, and John McCain:


Corker has been one of the loudest critics of ballooning the deficit. But he’s been careful not to openly disparage the tax plans moving through Congress, and Senate tax-writers, as well as leadership, are aware of his concerns. The Tennessee Republican said he has been discussing ways to resolve deficit worries with other senators — Flake among them — but declined to elaborate further.

Whether Senate Republicans can ultimately win over the GOP skeptics is unclear.

When asked about the cost of extending expiring provisions, McCain stressed: “I’m always worried about the deficit.”

So will retiring from the Senate make these three GOPers more likely to vote down the GOP’s prized tax cut out of sense of fiscal responsibility, or will retiring just make it easier for these Senators to vote for a bill that will likely cause havoc on the budget after they’ve retired? We’ll see.

GOP Mega-Donors, the Ultimate Constituency

But one aspect of being a retiring Senator should make life much easier for people like Bob Corker, Jeff Flake, and John McCain: they don’t have to answer to the GOP mega-donors:

Talking Points Memo
Livewire

GOPer On Tax Cuts: Donors Are Saying ‘Get It Done Or Don’t Ever Call Me Again’

By Matt Shuham
Published November 7, 2017 1:53 pm

Rep. Chris Collins (R-NY) got points for honesty Tuesday while advocating for Republicans’ tax bill to slash the corporate tax rate and eliminate the estate tax, among other things.

“My donors are basically saying, ‘Get it done or don’t ever call me again,’” Collins said.

According to the Hill, Collins made the comment while speaking to reporters after a House GOP conference meeting.

Collins, a millionaire and one of the wealthiest members of Congress, repeated the GOP claim in a radio interview Tuesday that a middle-income American family would get a roughly $1,200 tax break as a result of the party’s tax proposal.

Vox’s Matthew Iglesias reported Monday that claim is only true for the first year following the plan’s passage. The advertised tax break would decrease to next-to-nothing within six years, and the exemplar family would pay more under Republicans’ tax bill from year seven onward.

———-

“GOPer On Tax Cuts: Donors Are Saying ‘Get It Done Or Don’t Ever Call Me Again’” by Matt Shuham; Talking Points Memo; 11/07/2017

““My donors are basically saying, ‘Get it done or don’t ever call me again,’” Collins said.”

Sure, that’s just an anecdote from a single congressman. But it’s hard to imagine that this isn’t the same message all GOPers are getting from their mega-donors across the country. After all, it’s not like a tax cut that’s almost entirely for the rich and corporation is going to be politically popular. Yet the GOP is clearly desperate to make this political poison pill a reality.

And yes, Trump and the GOP still clearly need at least one big legislative ‘win’. But it’s hard to see how a tax cut that starts eroding away for the poor and middle-class in a year is going to be politically helpful. Mega-donors wouldn’t need to issue ‘pass this, or else’ threats if it was a political winner. If Congress simply passed a resolution to be better people next year that would be a far, far bigger legislative accomplishment for the GOP than a super-villain-ish tax monstrosity.

Misinformed Future Voters Who Won’t Realize the Damage the GOP Has Already Done is Also an Important GOP Constituency

So given how politically poisonous this horrible tax plan is, it raises the question of what the GOP’s long-term plans are, especially given the already declared plans to extend all the tax cuts and blow up the deficit even more. After all, if this bill passes and ends up being as politically poisonous it appears to be, it’s entirely possible that the GOP will lose control of the House in 2018 and the Senate and White House in 2020.

Does the GOP and its mega-donor class actually believe in their Super Tricke-Down rhetoric? Do they actually think there’s going to be an economic mega-boom that makes results in the tax cut paying for itself? That seems highly unlikely. So what’s the plan?

Well, as the following article from Bruce Bartlett – a domestic policy advisor for Ronald Reagan who helped popularize the Trickle-Down myth but who is now a harsh critic of GOP economic policy – makes clear, the GOP plan is likely as follows: pass a massive tax cut now, lose control of power and the Democrats temporarily take control while deficits explode from the tax cuts, then campaign against the Democrats as out-of-control spenders who need to be thrown out of office for their fiscal irresponsibility, and finally regain political power and demand massive spending cuts. In other words, ‘the plan’ the same plan the GOP has been successfully exploiting for decades:

The Guardian

Republican tax cuts will hurt Americans. And Democrats will pay the price

The consequences of the tax program will shelve support for the Republicans, but once in power the Democrats’ hands will be financially bound for years

Bruce Bartlett
Monday 20 November 2017 09.10 EST
Last modified on Monday 20 November 2017 10.35 EST

I think many Democrats and independent political observers are puzzled by the intensity with which Republicans are pursuing their tax cut. It’s not politically popular and may well lead to the party’s defeat in next year’s congressional elections. So why do it?

The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.

The theory was laid out almost 30 years ago by two Swedish economists, Torsten Persson and Lars EO Svensson. In a densely written article for the Quarterly Journal of Economics in 1989, they explained why a stubborn conservative legislator would intentionally run a big budget deficit.

It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear until the future, when a different political party will be in power. Thus the credit or blame will accrue to that party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today to the party in power today even if that party had nothing to do with it.

Thus Barack Obama got blamed for a recession and resulting budget deficits he had nothing to do with originating. No matter how many times the Congressional Budget Office showed that the vast bulk of the budget deficits in his administration were baked in the cake the day he took office, Republicans nevertheless blamed him and his policies exclusively for those deficits.

Of course, another reason for those deficits is that Republicans systematically decimated the federal government’s revenue-raising capacity during the George W Bush administration with one huge tax cut after another. All of these were sold as necessary to get the economy growing again. The failure of the economy to respond positively was never taken as evidence of the failure of those tax cuts, but rather as showing the need for even more and bigger tax cuts.

The payoff for this orgy of tax-cutting came when Obama took office. All of a sudden, Republicans noticed that there were large deficits and insisted that Obama do something about them right this minute! They even made the nonsensical argument that spending cuts would stimulate growth by reducing the burden of government.

Democrats did a poor job of explaining how Franklin Roosevelt tried exactly that in 1937, slashing government spending because his treasury secretary told him it would restore business confidence. The result was a sharp downturn that raised unemployment, which had been trending down.

Obama’s hands were tied by the deficit hawks in his own party as well and prevented from offering an economic stimulus adequate to offset the loss of aggregate demand resulting from the great recession that began in December 2007 on Bush’s watch. Obama even joined with Republicans to slash spending in the 2011 budget deal and put in place budget controls that made it virtually impossible to pursue any positive Democratic initiatives for the balance of his presidency. No wonder Trump won.

I think Republicans remember better than Democrats the lesson of 1993 as well. Bill Clinton was elected in 1992 on an activist agenda. But once in office, he was persuaded to reverse course and put all his efforts into deficit reduction. This transformation was spelled out in detail in Bob Woodward’s 1994 book, The Agenda. Its key element was a significant tax increase that every Republican in Congress voted against. They said it would crash the economy, but was instead followed by an economic boom. Unfortunately, the boom didn’t become apparent until after the 1994 election in which Democrats took heavy losses – in large part because of the tax increase. Republicans got control of both houses of Congress for the first time in 40 years.

Clinton remained beholden to the deficit hawks for his entire presidency, doing nothing with the vast budget surpluses that emerged and hoarding them like a modern day Midas, despite pressing economic needs and growing financial problems withsocial security and Medicare that those surpluses could have fixed. Clinton simply bequeathed them to Bush, who promptly dissipated them with tax cuts and a huge new spending program, Medicare Part D, not to mention wars in the Middle East that continue to this day.

I believe that the same cycle will rerun over the next few years. Should Democrats get control of the House and/or Senate next year, Trump and his party will insist that deficit reduction be the only order of business. Automatic spending cuts resulting directly from the tax cut will start to bite, hurting the poor and middle class primarily, according to the Congressional Budget Office, and making them forget that they resulted from a huge tax give-away to the wealthy that increased the deficit by $1.5tn. Democrats will get much of the blame due to time-inconsistency.

It’s possible that Trump’s appointees to the Federal Reserve may be so alarmed by the inflationary potential of the growing deficits that they will raise interest rates in response. This could trigger a recession that will be blamed on a Democratic president taking office in 2021, just as happened with Obama. But that president may not be able to enact any stimulus at all because deficits crowd out any fiscal space. By 2022, Republicans will be back in control of Congress and in the White House by 2024. In 2025, they will demand still more tax cuts.

Keep in mind that no matter how big the deficit gets from the tax cut Republicans are rushing to enact, none of them will ever vote to undo those cuts or raise taxes except, perhaps, in ways that further burden the poor, such as raising the gasoline tax. That is because they all signed a tax pledge promising never to raise taxes. Therefore, any deficit reduction will either consist solely of spending cuts or pass with only Democratic votes, as was the case in 1993.

The originator of the pledge, Grover Norquist, planned it this way. I doubt he has ever read Persson and Svensson, but understood intuitively that the tax pledge was guaranteed to ratchet down the size of government forever. It wouldn’t happen all at once, but over a period of decades. The history of fiscal policy since the pledge was originated in 1988 is, sadly, proof that it has worked exactly as he hoped.

———-

“Republican tax cuts will hurt Americans. And Democrats will pay the price” by Bruce Bartlett; The Guardian; 11/20/2017.

“I think many Democrats and independent political observers are puzzled by the intensity with which Republicans are pursuing their tax cut. It’s not politically popular and may well lead to the party’s defeat in next year’s congressional elections. So why do it?

That’s the big question: why do it? Why is the GOP pushing so hard to do something that appears to be political suicide? And Bruce Bartlett has a very compelling answer: The GOP is intentionally committing the political equivalent of a suicide-bombing. It’s a strategy rooted in the assumption that the public will have no memory any of this ever happened:


The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.

The theory was laid out almost 30 years ago by two Swedish economists, Torsten Persson and Lars EO Svensson. In a densely written article for the Quarterly Journal of Economics in 1989, they explained why a stubborn conservative legislator would intentionally run a big budget deficit.

It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear until the future, when a different political party will be in power. Thus the credit or blame will accrue to that party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today to the party in power today even if that party had nothing to do with it.

“It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear until the future, when a different political party will be in power. Thus the credit or blame will accrue to that party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today to the party in power today even if that party had nothing to do with it.”

Blowing the party up in order to create fiscal conditions that force the party’s long-term goals and relying on the theory of “time inconsistency” to ensure that voters have no idea what happened. That’s the plan.

And it’s plan with precedents. Very recent precedents:


Thus Barack Obama got blamed for a recession and resulting budget deficits he had nothing to do with originating. No matter how many times the Congressional Budget Office showed that the vast bulk of the budget deficits in his administration were baked in the cake the day he took office, Republicans nevertheless blamed him and his policies exclusively for those deficits.

Of course, another reason for those deficits is that Republicans systematically decimated the federal government’s revenue-raising capacity during the George W Bush administration with one huge tax cut after another. All of these were sold as necessary to get the economy growing again. The failure of the economy to respond positively was never taken as evidence of the failure of those tax cuts, but rather as showing the need for even more and bigger tax cuts.

The payoff for this orgy of tax-cutting came when Obama took office. All of a sudden, Republicans noticed that there were large deficits and insisted that Obama do something about them right this minute! They even made the nonsensical argument that spending cuts would stimulate growth by reducing the burden of government.

Democrats did a poor job of explaining how Franklin Roosevelt tried exactly that in 1937, slashing government spending because his treasury secretary told him it would restore business confidence. The result was a sharp downturn that raised unemployment, which had been trending down.

The Obama presidency was an example of the successful implementation of “time-inconsistency”. The George W. Bush administration pass all sorts of tax cuts for the rich that don’t magically result in a booming economy, deregulates the financial sector, and by the time Obama enters the White House the economy has tanked, deficits spiked, and the Democrats are unable to adequately respond in fiscal stimulus. It’s an important lesson, not just because it was recent, but also because you almost couldn’t come up with a more appropriate situation for deficit spending than government stimulus following something like the 2008 financial crisis. But that option was significantly comprised thanks to the Bush tax cuts.

And then, following the GOP re-taking control of the House in 2010, the GOP immediately declares the budget is out of control and eventually blackmailing the Democrats into accepting the sequester because the alternative would have been the GOP forcing a default on the national debt. And that same sequester is still in place today. This is why the $25 billion in Medicare cuts might happen as result of the propose tax cuts: Republicans used the rising deficits in Obama’s early years following the 2008 financial crisis – years when the deficit should have risen due to the situation – to regain political power and then take the nation’s finances hostage to force the Democrats into accepting the sequester. And the public largely has no idea this happened. Time-inconsistency in action:


Obama’s hands were tied by the deficit hawks in his own party as well and prevented from offering an economic stimulus adequate to offset the loss of aggregate demand resulting from the great recession that began in December 2007 on Bush’s watch. Obama even joined with Republicans to slash spending in the 2011 budget deal and put in place budget controls that made it virtually impossible to pursue any positive Democratic initiatives for the balance of his presidency. No wonder Trump won.

And that’s just the precedent from the Obama years. Then there’s the case of the Clinton administration: Bill Clinton gets elected on an activist agenda in 1992 but then submits to a deficits reduction strategy that involves raising taxes. That tax hike helps sweep the GOP into congressional power in 1994, but it’s also great policy and precedes an economic boom that results in a surge in government revenues. Clinton sticks with the budget-reduction agenda and eventually hands a budget surplus to George W. Bush, who promptly proceeds to convert it into a budget-busting tax cut for the rich and Medicare Part D (which is basically a corporate giveaway that fosters high drug prices):


I think Republicans remember better than Democrats the lesson of 1993 as well. Bill Clinton was elected in 1992 on an activist agenda. But once in office, he was persuaded to reverse course and put all his efforts into deficit reduction. This transformation was spelled out in detail in Bob Woodward’s 1994 book, The Agenda. Its key element was a significant tax increase that every Republican in Congress voted against. They said it would crash the economy, but was instead followed by an economic boom. Unfortunately, the boom didn’t become apparent until after the 1994 election in which Democrats took heavy losses – in large part because of the tax increase. Republicans got control of both houses of Congress for the first time in 40 years.

Clinton remained beholden to the deficit hawks for his entire presidency, doing nothing with the vast budget surpluses that emerged and hoarding them like a modern day Midas, despite pressing economic needs and growing financial problems withsocial security and Medicare that those surpluses could have fixed. Clinton simply bequeathed them to Bush, who promptly dissipated them with tax cuts and a huge new spending program, Medicare Part D, not to mention wars in the Middle East that continue to this day.

Clinton raises taxes, gets politically punished for it, oversees an economic boom, and hands a budget surplus to George W. Bush who blows it all on tax cuts, wars, and a Big Pharma giveaway. Time-inconsistency strikes again.

And as Bruce Barlett warns us, this cycle is likely to play out again:


I believe that the same cycle will rerun over the next few years. Should Democrats get control of the House and/or Senate next year, Trump and his party will insist that deficit reduction be the only order of business. Automatic spending cuts resulting directly from the tax cut will start to bite, hurting the poor and middle class primarily, according to the Congressional Budget Office, and making them forget that they resulted from a huge tax give-away to the wealthy that increased the deficit by $1.5tn. Democrats will get much of the blame due to time-inconsistency.

I believe that the same cycle will rerun over the next few years. Should Democrats get control of the House and/or Senate next year, Trump and his party will insist that deficit reduction be the only order of business. Automatic spending cuts resulting directly from the tax cut will start to bite, hurting the poor and middle class primarily, according to the Congressional Budget Office, and making them forget that they resulted from a huge tax give-away to the wealthy that increased the deficit by $1.5tn. Democrats will get much of the blame due to time-inconsistency”

And that cycle that Bruce Bartlett warns us about is the cycle Grover Norquist has been promoting for decades. In particular, promoting by getting GOPers to sign a ‘no tax’ pledge that means the GOP has pledged to not undo the damage it does even if its tax cut is super damaging:


Keep in mind that no matter how big the deficit gets from the tax cut Republicans are rushing to enact, none of them will ever vote to undo those cuts or raise taxes except, perhaps, in ways that further burden the poor, such as raising the gasoline tax. That is because they all signed a tax pledge promising never to raise taxes. Therefore, any deficit reduction will either consist solely of spending cuts or pass with only Democratic votes, as was the case in 1993.

The originator of the pledge, Grover Norquist, planned it this way. I doubt he has ever read Persson and Svensson, but understood intuitively that the tax pledge was guaranteed to ratchet down the size of government forever. It wouldn’t happen all at once, but over a period of decades. The history of fiscal policy since the pledge was originated in 1988 is, sadly, proof that it has worked exactly as he hoped.

“Therefore, any deficit reduction will either consist solely of spending cuts or pass with only Democratic votes, as was the case in 1993.”

Yep, the Norquist cycle continues:

1. The GOP engages in a fiscally egregious agenda

2. The Democrats eventually regain control after the GOP’s politicies create a financial disaster and the GOP immediately starts using rising deficits to argue for cutting entitlements and public programs

3. Democrats try to undo the GOP’s fiscal damage, including with tax hikes, and get politically punished

4. The GOP regains control and immediately forgets about deficits and pursues its fiscally egregious agenda. And Grover Norquist gets really happy.

That’s been the political cycle playing out in the US ever since the GOP embraced ‘Reaganomics’ and the Myth of the Magical Trickle-Down Tax Cut. And this is Bruce Bartlett – one of the architects of that myth – who is reminding us of this cycle.

But as important as Bruce Bartlett’s lesson about the impending trap that the GOP and its mega-donor puppetmasters are laying is for the American public at this moment, perhaps the most important lesson is that Bruce Bartlett needed to explain this lesson in the first place. Because this is just basic history at this point. It was super helpful that Bruce Bartlett wrote that article but it shouldn’t be super helpful because we should already all know this. But Americans don’t know this and it’s that mass collective amnesia about significant issues – issues like how the GOP exploits mass amnesia to wage a class war on behalf of fascist mega-donors – that allows this cycle to continue without end. We’re so collectively bad at learning from history that we haven’t even learned that we’re collectively bad at learning from history. It’s hard to think of a more important lesson than the fact that the American public is largely incapable of learning important lessons from contemporary history because that’s why this same scam keeps happening over and over.

Mass amnesia over contemporary history is so predictable in the US that the GOP and its mega-donors can plot a strategy predicated on the above cycle predictably playing out one more time. That’s the conclusion Bruce Bartlett has arrived at and it seems like a very reasonable conclusion. A plan predicated on the assumpion of mass amnesia is a very GOP-ish plan to execute. No matter how Big the Lie gets with the GOP, the people forget that it happened. Or never learn in the first place. And it just keeps happening over and over. Because if the time-inconsistency strategy works once it’s probably going to keep working over and over because it only works when the public doesn’t know its own history. A political strategy of rooted in the time-inconsistency theory is a political strategy rooted in an awareness of a public mass lack of awareness of happened. And that awareness that the GOP clearly possesses means GOP can reuse the time-inconsistency strategy over and over. Which the GOP appears to be doing. Again.

So, because the current tax madness is just the latest iteration of an ongoing scam cycle rooted in the exploitation of a poor national memory, it’s going to be important to keep in mind that rebuilding the capacity for a meaningful national memory should probably be part of the national response to the tax monstrosity that’s about to be unleashed. Making a point of actively remembering for years to come that the GOP unleashed a fiscal time-bomb (for the benefit of the super-rich) is probably one of the most valuable things the Democrats and public at large can do if this tax bill becomes law.

Imagine a big political fight in a decade (or more likeliy 2024, or even 2020), over whether or not to make the temporary tax cuts for the poor and middle-class permanent. Being able to remember contemporary history – history that includes the economic boom that followed the Clinton tax hikes – will be invaluable in that kind of political situation. Because thanks to these tax cuts and the damage they’re most assuredly going to do to the federal budget, the US public is soon going to be facing a stark choice over whether or not to raise taxes or massively cut federal programs like Medicare that the public loves. Don’t forget, forcing stark choices like that and betting that the Democrats and public won’t choose to raise taxes and cut spending instead is part of the GOP/Norquist long-term time-inconsistency plan too. And that’s why it’s going to be so important to develop a national memory capable of recalling things like the fact that Democratic tax hikes are done to fix GOP fiscal damage and they’ve been largely successful.

The GOP is planning on creating a giant fiscal mess that it knows Democrats are going to be forced to clean up and the GOP is planning on using that as an opportunity to regain power by bashing the Democrats for cleaning up the mess. We know that’s likely the plan because it’s the same plan we’ve watched play out for decades to the GOP’s enormous success. And it’s going to remain the GOP’s plan as long as we keep collectively forgetting that it remains the GOP’s plan.

While Bruce Bartlett is absolutely correct that the best outcome is for the public to prevent this tax bill from becoming law in the first place, it’s also pretty clear that it really could easily become law at this point even if it’s going to damage the GOP to do so. Passing fiscally disastrous tax cuts for the wealthy and corporations is one of the GOP’s core reasons for existing. It’s what it does even when that’s not the best move politically because keeping mega-donors happy is the GOP’s long-term best political move. As Barlett pointed out, the GOP is probably planning on losing in the House and Senate in upcoming elections and maybe even the White House too. Handing control back to the Democrats after creating a fiscal crisis is part of the cycle. Unless of handful of GOP Senators save the day it’s hard to see what’s going to stop it’s passage.

And if it passes, the US is going to be facing a general set of choices

1. Trickle-down economics magically start working and the projected deficits never materialize. Hooray.

2. The projected deficits materialize and public spending is cut to deal with them.

3. The projected deficits materialize and taxes are raised to deal with them.

4. Some combination of 2. and 3.

Unless ill-advised trickle-down economics suddenly works, the US is going to have to raise taxes or cut spending. And the GOP is betting that even if the Democrats take control in coming years they’ll still be pressured into cutting spending instead of raising taxes.

So it’s probably not too early to start laying the groundwork for a political movement dedicated to building the national collective awareness about the time-inconsistency theory of politics and the fact the GOP has been employing this theory for a long time. There is no logical reason the Democrats should be politically punished for cleaning up the GOP’s fiscal messes rewarded for raising taxes on the rich. Especially when polls show the American public would much rather see taxes raised on corporations and the wealthy, not lowered dramatically. Which is a finding polls have shown for years. When the Democrats are forced to raise taxes to clean up the GOP’s giant fiscal mess, there’s not reason that can’t be a positive political move for Democrats too. But for that to happen the American public needs to have a working memory of this same old scam cycle that this the GOP is trying to do right now and has done in the past.

So what better time than the present for a public education campaign to teach the American public about the contemporary history of the GOP creating fiscal messes with tax cuts for the rich and the Democrats cleaning up that mess and getting politically punished for doing so. The history of GOP tax scams is coming alive once again as it repeats itself, so the American public should probably learn that history this time around.

Discussion

12 comments for “The US Falls Down the GOP’s Tax Scam Memory Hole. Again.”

  1. One of the interesting twists to the current GOP tax cut push that contrasts it somewhat with previous tax cuts relates to the “time-inconsistency” theory of voter behavior and GOP sophistry Bruce Bartlett recently wrote about – the idea that the consequences of political actions taken today may not appear until the future, when a different political party will be in power to share the blame or accolades of a policy they didn’t put in place and that explains why the GOP is willing to be so openly reckless on topics like tax cuts. The twist involves the fact that the time-inconsistency scheme is best executed when the initial destructive policy is liked by voters when it initially passes. Because if voters hate a policy they’re going to probably be a lot more likely to remember that hated policy years later when the policy disaster strikes while a different party is in power.

    Imagine two scenarios:

    1. The GOP passes a budget-busting tax cut that voters initially like. In 7 years there’s a giant budget crisis when the Democrats are in power.

    or

    2. The GOP passes a budget-busting tax cut that voters initially think is a complete scam and they feel insulted the GOP tried to sell this scam as a “middle-class tax cut”. In 7 years there’s a giant budget crisis when the Democrats are in power.

    Isn’t the GOP far more likely to take the blame when that budget crisis hits in scenario two? It seems like it’s just human psychology that voters will remember the policies they view as a scams for the rich a lot better than they remember a random ‘middle-class tax cut’ that gives the average family a small windfall that does little to change their financial situation.

    And that’s the fascinating twist the current GOP tax bill: It’s very similar to past GOP tax bills, in the sense that it’s primarily a tax cut for the rich and corporations and sold as tax cut for the middle-class, but it’s very different from past GOP tax bills in the sense that the tax cuts for the poor and middle-class this time around are almost like an insult. There’s almost no ‘feel good’ element to them because they quickly evaporate in order to pay for things like the corporate tax cut and eliminating the estate tax. It’s an outrageous scam that feels like an outrageous scam. And outrageous scams aren’t supposed to feel outrageously scammy. It’s poor con artistry technique.

    And that relates to another fascinating twist to the GOP’s current tax bill sales pitch: in order to make the evaporating poor and middle-class tax cuts seem less like a scam to average voters, we have the GOP now predicting that the expiring tax cuts for the poor and middle-class will be extended and made permanent. And these predictions of extending those tax cuts are being made at the same time the GOP keeps assuring voters that they aren’t about to explode the deficits and force massive spending cuts. And making both of these contradicting arguments simultaneously is, of course, very scammy. It’s a scammy argument being used to placate middle-class voters feeling scammed about the disappearing middle-class tax cut scam.

    Another things that makes the above scammy duel argument so fascinating is that both arguments are meant to be heard and believed simultaneously. It’s not unusual for politicians to adopt multiple stances on an issue, but they usually take those multiple stances in front of separate audiences. But in this case it really is important to the GOP that the poor and middle-class simultaneously believes that the tax cuts won’t explode the deficit and the tax cuts for the poor and middle-class will be extended. The GOP can’t avoid looking two-faced because it has to sell the public on two contradictory messages in order to avoid leaving voting feeling scammed. Looking two-faced is the GOP’s best messaging option. The tax bill is that bad.

    This is also why an open embrace of trickle-down economics is now vital to the GOP’s tax schemes: the only way to somehow resolve the twin messages of ‘don’t worry about the deficit’ and ‘don’t worry, those temporary tax cuts will be made permanent’ is to pretend that there won’t be any large deficits after the temporary tax cuts are made permanent because trickle-down economics will cause a huge economic boom that covers the lost tax revenue.

    So it’s really a triple-layered messaging: Don’t worry about deficits because it’s deficit neutral. Don’t worry about expiring tax cuts. And when you decide to start worrying about deficits after the expiring tax cuts are made permanent, don’t worry because trickle-down economics will save the day.

    And for this scam to work, all of these arguments need to be made simultaneously. Not made simultaneously by the same GOP messenger, because that would be too weird. But by simultaneously sending messengers out to make each of those arguments separately, the net messaging effect is all of those arguments simultaneously.

    And as the follow column by Paul Krugman points out, that’s exactly what the GOP is doing with its deceptive messaging on the tax bill. And that’s incoherent in part because GOP figures are saying wildly different things. But taken together, they’re more or less making the three above arguments. Separately but simultaneously.

    So is this part of a conscious fog of confusion messaging strategy or is the GOP’s propensity for lying and intellectual incoherence inadvertently executing that strategy? It’s very unclear, since it’s pretty hard to distinguish between intentional and unintentional maelstroms’s of lies and incoherence (and even rage when the lie and incoherence is pointed out) and both scenarios seem plausible for the contemporary GOP:

    The New York Times
    The Conscience of a Liberal

    Lies, Incoherence and Rage on Tax Cuts

    by Paul Krugman
    NOV. 20, 2017

    One thing you can count on in 21st-century U.S. politics is that Republicans will lie about taxes. They did it under George W. Bush, they did it under Barack Obama and they’re still doing it under Donald Trump.

    Yet this time is different. It’s not just that the lies have gotten even more brazen. There’s now a combination of incoherence and rage that we, or at least I, haven’t seen before. These days, they can’t even seem to get their fake story straight — and they literally start yelling obscenities when someone tries to point out the facts.

    G.O.P. lies about taxes generally involve two issues: who is hurt or helped by tax changes, and what these changes will do to the budget.

    Thus, when George W. Bush cut taxes in 2001 and 2003, he and his party repeatedly insisted that the tax cuts were primarily for the middle class. In fact, while there were were some middle-class tax breaks in the package, such as an increase in the child tax credit, these were dwarfed by cuts in tax rates on high incomes, reduced taxes on dividends and repeal of the estate tax. Over all, the richest 1 percent saw a much larger increase in after-tax income than middle-class families did.

    At the same time, the Bush administration used a series of gimmicks to hide the true fiscal cost of the plan, such as delaying the implementation of some tax cuts while pretending that others would expire when the actual intention was to make them permanent.

    When Obama took office, these tricks were simply flipped on their head. Republicans insisted, falsely, that Obama had imposed a “massive tax increase” on the middle class; in fact, for the most part he actually cut middle-class taxes. Meanwhile, they insisted that the surge in the budget deficit caused by the aftermath of the 2008 financial crisis was permanent, and ridiculed the Obama administration’s claims that deficits would fall sharply once crisis spending ended and tax receipts recovered; in fact, that’s exactly what happened.

    So what’s different this time? As in the Bush years, Republicans are claiming to be offering a middle-class tax cut. But where Bush truly was cutting taxes on the middle class, just much less than he was on the wealthy, current Republican plans would raise those taxes on many lower- and middle-income families, even as they go down for the wealthy. (Steven Mnuchin, the Treasury secretary, claims that only “million-dollar earners” would see tax increases. This is the opposite of the truth.)

    Oh, and a memo to journalists: If you play it safe by reporting this as “Democrats say” that middle-class taxes will go up, you’re misleading your readers: Those estimates come from the Joint Committee on Taxation, Congress’s own nonpartisan scorekeeper.

    How can Republicans like Paul Ryan, the speaker of the House, pretend to be helping the middle class? It depends crucially on a new kind of budget gimmick: Both the House and Senate tax-cut bills do contain some middle-class tax breaks — but only for the first few years. Then they expire.

    Take one of Ryan’s favorite examples, a family with two children and earning $59,000 a year. That family would indeed get a tax break next year. But the break would rapidly dwindle and turn into a tax increase by 2024.

    The Republican response is to claim that these tax breaks wouldn’t really expire, that Congress would eventually renew them. That’s quite doubtful — and even if true, it means that the tax plans would add much more to the national debt than the G.O.P. admits. Which brings me to the whole budget deficit issue.

    Not long ago, leading Republicans claimed to be deeply concerned about budget deficits. Only fools and centrists took the Republicans seriously. Still, the abrupt shift to nonchalance about adding trillions to the debt in order to cut taxes on corporations and the wealthy is causing a bit of whiplash even among cynics. How do they justify the shift?

    Well, they don’t seem to have settled on a story. Mnuchin keeps asserting that tax cuts will pay for themselves, going so far as to claim (falsely) that Treasury has released a study showing this. Mick Mulvaney, the budget director, cheerfully acknowledges that they’re using gimmicks to pass a bill that permanently cuts taxes on corporations, and not to worry. Whatever works, it seems.

    So we’re really looking at an unprecedented level of dishonesty here. But what happens when you try to explain what’s going on? When Senator Sherrod Brown tried to point out, correctly, that the Senate G.O.P.’s tax bill heavily favors the rich, Senator Orrin Hatch exploded, calling it “bull crap” and asserting that he grew up poor (which is relevant why, exactly?).

    Sorry, but this isn’t the righteous anger of a man falsely accused of wrongdoing. It’s the rage con men always exhibit when caught out in their con.

    ———-

    “Lies, Incoherence and Rage on Tax Cuts” by Paul Krugman; The New York Times; 11/20/2017

    Not long ago, leading Republicans claimed to be deeply concerned about budget deficits. Only fools and centrists took the Republicans seriously. Still, the abrupt shift to nonchalance about adding trillions to the debt in order to cut taxes on corporations and the wealthy is causing a bit of whiplash even among cynics. How do they justify the shift?

    Yes, it wasn’t too long ago that the GOP pretended to care about deficits. But suddenly all that changed. For reasons even the GOP can settle upon, hence the messaging fog of confusion:


    Well, they don’t seem to have settled on a story. Mnuchin keeps asserting that tax cuts will pay for themselves, going so far as to claim (falsely) that Treasury has released a study showing this. Mick Mulvaney, the budget director, cheerfully acknowledges that they’re using gimmicks to pass a bill that permanently cuts taxes on corporations, and not to worry. Whatever works, it seems.

    So we’re really looking at an unprecedented level of dishonesty here. But what happens when you try to explain what’s going on? When Senator Sherrod Brown tried to point out, correctly, that the Senate G.O.P.’s tax bill heavily favors the rich, Senator Orrin Hatch exploded, calling it “bull crap” and asserting that he grew up poor (which is relevant why, exactly?).

    Sorry, but this isn’t the righteous anger of a man falsely accused of wrongdoing. It’s the rage con men always exhibit when caught out in their con.

    “Well, they don’t seem to have settled on a story. Mnuchin keeps asserting that tax cuts will pay for themselves, going so far as to claim (falsely) that Treasury has released a study showing this. Mick Mulvaney, the budget director, cheerfully acknowledges that they’re using gimmicks to pass a bill that permanently cuts taxes on corporations, and not to worry. Whatever works, it seems.

    Whatever works. That’s the strategy. And it’s a strategy that’s particularly useful for communication the GOP’s triple-layered nonsense message: Don’t worry about deficits because it’s deficit neutral. Don’t worry about expiring tax cuts. And when you decide to start worrying about deficits after the expiring tax cuts are made permanent, don’t worry because trickle-down economics will save the day.

    It’s also worth pointing out another message that White House economic advisor Gary Cohn communicated during an interview a couple weeks ago with CNBC’s John Harwood: During the interview, Cohn repeatedly argues that the tax cut is actually focused on the middle-class and there was no plans for cutting taxes on the wealthy and then appears to argue that the tax cuts for the wealthy and corporations are actually targeting the middle-class. Because of all the benefits that will ‘trickle-down’ on them. Tax cuts for the wealthy and the corporations will increase economic growth so much that not only will we see increased tax revenues but workers will also see significant wage inflation. Want a raise? Cut taxes on the wealthy and corporations. That was Cohn’s core message. It’s impressive spin.

    But there was an additional message Cohn had that he perhaps didn’t intend to express, and it’s the kind of message that directly relates to the expiring poor and middle-class tax cuts: When Harwood confronts Cohn with the fact that 80 percent of the tax cuts are for corporations and the wealthy, Cohn responds that federal income taxes for the middle-class are already so low that after the planned middle-class cuts they can’t really go any lower because a family of four making $60k will only be paying around $500 in federal income taxes. In other words, Cohn was making the case that this would effectively be the last middle-class tax cut. He didn’t say that, but it’s certainly implied in his answer.

    And when you think about how important “middle-class tax cuts” are to the GOP’s long-term strategy of cutting taxes for the rich, the fact that there might not be much room left to cut federal income taxes on the middle-class and poor spells disaster for that long-term strategy. Unless the tax cuts for the poor and middle-class expire, in which case there’s once again room to craft a giant tax bill that mostly cuts taxes on the wealthy that also includes a few tax cuts for the poor and middle-class as a selling point.

    Also keep in mind that federal income taxes aren’t the only federal taxes the poor and middle-class pay. Payroll taxes that finance Social Security and Medicare are far more significant for these incomes. That hypothetical family of four making $60k and paying $500 in federal income taxes would still be paying more than $4,000 in payroll taxes to help fund programs like Social Security and Medicare.

    So there are still significant federal taxes the poor and middle-class will be paying even without an income tax. But cutting income taxes for the poor and middle-class is still crucial for selling the public on tax bills that slash income taxes on the wealthy. Well, at least that used to be the case. Now that Gary Cohn is peddling ‘trickle-down’ tax cuts for the wealthy as a policy targeting the middle-class, who knows what kind of sales pitches the GOP will be using for future tax cuts. But it’s still pretty notable that Cohn implicitly admitted that if those poor and middle-class tax cuts didn’t expire, there wouldn’t be any room left to cut them again:

    CNBC

    Gary Cohn: Trickle-down is good for the economy

    * Gary Cohn says, “I don’t believe that we’ve set out to create a tax cut for the wealthy. If someone’s getting a tax cut, I’m not upset that they’re getting a tax cut.”
    * “Everything in our tax plan is meant to encourage investment.”
    * “We’re trying to solve [problems] for middle-income, hardworking families,” he tells CNBC.

    John Harwood
    Published 7:01 AM ET Thu, 9 Nov 2017 Updated 7:25 AM ET Thu, 9 Nov 2017

    Gary Cohn was in some ways an unlikely choice for Donald Trump’s White House. He is a Democratic Wall Street veteran serving a Republican president who cast himself as the champion of “forgotten people” battered by economic change.

    But Cohn, 57, jumped at the chance to leave a top job at Goldman Sachs and become director of the National Economic Council at the White House. His introduction to government has been relentlessly turbulent, marked by staff shakeups, a damaging defeat on health-care policy, and a president whose popularity sags under the weight of self-generated controversy. After Trump failed to unequivocally denounce white supremacists and neo-Nazis this summer, Cohn himself felt compelled to speak out.

    But the moment Cohn has waited for is here. He and his boss, along with Republican congressional leaders, have begun the effort to enact their tax-cut plan despite tepid public support, fierce Democratic resistance and uncertain GOP unity.

    Cohn sat down to discuss the plan in a classroom at American University, where he gained his first exposure to financial markets at a student. What follows is a condensed, edited transcript of their conversation.

    CNBC’s John Harwood: So, we’re at American University, where you went to school. Tell me what you learned about yourself.

    Harwood: I think most people looking from the outside see more irrational stuff happening in this White House than in any White House that they’ve seen.

    Cohn: I’m involved in the economic side of the White House. On the economic side, I think the reality is pretty strong for what’s going on in this White House. You know, you can look at the jobs data. You know, we had 4.1 percent unemployment last month, which is a 16-year low. We’ve had two-consecutive quarters of over 3 percent GDP growth with hurricanes in the last quarter. You look at what the stock market’s telling you about people committing capital and willing to invest in our economy. Things are really strong.

    Harwood: All those strengths kind of undercut the argument that ‘Oh, we have to do tax reform right now,’ don’t they?

    Cohn: We have not had wage growth in this country. So, we’ve got a lot of Americans finding work, but they’re finding work at stagnant wages. Really to continue going on with this recovery, this long recovery, is we have to find a way to really drive wage growth. What our tax plan is really aimed at doing is creating wage growth.

    Harwood: What were the one or two most important principles that drove what you did?

    Cohn: The president had two really important principles. Number one is we have to deliver middle-class tax cuts to the hardworking families in this country. Number two, our corporate tax system just is not competitive with the rest of the world. We have to create a corporate tax rate, and along with that a pass-through tax rate, that makes us competitive with the rest of the world so we can attract businesses back to the United States.

    Harwood: Let me suggest an alternative principle. Look at the components of the plan: big corporate reductions, big pass-through reductions for business, much more tax cuts for businesses than for individuals. You’ve got the elimination of the estate tax, you’ve got the preservation of the step-up basis, you’ve got the elimination of the alternative minimum tax. What you have is a bunch of people, including you, including the president, who think ‘What I do is good for the economy, therefore, taxing the things that I do less will be good for the economy and good for other people’ instead of giving direct benefits to those people. Because middle-class people in this tax cut do not get very much in direct benefit.

    Cohn: I just completely disagree with you.

    Harwood: Look at the numbers.

    Cohn: I’ve done nothing but look at the numbers for the last 90 days.

    Harwood: If you look at Joint Tax, $1 trillion in net cuts for business, $200 billion through the estate tax, and $300 billion for individuals. So, four times as much in business tax cuts and estate tax as for individuals.

    Cohn: Yup. But, John, if you look at what we’re doing for middle-class taxpayers, the reality is kind of simple. The median-income family in the United States, the family that earns about $60,000 in the United States, the Speaker [Paul Ryan] talked about them getting a $1,182 tax cut. That family is now paying a marginal tax rate of less than 1 percent. They’re paying less than $500 of total taxes in the system. So a $60,000 earner, family of four, is paying less than $500. We have cut their taxes significantly. You can’t go much further in the tax system.

    Harwood: You’re saying you can’t give middle-class taxpayers more of a tax break than you’ve done?

    Cohn: Unless you want to start going negative tax rates and go into the negative world. So, when people score this, you’re scoring against the bound of zero.

    Harwood: You have a tax bill that takes away deductions for high medical expenses; that preserves carried interest — I know they’re working on that; that takes away deductions for grad school tuition breaks; that takes away an adoption credit. And on a percentage basis, people in the top 1 percent get twice as much of a reduction in their effective tax rate as everyone else.

    Cohn: Yeah, look, first of all, we’re not done. The only thing you have to work on now is the House blueprint. We’re going to get a Senate plan later this week. Remember, the big thing we’re trying to do is we’re trying to solve for middle income, hardworking families.

    Harwood: The companies that benefit from pass-through rates are high income because if they were middle income they’d be paying at the 25 percent rate already. The vast majority of those benefits go to wealthy businesses.

    Cohn: You’ve got to wait till the whole plan is done and see where we finally end up, and see what the plan comes out. Everything in our tax plan is meant to encourage investment.

    Harwood:You’re not saying, as you did a few weeks ago, that the wealthy do not get a tax cut under your plan?.

    Cohn: No. I’m saying there’s unique situations to everyone out there. Everyone has their own story. It’s not our intention to give the wealthy a tax cut..

    Harwood: But they’re getting one.

    Cohn: I don’t believe that we’ve set out to create a tax cut for the wealthy. If someone’s getting a tax cut, I’m not upset that they’re getting a tax cut. I’m really not upset.

    Harwood: Your old colleague, Steve Bannon, says, ‘Ask him why they didn’t design a tax plan focused on average Trump voters.’ And when I talked to Larry Summers, who’s your predecessor at the NEC, also Treasury secretary, he said, ‘Look, they’re doing what their money wants.’

    Cohn: They’re entitled to their opinions.

    Harwood: Why are they wrong?

    Cohn: We have achieved our objectives. We are delivering a middle income tax cut

    Harwood: Small.

    Cohn: We are lowering corporate taxes to make ourselves competitive with the world.

    Harwood: Big.

    Cohn: Yeah.

    Harwood: If you look at the center of gravity of the economics profession, what they will say is that the deficit will go up more than you guys say, growth will increase less than you guys say, and that workers will get less than you guys are projecting.

    Cohn: We vehemently don’t agree. When you take a corporate tax rate at 35 percent and move it to 20 percent, and you see what’s happened over the last two decades to businesses migrating out of the United States, migrating profits out of the United States, migrating domicile out of the United States, and hiring workers out of the United States, it’s hard for me to not imagine that they’re not going to bring businesses back to the United States.

    We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that’s good for the economy.

    Harwood: Another thing Larry Summers told me: ‘The country wants to spend more on defense. We’ve got a whole lot of baby boomers retiring. We are going to need more money for government and not less.’ The Penn-Wharton model — run by a former Bush administration economist, not a Democrat — says that this plan by 2040 will lose $4 trillion. During that time, the number of people on Social Security is going to go from 45 million to 72 million. How in the world does that make sense?

    Cohn: We firmly believe that we are creating a model that creates economic growth in this country.

    Harwood: But you know no tax cut’s ever paid for itself.

    Cohn: The years that we increased deficit are years when our economy is slowing down. We continue to borrow more and more money. So, the number one thing we can do for the United States citizens is to grow the economy. This tax plan is meant to grow the economy.

    Harwood: Are you thinking that you’ll deal with that Social Security/Medicare/baby boomer retirement issue later by entitlement reform that reduces benefits?

    Cohn: Look, the president on the economic front laid out three core principles. Number one was reg reform, number two was taxes and number three was infrastructure. We’re working our way methodically through reg reform, taxes and infrastructure. I think when he gets done with those, I think welfare is going to come up. That’s our near-term economic agenda right now.

    ———-

    “Gary Cohn: Trickle-down is good for the economy” bs John Harwood; CNBC; 11/09/2017

    “Cohn: We have not had wage growth in this country. So, we’ve got a lot of Americans finding work, but they’re finding work at stagnant wages. Really to continue going on with this recovery, this long recovery, is we have to find a way to really drive wage growth. What our tax plan is really aimed at doing is creating wage growth.”

    It’s all about the middle-class: that’s the laughable meta-spin the GOP uses with every tax cut, even when the middle-class tax cuts are set to expire. And how does Gary Cohn spin this tax bill as focused on the middle-class? By spinning corporate tax cuts as the path to higher wages:


    Harwood: If you look at the center of gravity of the economics profession, what they will say is that the deficit will go up more than you guys say, growth will increase less than you guys say, and that workers will get less than you guys are projecting.

    Cohn: We vehemently don’t agree. When you take a corporate tax rate at 35 percent and move it to 20 percent, and you see what’s happened over the last two decades to businesses migrating out of the United States, migrating profits out of the United States, migrating domicile out of the United States, and hiring workers out of the United States, it’s hard for me to not imagine that they’re not going to bring businesses back to the United States.

    We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that’s good for the economy.

    Harwood: Another thing Larry Summers told me: ‘The country wants to spend more on defense. We’ve got a whole lot of baby boomers retiring. We are going to need more money for government and not less.’ The Penn-Wharton model — run by a former Bush administration economist, not a Democrat — says that this plan by 2040 will lose $4 trillion. During that time, the number of people on Social Security is going to go from 45 million to 72 million. How in the world does that make sense?

    Cohn: We firmly believe that we are creating a model that creates economic growth in this country.

    “We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that’s good for the economy.”

    Want a raise? Cut corporate taxes. That’s the fantasy Gary Cohn in peddling. The reality is that corporate tax cuts will likely be used for stock buybacks, dividends, and executive compensation. But in Gary Cohn’s fantasy version of reality, corporate tax cuts are going to lead to broad-based wage inflation and that was the primary focus of the tax cut all along.

    And check out Cohn’s answers to questions about how much the wealthy are receiving in this tax bill: Cohn appears to claim that as almost accidental. The GOP didn’t set out to cut taxes for the rich. It’s just sort of happened, but Cohn isn’t upset about it:


    Harwood: You’re not saying, as you did a few weeks ago, that the wealthy do not get a tax cut under your plan?.

    Cohn: No. I’m saying there’s unique situations to everyone out there. Everyone has their own story. It’s not our intention to give the wealthy a tax cut.

    Harwood: But they’re getting one.

    Cohn: I don’t believe that we’ve set out to create a tax cut for the wealthy. If someone’s getting a tax cut, I’m not upset that they’re getting a tax cut. I’m really not upset.

    “I don’t believe that we’ve set out to create a tax cut for the wealthy. If someone’s getting a tax cut, I’m not upset that they’re getting a tax cut. I’m really not upset.”

    That wasn’t intended to be sarcasm. It’s pretty amazing.

    And when pressed about the fact that the corporate and estate tax cuts were four times larger than the individual rate cuts, Cohn makes his startling admission: if the middle-class tax cuts didn’t evaporate, there wouldn’t be room to cut them again:


    Harwood: If you look at Joint Tax, $1 trillion in net cuts for business, $200 billion through the estate tax, and $300 billion for individuals. So, four times as much in business tax cuts and estate tax as for individuals.

    Cohn: Yup. But, John, if you look at what we’re doing for middle-class taxpayers, the reality is kind of simple. The median-income family in the United States, the family that earns about $60,000 in the United States, the Speaker [Paul Ryan] talked about them getting a $1,182 tax cut. That family is now paying a marginal tax rate of less than 1 percent. They’re paying less than $500 of total taxes in the system. So a $60,000 earner, family of four, is paying less than $500. We have cut their taxes significantly. You can’t go much further in the tax system.

    Harwood: You’re saying you can’t give middle-class taxpayers more of a tax break than you’ve done?

    Cohn: Unless you want to start going negative tax rates and go into the negative world. So, when people score this, you’re scoring against the bound of zero.

    “The median-income family in the United States, the family that earns about $60,000 in the United States, the Speaker [Paul Ryan] talked about them getting a $1,182 tax cut. That family is now paying a marginal tax rate of less than 1 percent. They’re paying less than $500 of total taxes in the system. So a $60,000 earner, family of four, is paying less than $500. We have cut their taxes significantly. You can’t go much further in the tax system.”

    For the hypothetical middle-class family of four – politicians’ favorite demographic fetish – the effective federal income taxes would be approaching zero when you factor in the various deductions if they got cut again after the GOP gets done with its ‘middle-class tax cut’. And that means no more opportunities for the GOP to use middle-class income tax cuts as a political prop to sell the public on wealthy income tax cuts. Or it would mean that if the tax cut for this hypothetical family of four didn’t starts climbing after the first year and expiring in less than a decade.

    Still, don’t forget that even if this hypothetical family of four that Cohn claims would only be “paying less than $500 of total taxes in the system,” that same family would also be paying more than $4,000 in payroll taxes to help fund programs like Social Security and Medicare. So even if income taxes on the middle-class are some day permanently cut to effectively zero (after deductions) in the future, it’s not like there aren’t other federal taxes that GOP can use as a policy prop to sell future big tax cuts for the rich.

    Although as we saw from Gary Cohn’s rhetoric, the future sales pitches for tax cuts for the rich are probably going to be something “wow, these tax cuts exclusively for the rich are going to be really great for the middle-class!” It’s almost the argument they’re making right now.

    The future is now. It’s apparently going to be scammy future.

    Posted by Pterrafractyl | November 26, 2017, 10:30 pm
  2. The non-partisan Congressional Budget Office (CBO) just came out with a new analysis on the Senate GOP’s tax bill and, like the other various analyses of the bill, the CBO found that the bill is wildly beneficial for the wealthy at the expense of the poor. Surprise!

    And while that set of findings isn’t actually remotely surprising, the analysis makes an important point that highlights one of the more interesting political dynamics that could emerge in coming years if this tax bill becomes reality: The CBO report notes that 13 million people are expected to lose their health insurance coverage as a consequence of the tax bill’s repeal of the “individual mandate” in Obamacare that imposes a small fine on adults who don’t have health insurance. GOPers have defended this by asserting that those 13 million people who lose health insurance coverage want to lose that coverage and are only getting coverage because of the individual mandate. But the CBO points out that while some of the people – typically young and healthy people -who are going to lose their coverage will do so voluntarily, there’s also another set of people who are going to involuntarily lose their coverage thanks to the rising insurance premiums that are an inevitable result of all those young and healthy people dropping their insurance. The voluntary loss of coverage will drive the an involuntary loss of coverage.

    Now, the fact that this tax bill might result in rising health insurance premiums that will predictably price health coverage out of the markets should be a big enough political obstacle for a tax cut. But let’s not forget that spiking insurance premiums has been one of the GOP’s key tactics for indirectly forcing the death of Obamacare and a key element of that Obamacare-killing strategy is to spike premiums without taking the blame. So the Senate GOP version of the tax bill doesn’t just raise health insurance premiums by destabilizing the markets. It merely one of many different destabilization tactics the GOP is employing to raise Obamacare premiums. But it will be a pretty high-profile Obamacare destabilization tactic that is very directly tied to financing bigger tax cuts for corporations and the wealthy. The GOP clearly wants to catalyze a health care crisis in order to create a public clamor for the repeal of Obamacare. But they presumably didn’t want to tie that whole scheme directly to their other schemes to get massive tax cuts for the rich. The optics aren’t great for the GOP:

    Talking Points Memo

    CBO: Senate GOP Tax Bill Favors High Earners Over Low Income Taxpayers

    By Alice Ollstein
    Published November 27, 2017 10:21 am

    The Congressional Budget Office dropped a new analysis Sunday night of the Senate Republican tax bill that could pass later this week after zero hearings and minimal debate showing the bill would significantly cut taxes for people in the top income brackets while raising them for people making less than $30,000 a year.

    The CBO said in addition to adding $1.4 trillion to the federal deficit and reducing the number of Americans with health insurance by 13 million, the tax bill would have a harmful impact on low-income Americans.

    By 2019, the agency found, Americans earning less than $30,000 a year would see their tax bill go up under the Senate bill. By 2021, those earning $40,000 or less would see a hike. By 2027, most people earning $75,000 a year or less would have to pay more. At the same time, people earning more than $100,000 a year would see the biggest benefit over time.

    Because most Americans at the lowest-earning end of the spectrum do not pay income taxes, the estimate is largely based on them losing tax credits for purchasing health insurance because the tax bill repeals the individual mandate. Republican lawmakers have argued the drop in health coverage would be a choice, but the CBO emphasizes that many would also be pushed out of the market against their will by rising premiums.

    “Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the non-group market, the resulting increases in premiums would cause more people to not purchase insurance,” the report states.

    Republicans have also argued that the CBO’s massive deficit estimates are inaccurate, because they don’t take into account all of the economic growth they claim would result from slashing corporate taxes. But even studies that take that expected growth into account find that the bill would grow the federal deficit by more than $1 trillion.

    As Republicans scramble to shore up the votes needed to pass the tax bill, this latest reports adds fuel to criticisms from Democrats and independent economists that the bill privileges the wealthy and corporations at the expense of the middle class and the poor.

    ———-

    “CBO: Senate GOP Tax Bill Favors High Earners Over Low Income Taxpayers” by Alice Ollstein; Talking Points Memo; 11/27/2017

    “As Republicans scramble to shore up the votes needed to pass the tax bill, this latest reports adds fuel to criticisms from Democrats and independent economists that the bill privileges the wealthy and corporations at the expense of the middle class and the poor.”

    Yes indeed, this latest report adds quite a bit of fuel to criticisms from Democrats and independent economists that the bill privileges the wealthy and corporations at the expense of the middle class and the poor. But it should add quite a bit of fuel to criticisms about the GOP’s tactics on health care because let’s not forget that spiking insurance premiums was something Trump and the GOP were openly talking about just last month. Destabilizing the insurance markets to increase dissatisfaction with Obamacare is an openly discussed GOP policy. This is just what the GOP does these days.

    So learning that the Senate tax bill is going to destabilize health insurance markets in order to pay for tax cuts for corporations and the rich isn’t just an unpleasant surprise to find in a tax bill. It’s also an unsurprising extension of an GOP plan already in operation:


    Because most Americans at the lowest-earning end of the spectrum do not pay income taxes, the estimate is largely based on them losing tax credits for purchasing health insurance because the tax bill repeals the individual mandate. Republican lawmakers have argued the drop in health coverage would be a choice, but the CBO emphasizes that many would also be pushed out of the market against their will by rising premiums.

    “Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the non-group market, the resulting increases in premiums would cause more people to not purchase insurance,” the report states.

    “Republican lawmakers have argued the drop in health coverage would be a choice, but the CBO emphasizes that many would also be pushed out of the market against their will by rising premiums.

    Rising premiums pushing people out of the individual markets Obamacare set up. That’s a predictable consequence of the Senate GOP’s tax bill. But it’s also the predictable consequence of the various other GOP attempts to destabilize the Obamacare markets, many of which the GOP did long before Trump became president like Marco Rubio’s successful destabilization of premiums in 2015.

    Destabilizing Obamacare is more than just a strategy of the GOP’s at this point. It’s a passionate hobby. A passionate hobby that’s always has the end goal of maximizing tax cuts for billionaires, which is something the GOP Senate bill now makes unambiguously clear.

    So that’s all part of the fascinating new political dynamic this GOP tax bill could create: if this tax bill passes and it includes repealing the Obamacare mandate, the GOP’s ongoing and seemingly endless attempts to destabilize Obamacare insurance markets by doing things that cause premiums to rise are going to be inextricably intertwined with the current giant GOP tax scam which, in turn, helps highlight that this is all being done for the super-rich and also helps highlight that the GOP has been actively destabilizing Obamacare for years. It’s like a convergence of bad ideas that synergistically accentuates the badness of each idea by demonstrating how intertwined they all are with other bad ideas. Which seems like a politically bad idea.

    Posted by Pterrafractyl | November 28, 2017, 12:10 am
  3. Well that’s certainly ominous: The Senate just pushed the tax scam monstrosity out of the Senate Budget Committee, which will allow it to move forward to a full vote in the Senate and into “conference” with the House, which already passed its own monstrous version of the tax bill. But that’s not the ominous part. What’s ominous is that we’re now getting word from GOP Senators and the White House that the plan is to rapidly have a vote on the tax plan this week, without adequate time for public debate or hearings or expert testimony or any or the normal proceedings for passing a bill in the Senate. And White House sources are saying they want to avoid a formal House/Senate conference and would prefer that process be worked out behind closed doors. That’s what’s ominous.

    But what’s extra ominous is the fact that most of the GOP Senators who have been expressing misgivings of the tax bill thus far suddenly ‘found (supply-side) Jesus’ after lunch with Trump on Tuesday and are sounding like they’re almost ready to support it. That includes Senators Susan Collins, Bob Corker, and Ron Johnson.

    Johnson’s sudden shift isn’t surprising since his primary complaint is that the ‘pass-through’ tax cut that primarily benefits the wealthy isn’t big enough. This was his deal-breaker issue. So he’s almost entirely behind this incredibly irresponsible bill already. He just doesn’t think its irresponsible enough.

    Corker and Collins suddenly supporting the bill, on the other hand, is much more ominous than Johnson’s sudden support because their political brands make a ‘no’ vote on this bill potentially politically beneficial, especially given the politically toxicity of the tax bill. It’s just a politically crappy bill, so it wasn’t inconceivable that three of the GOP Senators who might conceivably vote against the bill – Collins, Corker, Flake, and McCain – actually end up doing that. Because it makes political sense now that they’re wedded to the “I told you so” wing of the GOP. The GOP ‘anti-Trump’ faction is inevitably going to experience a renewal of some sort in the GOP if the current Trump/GOP Era of Errors leads to disaster and these senators are already basically in that “I told you so” faction. So the emergence of a block of three or more GOP senators who block a politically disastrous tax cut bill and save the GOP from itself wasn’t inconceivable.

    But now we’re hearing that Susan Collins – who was primarily expressing concern about the part of the tax bill that repeals the Obamacare individual mandate which would destabilize the individual insurance markets – has been assured during the Tuesday lunch with Trump that the Senate is going to pass a pair of bill design to shore up the Obamacare insurance markets (which is basically temporarily undoing some of the damage from the GOP’s endless sabotage successes) and she’s saying she was assured those laws supporting Obamacare markets would be passed by the Senate and signed into law before the conference report. And that sure sounds like Susan Collin is suggesting that she’s fine with the tax bill passing out of the Senate and into conference with the House because the conference report doesn’t happen until the bill passes out of the Senate and goes to the conference committee.

    Senator Corker also emerged from lunch with Trump indicating that he was assured that his concerns over the impact of tax bill on the deficit would be limited by some sort of “trigger” is the trickle-down magic didn’t happen and the deficit exploded. We don’t know what the trigger is going to be and which taxes are going to be hiked in response (because it will probably be middle-class tax hikes) but we are told Corker has been assured some sort of trigger system will be in place.

    And Senator Johnson has been assured that the “pass-through” tax cut will be increased, which is guaranteed to increase the deficit unless the trickle-down magic happens. So we better hope Senator Corkers’ tax hike “triggers” are well thought out because they’re probably going to be triggered.

    But before we look at the sudden Tuesday collapse of the tiny GOP tax scam hold out faction, here’s an article from Monday when we first got word that the White House wants to avoid a conference committee entirely after the bill passes the Senate so there will be almost public debate on the tax bill at all:

    The New York Times

    Senators Scramble to Advance Tax Bill That Increasingly Rewards Wealthy

    By JIM TANKERSLEY, ALAN RAPPEPORT and THOMAS KAPLAN
    NOV. 27, 2017

    WASHINGTON — The Republican tax bill hurtling through Congress is increasingly tilting the United States tax code to benefit wealthy Americans, as party leaders race to shore up wavering lawmakers who are requesting more help for high-earning business owners.

    On Monday, as Republican lawmakers returned to Washington determined to quickly pass their tax overhaul, senators were in feverish talks to resolve concerns that could bedevil the bill’s passage. With pressure increasing on Republicans to produce a legislative victory, lawmakers are contemplating changes that would exacerbate the tax bill’s divide between the rich and the middle class.

    Those include efforts to further reward certain high-income business owners who are already receiving a tax break in the Senate bill but who are at the center of a concerted push by conservative lawmakers and trade groups to sweeten those benefits.

    As Republican leaders pressed for a Senate floor vote this week, there appeared to be little momentum for amendments that would help low-income Americans, which some Republican and many Democratic senators had sought.

    The Congressional Budget Office said this week that the Senate bill, as written, would hurt workers earning less than $30,000 a year in short order, while delivering benefits to the highest earners throughout the next decade. Those estimates echo other analyses, like that by the Joint Committee on Taxation, which have found the biggest benefits of the bill increasingly flowing to the rich over time. By 2027, the budget office said, Americans earning $75,000 a year and below would, as a group, see their taxes increase, because individual tax cuts are set to expire at the end of 2025.

    At the heart of the debate is whether to more favorably treat small businesses and other so-called pass-through entities — businesses whose profits are distributed to their owners and taxed at rates for individuals. Seventy percent of pass-through income flows to the top 1 percent of American earners, according to research by Owen Zidar, an economist at the University of Chicago’s Booth School of Business.

    Two Republican senators, Ron Johnson of Wisconsin and Steve Daines of Montana, have said that they will vote against the plan if it does not do more to help the owners of those businesses, possibly by increasing the individual income tax deduction for such owners from the 17.4 percent rate currently in the Senate bill.

    Republicans, who control the Senate 52 to 48, can afford to lose only two of their members if they hope to pass the bill on party lines in the upper chamber.

    Mr. Johnson could stall the bill by himself on Tuesday, when it is scheduled for a vote in the Senate Budget Committee. Mr. Johnson sits on that committee, where Republicans have a single-vote majority. On Monday, he said he would vote “no” unless his concerns were addressed.

    “I need a fix beforehand,” Mr. Johnson said.

    Earlier in the day, Senator John Cornyn, Republican of Texas and the majority whip, said, “There’s no deal, but there’s been some discussions on how to address Senator Johnson and Senator Daines’s concerns.” He continued, “We’re trying to be responsive.”

    Adding to the uncertainty, Senator Bob Corker of Tennessee also said on Monday that he could be a “no” vote in the Budget Committee if his concerns about the bill’s effect on the deficit were not adequately addressed.

    Orrin G. Hatch, Republican of Utah, who leads the Senate Finance Committee, said that there was a strong desire to get a bill passed by Friday and that additional changes would most likely be made on the Senate floor. Despite speculation that the House will face pressure to quickly vote upon whatever passes in the Senate, Senator Rob Portman, Republican of Ohio, said he “fully expects” that there would be a conference to bridge differences between the House and Senate plans.

    The pass-through fight is the first skirmish in what lawmakers and lobbyists expect will be a frenzied week, which Republican leaders hope will produce the first major legislative victory of the Trump-era for their party.

    The week is expected to be punctuated by behind-the-scenes arm twisting and deal making as party leaders work to allay senators’ worries without exceeding their self-imposed $1.5 trillion budget for tax cuts. At least a half-dozen senators have raised concerns about the bill, including its potential to add to the federal deficit and a provision that would eliminate the Affordable Care Act requirement that most Americans have health insurance or pay a penalty.

    Many of those senators are in discussions with party leaders over how to tweak the bill to address their concerns. James Lankford, Republican of Oklahoma, said on Monday that he was in talks over a proposal meant to ensure the tax plan did not balloon the deficit. Mr. Lankford said the Senate was discussing inserting a provision that would lead to tax increases — as yet unspecified — after a period of years if federal revenues fell short of lawmakers’ projections.

    “To me,” Mr. Lankford said, “the big issue is how are we dealing with debt and deficit, do we have realistic numbers, and is there a backstop in the process just in case we don’t?”

    Mr. Corker and Senator Jeff Flake of Arizona, who has also expressed concerns about the bill’s costs, said on Monday that they were similarly interested in some type of trigger or backstop.

    Some other senators’ concerns appear less likely to be addressed. Mike Lee of Utah and Marco Rubio of Florida, for example, appear to be making little progress in persuading party leaders to expand access to the child tax credit for low-income families, by allowing the credit to be refundable against payroll tax liability. Such a move would allow working parents who do not currently face income tax liability to still benefit from the expanded credit envisioned in the bill.

    On Monday, several Republicans from the Senate Finance Committee, including Mr. Hatch, emerged from a lunch with President Trump at the White House saying that they were confident they would have the necessary votes to pass the package this week and would be able to resolve differences with the House version so that the bill could be signed into law in short order.

    White House officials privately said that they hoped the two chambers could resolve their differences privately and informally to avoid a potentially lengthy and divisive formal conference that typically is needed to complete major legislation.

    Asked whether the legislation could be completed by Christmas, Mr. Hatch said, “I hope so.”

    He added that Democrats should “get off their duffs” and support the plan. Mr. Trump, for his part, said later in the day that he was not interested in getting Democratic support.

    At an event in the Oval Office honoring Navajo code talkers from World War II, Mr. Trump boasted that the package would be “a tremendous tax cut, the biggest in the history of our country” and predicted that there would be “great receptivity” to it.

    “If we win, we’ll get some Democratic senators joining us,” he said. “But I’m not so interested in that. We’re really interested just in getting it passed.”

    Mr. Trump is expected to go to Capitol Hill on Tuesday to have lunch with Republican senators before meeting with the top congressional leaders from both parties in the afternoon.

    ———-

    “Senators Scramble to Advance Tax Bill That Increasingly Rewards Wealthy” by JIM TANKERSLEY, ALAN RAPPEPORT and THOMAS KAPLAN; The New York Times; 11/27/2017

    “White House officials privately said that they hoped the two chambers could resolve their differences privately and informally to avoid a potentially lengthy and divisive formal conference that typically is needed to complete major legislation.”

    The White House wants Congress to “resolves their differences privately and informally.” And they’re talking about a massive tax overhaul. It’s a sign that the GOP’s plan for addressing the outrageous scamminess of their tax bill is to hide it from the public as much as possible.

    And, of course, Senator Johnson was pledging to not even allow the bill out of the Budget Committee unless his complaints about the pass-through cuts weren’t address:


    At the heart of the debate is whether to more favorably treat small businesses and other so-called pass-through entities — businesses whose profits are distributed to their owners and taxed at rates for individuals. Seventy percent of pass-through income flows to the top 1 percent of American earners, according to research by Owen Zidar, an economist at the University of Chicago’s Booth School of Business.

    Two Republican senators, Ron Johnson of Wisconsin and Steve Daines of Montana, have said that they will vote against the plan if it does not do more to help the owners of those businesses, possibly by increasing the individual income tax deduction for such owners from the 17.4 percent rate currently in the Senate bill.

    Republicans, who control the Senate 52 to 48, can afford to lose only two of their members if they hope to pass the bill on party lines in the upper chamber.

    Mr. Johnson could stall the bill by himself on Tuesday, when it is scheduled for a vote in the Senate Budget Committee. Mr. Johnson sits on that committee, where Republicans have a single-vote majority. On Monday, he said he would vote “no” unless his concerns were addressed.

    “I need a fix beforehand,” Mr. Johnson said.

    And some other Senators, in particular Corker and Flake, were calling for a “trigger” that was raise taxes automatically if the tax cuts didn’t generate enough in new revenues. And Corker, like Johnson, also sits on the Budget Committee and was threatening to not even let it out of the Committee unless his deficit concerns were address:


    Adding to the uncertainty, Senator Bob Corker of Tennessee also said on Monday that he could be a “no” vote in the Budget Committee if his concerns about the bill’s effect on the deficit were not adequately addressed.

    Many of those senators are in discussions with party leaders over how to tweak the bill to address their concerns. James Lankford, Republican of Oklahoma, said on Monday that he was in talks over a proposal meant to ensure the tax plan did not balloon the deficit. Mr. Lankford said the Senate was discussing inserting a provision that would lead to tax increases — as yet unspecified — after a period of years if federal revenues fell short of lawmakers’ projections.

    “To me,” Mr. Lankford said, “the big issue is how are we dealing with debt and deficit, do we have realistic numbers, and is there a backstop in the process just in case we don’t?”

    Mr. Corker and Senator Jeff Flake of Arizona, who has also expressed concerns about the bill’s costs, said on Monday that they were similarly interested in some type of trigger or backstop.

    So we have Senator Johnson threatening to block the bill in the Budget Committee if it doesn’t expand the tax cuts and blow up the deficit even more while at the same time Senator Corker was threatening to also block the bill in the Budget Committee if it doesn’t do something about the exploding deficit.

    That was the situation Monday. And now here’s a report from Tuesday following lunch with Trump. As we’ll see, Corker, Collins, and Johnson are all placated as the bill makes its way out of the Budget Committee (with Corker’s and Johnson’s support) and on its way to a full Senate vote.

    Now, it’s important to note that Johnson and Corker could have both single-handedly stopped the tax bill simply by not voting to let it out of the Budget Committee, and they probably weren’t going to do that on their own even if they’re still planning on voting against the bill in the end. So, while Johnson appears to be a safe eventual vote (since he’s trying to make it even more of a deficit-buster), we still don’t really know where Corker stands on the bill. That’s presumably going to depend on the details of the “triggers” that have yet to be worked out.

    But there was a particular ominous comment from Susan Collins regarding her concerns with the bill’s destabilization of the Obamacare insurance markets: Collins came out of that lunch meeting with Trump expressing her confidence that her concerns will be addressed before the conference report. And the conference report is presumably going to happen after the bill passes full vote in the Senate. So that sure sounds like Susan Collins was hinting at a deal to vote it through the Senate and take it to conference, the step the White House wants to be worked out informally and in private. And that means we could be looking a situation where this tax bill is passed by the Senate, and then moved through the House/Senate conference, and back to the House and Senate for a final vote with virtually no public hearings and this could happen very soon:

    CNN

    How the GOP’s tax bill came back to life

    By Lauren Fox, Ted Barrett and Ashley Killough, CNN

    Updated 6:00 PM ET, Tue November 28, 2017

    (CNN)In a matter of hours, the Republican tax bill — the last hope Republican senators had of making a major legislative push this year — went from hanging on by a thread to moving full steam ahead to the Senate floor.

    In an afternoon that included a visit from President Donald Trump and around-the-clock negotiations, Republican senators found their footing, came around and passed the tax overhaul out of the Senate Budget Committee in a party line vote.

    “This is the US Senate. People are compromising, people are bringing in new ideas and actually having a real debate,” said Sen. David Perdue, a Republican from Georgia. “Frankly, I’m ecstatic that we just passed this out of the Budget Committee. Now, we put it on the floor. I’m very hopeful we’ll get this passed this week.”

    Senators voted in the Budget Committee amid raucous protests. Outside the markup, protesters marched up and down the hallway, shouting at senators. “Kill the bill, don’t kill us,” they yelled, echoing chants that were used during the at times chaotic protests of the health care debate.

    Sen. Lindsey Graham, growing irritated, asked for one woman to be removed as she loudly tried to drown out his gaggle before cameras. After the hearing started, protesters in the room were dragged or carried out into the hallway and arrested.

    Still, the bill passed the committee and several GOP senators said they expected a vote on the Senate floor by the end of the week.

    There’s still more work to be done and concerns to be ironed out before the final vote in the Senate, but the mood Tuesday afternoon varied greatly from the tension that permeated the Capitol in the morning when two Senators on the Budget Committee — Sens. Bob Corker of Tennessee and Ron Johnson of Wisconsin — were still pledging they might vote against the GOP’s best efforts since 1987 to pass a tax reform bill out of the Budget committee. The GOP only had a one-vote majority on the committee so a “no” from either would prevent the bill from advancing.

    Republican lawmakers supporting the tax bill were on edge, hoping that their colleagues on the fence would come around.

    “I think the American people will look at all of us and say ‘I can’t believe you people didn’t pass this bill. How did you make it out of the birth canal? A pox on all your houses,'” Louisiana Sen. John Kennedy said.

    For many members on the fence, the fruits of weeks-long negotiations panned out just moments before the Budget Committee vote. Corker — whose key concerns centered around how the tax bill would affect the country’s deficit — told reporters as he left the weekly Senate lunch that he had just struck a deal on a plan to ensure some kind of backup if the GOP’s tax proposal didn’t generate the kind of economic growth the party anticipated.

    “I think we’ve come to a pretty good place,” Corker said noting he spent all of Thanksgiving weekend on the phone with Trump administration officials like Gary Cohn and Treasury Secretary Steve Mnuchin. “I think we got a commitment that puts us in a pretty good place.”

    Lunch with Trump — which has in the past had the effect at times of actually imperiling negotiations rather than advancing them — even seemed to assuage concerns of some of the most skeptical lawmakers. Sen. Susan Collin, a Republican from Maine, had expressed concerns with including a repeal of Obamacare’s individual mandate to have health insurance in the tax bill noting that it could lead to spiking premiums for consumers. But Collins said she was getting more comfortable with the tax bill (albeit still undecided) after Trump told her in lunch that he supported two provisions that would bolster the Obamacare market place, referencing bipartisan legislation from Sens. Lamar Alexander and Patty Murray.

    “So, I believe I have secured an agreement that the Alexander-Murray bill — which reinstates the cost savings reductions and gives more flexibility to states, plus a bill that I have introduced with Bill Nelson, which would authorize and provide some seed money for high risks pools which would ensure that people with preexisting conditions are protected and would also help to lower premiuretiringms — would be considered and signed into law before the conference report on the tax bill comes back,” Collins said.

    Behind closed doors, Trump’s pitch to fellow Republicans was simple: we need a win and tax reform is it. One GOP aide told CNN that Trump and the senators had a “vibrant and robust” discussion on taxes, but a Republican senator noted Trump didn’t make any unusual or controversial remarks. Instead, the senator described Trump as businesslike and focused on taxes.

    Even Johnson, who had made headlines weeks ago for announcing he’d vote against the tax bill, came around in the end, as he cast a “yes” vote in the Budget Committee.

    Johnson had said he would be a “no” in committee unless he saw more parity on the way corporations and pass-through entities were taxed, but according to a source with knowledge of the situation, Trump called on Johnson directly to back the tax bill, and take his concerns over the tax bill to the conference. Several senators also stood up and urged Johnson to offer an amendment on the floor to address his concerns and not try to stall bill.”

    Despite his “yes” vote in the committee, Johnson told reporters later Tuesday that he won’t commit to voting to bring the tax bill to the floor for debate.

    “We need to make some progress,” Johnson told CNN when asked if he’d commit to voting for the bill.

    ———-

    “How the GOP’s tax bill came back to life” by Lauren Fox, Ted Barrett and Ashley Killough; CNN; 11/28/2017

    For many members on the fence, the fruits of weeks-long negotiations panned out just moments before the Budget Committee vote. Corker — whose key concerns centered around how the tax bill would affect the country’s deficit — told reporters as he left the weekly Senate lunch that he had just struck a deal on a plan to ensure some kind of backup if the GOP’s tax proposal didn’t generate the kind of economic growth the party anticipated.”

    Yep, as of Tuesday morning it was still looking like the tax bill might actually die in the Senate budget committee. But after that lunch session with Trump we find Corker, Collins, and Johnson all sounding like they’ve arrived as some sort of agreeable compromise, although they continued to hedge somewhat and weren’t saying they would definitely vote for the bill:


    “I think we’ve come to a pretty good place,” Corker said noting he spent all of Thanksgiving weekend on the phone with Trump administration officials like Gary Cohn and Treasury Secretary Steve Mnuchin. “I think we got a commitment that puts us in a pretty good place.”

    Even Johnson, who had made headlines weeks ago for announcing he’d vote against the tax bill, came around in the end, as he cast a “yes” vote in the Budget Committee.

    Johnson had said he would be a “no” in committee unless he saw more parity on the way corporations and pass-through entities were taxed, but according to a source with knowledge of the situation, Trump called on Johnson directly to back the tax bill, and take his concerns over the tax bill to the conference. Several senators also stood up and urged Johnson to offer an amendment on the floor to address his concerns and not try to stall bill.”

    Despite his “yes” vote in the committee, Johnson told reporters later Tuesday that he won’t commit to voting to bring the tax bill to the floor for debate.

    “We need to make some progress,” Johnson told CNN when asked if he’d commit to voting for the bill.

    But when it comes to Collins’s statements, that hedge started sounding like a commitment to vote for it in the Senate and move it to conference:


    Lunch with Trump — which has in the past had the effect at times of actually imperiling negotiations rather than advancing them — even seemed to assuage concerns of some of the most skeptical lawmakers. Sen. Susan Collin, a Republican from Maine, had expressed concerns with including a repeal of Obamacare’s individual mandate to have health insurance in the tax bill noting that it could lead to spiking premiums for consumers. But Collins said she was getting more comfortable with the tax bill (albeit still undecided) after Trump told her in lunch that he supported two provisions that would bolster the Obamacare market place, referencing bipartisan legislation from Sens. Lamar Alexander and Patty Murray.

    “So, I believe I have secured an agreement that the Alexander-Murray bill — which reinstates the cost savings reductions and gives more flexibility to states, plus a bill that I have introduced with Bill Nelson, which would authorize and provide some seed money for high risks pools which would ensure that people with preexisting conditions are protected and would also help to lower premiums — would be considered and signed into law before the conference report on the tax bill comes back,” Collins said.

    “So, I believe I have secured an agreement that the Alexander-Murray bill — which reinstates the cost savings reductions and gives more flexibility to states, plus a bill that I have introduced with Bill Nelson, which would authorize and provide some seed money for high risks pools which would ensure that people with preexisting conditions are protected and would also help to lower premiums — would be considered and signed into law before the conference report on the tax bill comes back”.

    Keep in mind, if there’s conference committee and the House and Senate leaders informally resolve the differences between the two bills – the plan the White House says it wants to see happen – that almost certainly means the House will just agree to vote on the Senate’s bill unchanged because the Senate has the constraints of the filibuster that the House doesn’t have. So whatever gets passed in the Senate could easily become the final law. And that means the agreement Collins says she got from the GOP leadership that these two Senate bills design to shore up the destabilized insurance markets before the conference report is potentially a completely useless agreement because there might not be a conference report.

    When confronted about this Collins expressed confidence that there would actually be a conference committee and conference report, saying, “Everything I’m hearing is that there is going to be a conference committee”. So is what she’s hearing from her colleagues accurate? We’ll find out:

    Talking Points Memo

    How Susan Collins Came Around On Killing The Individual Mandate

    By Alice Ollstein
    Published November 29, 2017 6:11 am

    Sen. Susan Collins (R-ME) walked out of a lunch meeting Tuesday with President Trump and Senate Republicans with a broad smile on her face, telling reporters that promises from the president to support two separate health care bills left her “encouraged” and more amenable to voting to repeal Obamacare’s individual mandate—something just weeks ago she warned would devastate the middle class.

    Despite Trump’s purported backing, however, it is far from certain that either one could pass both chambers of Congress. And even if they did, several independent experts have said that both these bills combined would not protect the individual health insurance market by the harm caused by repealing the mandate.

    “One of the major concerns I had was the impact on premiums of repealing the individual mandate,” she said Tuesday, referring to government estimates that repealing the mandate would raise insurance premiums by at least 10 percent as healthier consumers leave the market.

    Collins insisted Tuesday that she secured support from Trump for two bills she says would mitigate the damage of repealing the mandate—one to restore government subsidies to insurance companies that Trump defunded earlier this year and the other to set up a federal reinsurance program.

    “Collins-Nelson would provide seed money for states and authorize high-risk pools. That really helps insurers because it gives them much more certainty about what their claims are going to be like,” she told TPM in a gaggle with reporters Tuesday afternoon. “Similarly, Alexander-Murray would reinstate the cost-sharing reductions and that helps low-income people with their co-pays, and it gives certainty to insurers so they don’t flee the market. So I think the combination of those two would be very powerful.”

    Health policy experts are not so sure.

    “The Alexander-Murray bill—while good policy on its own—would come nowhere close to undoing the damage from individual mandate repeal. The same is true of the Collins-Nelson proposal,” writes Aviva Aron-Dine, a senior fellow at the Center on Budget and Policy Priorities and a former senior counselor at the Department of Health and Human Services.

    Aron-Dine says the reinsurance funding in the Collins-Nelson bill, about $2.25 billion per year for just two years, falls far short of the $10 billion per year in permanent funding needed to prevent premiums from rising. She added that repealing the mandate is also likely to be the final straw that pushes insurers to flee the market entirely.

    “An underfunded, temporary reinsurance program that states can decide whether and how to implement will not reverse the uncertainty and confusion about the overall status of the individual market risk pool resulting from mandate repeal,” she said. “As a result, it will not meaningfully reduce the risk that insurers will leave the market.”

    Sen. Patty Murray (D-WA), the author of the Alexander-Murray bill, noted that her legislation addresses a completely different problem than the one created by repealing the mandate.

    “Tacking Alexander-Murray onto the partisan Republican tax reform effort is like trying to put out a fire with penicillin. It will not do anything to help,” she said.

    The Kaiser Family Foundation’s Larry Levitt has a similar assessment, writing that even if premiums are kept stable by Collins’ two mitigating bills, the ranks of the uninsured would still increase dramatically, and some insurers are sure to exit the market.

    Though Collins said earlier this month that she would need these bills passed into law before voting on the Senate tax and mandate repeal bill, she moved the goalpost on Tuesday.

    “I’m pushing to make sure they are passed and signed into law prior to the conference report coming back,” she said, “So I would know for certain that we’re going to be able to mitigate the impact of repealing the individual mandate.”

    When reporters pointed out the possibility that there will be no conference committee, that the House just passes the bill as-is, Collins waved away that fear. “Everything I’m hearing is that there is going to be a conference committee,” she said.

    ———-
    “How Susan Collins Came Around On Killing The Individual Mandate” by Alice Ollstein; Talking Points Memo; 11/29/2017

    “When reporters pointed out the possibility that there will be no conference committee, that the House just passes the bill as-is, Collins waved away that fear. “Everything I’m hearing is that there is going to be a conference committee,” she said.”

    And note how, even if the Senate does pass these two bills designed to undo some of the damage the GOP has already done to the insurance markets by systematically destabilizing them, those bills still won’t do enough to prevent a further destabilization and there’s not guarantee the House will pass those bills too:


    Despite Trump’s purported backing, however, it is far from certain that either one could pass both chambers of Congress. And even if they did, several independent experts have said that both these bills combined would not protect the individual health insurance market by the harm caused by repealing the mandate.

    So that’s the status of the tax bill. The major GOP holdouts are suddenly holding out a little less after they all received a variety of reassurances. Reassurance that are both contradictory and not actually reassuring even if taken at face value: Senator Johnson wants to make the tax cuts even bigger, while Corker wants controls on the deficits. That’s not going to be an easy needle to thread. And Collins got a pledge that the Senate will pass two bill to restabilize the insurance markets before the conference report and yet those two bills wouldn’t actually do much to undo the damage and there’s no guarantee the House would pass them and no guarantee there’s going to be a conference committee at all.

    All in all, it’s rather ominous. But it gets worse: we’re now getting leaked reports on the negotiations over the “trigger” Corker and Flake are calling for. There are a couple different versions being negotiated, including a 1 percent hike in the corporate tax rate if the GDP doesn’t grow an average of 0.4 percent over the next five years. But, not surprisingly, there’s already four GOP Senators who are openly opposed to the idea of any trigger. And the Koch brothers’ front group, Club for Growth, has a different, highly predictable alternative trigger: triggering spending cuts if the tax cuts don’t lead to the promise growth (surprise!):

    Talking Points Memo
    DC

    The Wheels Are Coming Off The Tax Bill’s Promised Deficit Trigger

    By Alice Ollstein
    Published November 29, 2017 2:28 pm

    The Republican tax bill sailed out of committee Tuesday after former hold-out Sen. Bob Corker (R-TN) secured a “verbal promise” from President Trump to include a “trigger” mechanism in the bill that would undo some of the bill’s tax cuts if they—as predicted—balloon the federal deficit in the coming years.

    But the wheels are already coming off the car.

    Uncertainty about exactly what tax cuts would fall under the trigger and the length of time before it goes into effect, along with staunch opposition to the idea from fellow Republicans and outside conservative groups, could kill the idea before it ever makes it into the bill. With a vote just a day away and the details of the proposal still shrouded in secrecy, senators are agonizing over siding with the deficit hawks demanding the trigger or the growing band of lawmakers insisting no trigger is necessary because the tax cuts will create wild economic growth to fill the trillion-plus dollar deficit.

    According to information leaked to Bloomberg News, one version of the trigger currently under discussion involves $350 billion in tax hikes beginning in 2022 if the promised growth fails to materialize. The exact size of the tax increase would be determined by the size of the economic shortfall. Another version detailed by Politico involved hiking the corporate tax rate by 1 percent if GDP doesn’t grow an average of 0.4 percent over the five years after the law is enacted.

    A final version may never see the light of day.

    At least four senators – Dean Heller (R-NV), Thom Tillis (R-NC), Chuck Grassley (R-IA), and John Kennedy (R-LA) – say they’re opposed to the idea of a deficit trigger. Grassley told TPM on Tuesday that it would inject uncertainty into the economy. On the House side, several lawmakers have also come out against the idea, and powerful conservative advocacy groups are mobilizing as well.

    “The idea of a ‘tax hike trigger’ should be rejected on its merits,” wrote Club for Growth President David McIntosh on Wednesday. “It will have harmful impacts on American businesses and undermine any economic growth potential in this tax reform bill because businesses will not invest due to the possibility of a higher tax rate.”

    Instead of a trigger that raises taxes if the federal deficit becomes too deep, the Koch brothers-funded group has an alternative proposal.

    “Here’s an idea. How about cutting spending?” McIntosh wrote. “A spending cut trigger would be a far better idea.”

    Americans for Prosperity joined the chorus, writing: “Champions of pro-growth, comprehensive tax reform should oppose any attempt to include this harmful provision.”

    ———-

    “The Wheels Are Coming Off The Tax Bill’s Promised Deficit Trigger” by Alice Ollstein; Talking Points Memo; 11/29/2017

    “Uncertainty about exactly what tax cuts would fall under the trigger and the length of time before it goes into effect, along with staunch opposition to the idea from fellow Republicans and outside conservative groups, could kill the idea before it ever makes it into the bill. With a vote just a day away and the details of the proposal still shrouded in secrecy, senators are agonizing over siding with the deficit hawks demanding the trigger or the growing band of lawmakers insisting no trigger is necessary because the tax cuts will create wild economic growth to fill the trillion-plus dollar deficit.”

    The planned Thursday vote in the Senate is just a day away and the details of the “trigger” negotiations are still largely a secret. But we do have some leaks about some of the negotiations:


    According to information leaked to Bloomberg News, one version of the trigger currently under discussion involves $350 billion in tax hikes beginning in 2022 if the promised growth fails to materialize. The exact size of the tax increase would be determined by the size of the economic shortfall. Another version detailed by Politico involved hiking the corporate tax rate by 1 percent if GDP doesn’t grow an average of 0.4 percent over the five years after the law is enacted.

    The problem is that we also have leaks about four Senators who are already saying they’re opposed to the idea of any tax hiking trigger at all:


    At least four senators – Dean Heller (R-NV), Thom Tillis (R-NC), Chuck Grassley (R-IA), and John Kennedy (R-LA) – say they’re opposed to the idea of a deficit trigger. Grassley told TPM on Tuesday that it would inject uncertainty into the economy. On the House side, several lawmakers have also come out against the idea, and powerful conservative advocacy groups are mobilizing as well.

    And there’s no way the GOP can pass this bill while losing those four Senators. So we’re in a situation that would appear to be stalemate: if the triggers are put in place to get Corker’s and Flake’s vote it could lose four other GOP votes.

    What’s the GOP going to do with the big vote just a day away? The Koch brothers have an idea: make the triggers spending cut triggers instead:


    “The idea of a ‘tax hike trigger’ should be rejected on its merits,” wrote Club for Growth President David McIntosh on Wednesday. “It will have harmful impacts on American businesses and undermine any economic growth potential in this tax reform bill because businesses will not invest due to the possibility of a higher tax rate.”

    Instead of a trigger that raises taxes if the federal deficit becomes too deep, the Koch brothers-funded group has an alternative proposal.

    “Here’s an idea. How about cutting spending?” McIntosh wrote. “A spending cut trigger would be a far better idea.”

    Americans for Prosperity joined the chorus, writing: “Champions of pro-growth, comprehensive tax reform should oppose any attempt to include this harmful provision.”

    Don’t forget that that if these automatic spending cuts are triggered in the middle of a recession, that’s a recipe for a eurozone-style austerity death spiral: the economy is weak, so the triggers force more spending cuts, which makes the economy weaker, etc.

    So will the GOP compromise with its warring factions by putting in place mandatory spending cuts if its magical trickle-down tax scam doesn’t result in the economic boom they’re promising? On the one hand, that does seem like a very GOP-ish thing to do. But on the other hand, it’s hard to imagine a last minute change that could make this bill even more unpopular than to slip in an automatic spending-cut provision inside a bill that’s largely tax cuts for corporations and the super-rich. Passing this bill just becomes more and more politically risky the more we learn about it and the more modifications are made.

    And yet, we can’t forget that all this secrecy and plans to avoid any extended public hearings is specifically being done in anticipation of passing a highly unpopular bill. The GOP is clearly gambling on the prospects the public will eventually forget that this whole tax monstrosity happened and just move on to the next shiny object.

    Which might happen. We’ll see. The Senate just voted to move the tax bill to a floor debate on Thursday. It will 20 hours of debate, followed by “vota-a-rama” when Senators can propose any amendments they want, and then the final vote for the Senate bill. That’s what the Senate just approved and the 20 hour debate is happening tomorrow. And if the Senate votes to pass the final version of the bill it then moves on to the conference with the House. But as we already saw, the GOP’s plans are apparently to rush this bill through the Senate and then skip the conference committee and just have the House vote on whatever the Senate passes. And yet was also saw Senator Collins indicating that she was promised her concerns would be resolved in conference. So it’s very possible that GOPer holdouts like Collins are being told that there’s going to be another round of debate and amendments in the conference committee that never actually happens, which means these upcoming 20 hours of debate and amendments are going to effectively be the ONLY hours of debate and amendments for this bill and the people debate and amending it won’t necessarily realize they’re basically creating the final version:

    The Hill

    Senate GOP votes to begin debate on tax bill

    By Jordain Carney and Naomi Jagoda
    11/29/17 05:52 PM EST

    The Senate voted to begin debate on its tax cut bill Wednesday, edging Republicans closer to their first major legislative victory under President Trump as they seek to finish the chamber’s work on the measure by the end of the week.

    Senators voted 52-48 to take up the House-passed legislation, which is being used as a vehicle for the Senate bill.

    No Republicans voted against proceeding to debate, a huge accomplishment for GOP leaders who struggled earlier this year to corral their members around legislation to repeal and replace ObamaCare.

    GOP Sens. Susan Collins (Maine), Steve Daines (Mont.) and Jeff Flake (Ariz.) all said they would agree to start debate before it began, despite various worries about the legislation.

    In another sign of GOP momentum, Sen. Lisa Murkowski’s office told MSNBC that the Alaska Republican would be a “yes” on the tax plan.

    Majority Leader Mitch McConnell (R-Ky.) urged senators to vote to start debate, promising they’d have time to amend the bill on the floor.

    “I encourage any member who thinks that we need to fix the problems of our outdated tax code to vote to proceed to the legislation,” he said in a floor speech. “I urge them to vote for the motion to proceed and offer their amendments. …The bottom line is this: we must vote to begin debate.”

    The GOP’s goal is to get a final bill to Trump’s desk by the end of 2017, which would give him and his party a significant win at the end of a difficult year.

    If the Senate can approve its legislation this week, Congress would have the month of December to work out differences between the Senate and House bills.

    The vote to begin debate starts the clock on 20 hours of additional debate on the tax legislation before a free-wheeling “vote-a-rama.”

    During that process, any senator can demand a vote on any amendment, with hundreds of potential changes typically being filed. The vote-a-rama is expected to take place on Thursday.

    ———–
    “Senate GOP votes to begin debate on tax bill” by Jordain Carney and Naomi Jagoda; The Hill; 11/29/2017

    “The vote to begin debate starts the clock on 20 hours of additional debate on the tax legislation before a free-wheeling “vote-a-rama.””

    And notice how Alaska Senator Lisa Murkowski, a potential hold out, was already said she’s supporting the bill:


    In another sign of GOP momentum, Sen. Lisa Murkowski’s office told MSNBC that the Alaska Republican would be a “yes” on the tax plan.

    With Collins already hinting that she’s been promised her concerns would be address (which sounds like a soft ‘yes’), that pretty much just leaves Corker, Flake, and McCain as the possible ‘no’ votes.

    Will these three retiring Senators save the GOP from itself? It would be rather ironic if the retiring GOP Senators are the ones to save the GOP from a politically disastrous self-inflicted wound. At least it would be ironic if the US wasn’t clearly already living in Bizarro world. But here we are.

    Posted by Pterrafractyl | November 29, 2017, 3:47 pm
  4. The GOP’s giant tax scam isn’t failing to disappoint in the department of suspense: With the GOP Senator leadership hoping to pass the bill tomorrow but still unable to secure the 50 votes it needs to actually pass the bill, a massive last-minute rewrite is underway. And it’s still totally unclear what sort of amendments could possibly placate the remaining GOP holdouts given their conflicted demands.

    While Senator McCain appears to have moved into the ‘yes’ column, Senator Collins – who was sounding like a likely ‘yes’ vote in recent days – is sounding a lot less like a ‘yes’ vote now that it’s becoming increasingly clear that the demands she made to get to ‘yes’ probably can’t be kept. And the Joint Tax Committee – the official Congressional scorekeeper for assessing the likely impact of the tax cut on the debt and deficit – just released an estimate that predicts over $1 trillion in new debt over the next decade, a potentially significant obstacle for getting Senators Corker and Flake – two of the remaining members of the GOP’s ever-dwindling ‘deficit hawk’ faction – to ‘yes’. Beyond that, the solution the GOP had come up with for easing those deficit concerns – tax hikes, or spending cuts, that would get “triggered” if tax revenues didn’t meet expectations –
    has already been shot down as unworkable. There’s talk of an alternative plan of automatic tax hikes that will kick in down the road, but it’s very unclear how much support there is for that with the rest of the GOP caucus.

    In addition, Senators Johnson and Daines – who were both threatening ‘no’ votes unless the ‘pass-through’ tax cuts targeting the wealthy are expanded – are maintaining that ‘no’ vote threat. And don’t forget, meeting their demands works in the opposition direction of meeting the deficit hawks’ demands.

    So, basically, all of the intra-GOP tensions that existed in the lead up to the point remain. What doesn’t remain are the potential solutions they GOP cooked up. Hence the frenzy of last minute changes:

    Politico

    Republicans rewriting tax bill — and won’t vote tonight

    Senate GOP leaders are still making major changes to the plan in order to win over several hold-outs.

    By SEUNG MIN KIM and COLIN WILHELM

    11/30/2017 10:59 AM EST
    Updated 11/30/2017 07:56 PM EST

    Senate Republicans are still scrambling to win over enough votes to pass their massive tax code overhaul, with major changes to the bill still up in the air and a final vote pushed beyond Thursday night.

    Senate Majority Leader Mitch McConnell (R-Ky.) said the next vote in the tax debate will come at 11 a.m. Friday, as work continues behind the scenes to win over skeptical deficit hawks and other hold-outs.

    Multiple GOP senators leaving the chamber after a dramatic late afternoon vote said a key proposal for deficit hawks — a trigger to raise tax rates if sufficient economic growth did not materialize — would not pass procedural muster and would need to find something else to satisfy the bloc of deficit hawk holdouts, led by Sen. Bob Corker (R-Tenn.).

    “It doesn’t look like the trigger is going to work, according to the parliamentarian,” Senate Majority Whip John Cornyn (R-Texas) said. “So we have an alternative, frankly: a tax increase we don’t want to do to try to address Sen. Corker’s concerns.”

    Corker told reporters: “My understanding is, that the parliamentarian has ruled against it so they’re just going to automatically put [tax increases] in, period.” Corker and Sen. Jeff Flake (R-Ariz.) said the revenue raised with tax increases — which senators say would kick in six years after the enactment of the tax legislation — would total about $350 billion, although Cornyn suggested that figure may need to go higher.

    Their comments came after extended drama on the Senate floor Thursday during an otherwise mundane procedural vote, when Corker, Flake and Ron Johnson (R-Wis.) initially withheld their support on a vote to move forward with the bill. Ultimately they aligned with their party, but it suggested real concerns remained.

    Johnson withheld his vote during the standoff in exchange for votes on his amendments, including one that would further increase a tax deduction for pass-through businesses to around 25 percent.

    Republicans got a boost earlier in the day after Sen. John McCain said he would back the Senate GOP tax legislation.

    The Arizona Republican, who helped tank the party’s Obamacare repeal efforts earlier this year, has been a major question mark for weeks on the tax measure. He raised some general concerns about ballooning the deficit — one reason he voted against the Bush tax cuts in 2001 and 2003 — but stressed in his statement that he believed the tax measure would ultimately boost the economy and ease deficit issues.

    “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families,” McCain said in a statement.

    The legislation would slash the corporate tax rate and lower rates for many, though not all, individuals. Senate Republicans have said their plan would boost the economy but not by nearly as much as some lawmakers hope, a new official analysis shows.

    The nonpartisan Joint Committee on Taxation said Thursday that the GOP plan would fall well short of covering its $1.5 trillion cost through additional economic growth; it predicted $407 billion in additional revenue would come in by boosting the economy by 0.8 percent over the next decade.

    That would mean a $1 trillion deficit increase, which could be problematic for lawmakers like Corker, who has said he would vote against a tax bill that increased the deficit. A Senate Finance Committee aide noted that the analysis was “incomplete” since the bill text has yet to be finalized.

    McCain, however, signaled he was satisfied with the process, noting the bill went through “a thorough mark-up in the Senate Finance Committee.”

    But even with McCain in the “yes” column, Senate Republicans still have myriad issues to resolve before they can lock down at least 50 votes to ensure final passage of the tax bill on the floor. Republicans are using powerful budget procedures to evade a Democratic filibuster and could pass the bill as early as Thursday night.

    Other key GOP votes such as Corker, Flake and Susan Collins of Maine have yet to commit to the bill, for varying reasons. And Johnson and Steve Daines of Montana are trying to secure even more generous treatment of small businesses after extracting a boost in an earlier round of negotiations.

    Collins will offer a half-dozen amendments, including one that would hike the proposed corporate tax rate of 20 percent to restore a deduction for up to $10,000 for property taxes. She is among a handful of Republican senators who say they are open to raising the proposed corporate rate in order to fund other tax provisions in the bill.

    “I have talked with many CEOs who have called to lobby me and they start as saying that they’d really love to have the rate go to 20, and then I say, what about 22 percent? Would that change your decision-making?” Collins said late Wednesday night. “And they say we’d be happy with 22 percent.”

    The moderate senator is also seeking to extract some health care assurances because the current tax bill repeals Obamacare’s requirement that everyone carry insurance or pay a penalty.

    At a Christian Science Monitor breakfast on Thursday morning, Collins discussed an arrangement that would add two separate health care bills — one to stabilize the markets and another to protect pre-existing conditions and use high-risk pools — to a short-term spending bill that would need to pass before government funding expires Dec. 8.

    “I’m going to know whether or not those provisions made it” before final passage of a tax bill, Collins said. “That matters hugely to me.”

    Conservatives in the House Freedom Caucus, a group of about 40 Republicans that frequently buck their party’s leadership, rejected the notion of supporting those health care bills or other provisions thought to be key to garnering enough tax votes in the Senate.

    “I don’t see supporting a [continuing resolution] with Alexander-Murray attached to it,” said House Freedom Caucus Chair Mark Meadows (R-N.C.).

    Other members of the group said they opposed amendments that would raise the proposed corporate income tax rate above 20 percent, and bristled at the idea of a delayed cut, which the Senate’s bill does largely due to budgetary rules.

    “It’s a great strategy if you’re looking to put the Democrats in the majority and give them credit for what we did,” Rep. Louie Gohmert (R-Texas) said of the Senate’s proposed one-year delay to a corporate tax cut.

    ———-

    “Republicans rewriting tax bill — and won’t vote tonight” by SEUNG MIN KIM and COLIN WILHELM; Politico; 11/30/2017

    “Multiple GOP senators leaving the chamber after a dramatic late afternoon vote said a key proposal for deficit hawks — a trigger to raise tax rates if sufficient economic growth did not materialize — would not pass procedural muster and would need to find something else to satisfy the bloc of deficit hawk holdouts, led by Sen. Bob Corker (R-Tenn.).

    Something other than “the trigger” is going to be required to alleviate the deficit hawks’ concerns. And according to Senator Corker, a key deficit hawk, the replacement for the trigger is going to be automatic tax increases:


    “It doesn’t look like the trigger is going to work, according to the parliamentarian,” Senate Majority Whip John Cornyn (R-Texas) said. “So we have an alternative, frankly: a tax increase we don’t want to do to try to address Sen. Corker’s concerns.”

    Corker told reporters: “My understanding is, that the parliamentarian has ruled against it so they’re just going to automatically put [tax increases] in, period.” Corker and Sen. Jeff Flake (R-Ariz.) said the revenue raised with tax increases — which senators say would kick in six years after the enactment of the tax legislation — would total about $350 billion, although Cornyn suggested that figure may need to go higher.

    So how is the rest of the GOP caucus going to feel about the automatic tax increases Corker was hinting at? Well, since we don’t have any information about that proposal it’s hard to know exactly how the rest of the GOP will respond, but it’s not hard to imagine that the response isn’t going to be welcoming.

    And while it’s possible the deficit hawks – basically just Corker and Flake at this point – will suddenly cave, it’s going to be a lot harder for them to do that now that the Joint Committee on Taxation just came out with its official score for the tax bill and projected over a $1 trillion will be added to the debt:


    The nonpartisan Joint Committee on Taxation said Thursday that the GOP plan would fall well short of covering its $1.5 trillion cost through additional economic growth; it predicted $407 billion in additional revenue would come in by boosting the economy by 0.8 percent over the next decade.

    That would mean a $1 trillion deficit increase, which could be problematic for lawmakers like Corker, who has said he would vote against a tax bill that increased the deficit. A Senate Finance Committee aide noted that the analysis was “incomplete” since the bill text has yet to be finalized.

    That said, one of the Senators who was recently expressing deficit hawk concerns, Senator McCain, appears to have come around to supporting the bill. McCain’s vote isn’t enough to give the GOP the 50 votes it needs, but it’s getting closer:


    McCain, however, signaled he was satisfied with the process, noting the bill went through “a thorough mark-up in the Senate Finance Committee.”

    But even with McCain in the “yes” column, Senate Republicans still have myriad issues to resolve before they can lock down at least 50 votes to ensure final passage of the tax bill on the floor. Republicans are using powerful budget procedures to evade a Democratic filibuster and could pass the bill as early as Thursday night.

    Other key GOP votes such as Corker, Flake and Susan Collins of Maine have yet to commit to the bill, for varying reasons. And Johnson and Steve Daines of Montana are trying to secure even more generous treatment of small businesses after extracting a boost in an earlier round of negotiations.

    And the loss of the “trigger” isn’t the only modification to the bill that appears to be a non-starter. Senator Collins has been predicating her support for the bill on the assumption that her concerns over the repeal of the Obamacare mandate will be address with the passage of two different bills designed to shore up the insurance market. But there’s no way Senate leaders can promise that will happen because the House would need to pass those bills too, and the House’s far-right “Freedom Caucus” is already saying that’s a non-starter:


    Collins will offer a half-dozen amendments, including one that would hike the proposed corporate tax rate of 20 percent to restore a deduction for up to $10,000 for property taxes. She is among a handful of Republican senators who say they are open to raising the proposed corporate rate in order to fund other tax provisions in the bill.

    “I have talked with many CEOs who have called to lobby me and they start as saying that they’d really love to have the rate go to 20, and then I say, what about 22 percent? Would that change your decision-making?” Collins said late Wednesday night. “And they say we’d be happy with 22 percent.”

    The moderate senator is also seeking to extract some health care assurances because the current tax bill repeals Obamacare’s requirement that everyone carry insurance or pay a penalty.

    At a Christian Science Monitor breakfast on Thursday morning, Collins discussed an arrangement that would add two separate health care bills — one to stabilize the markets and another to protect pre-existing conditions and use high-risk pools — to a short-term spending bill that would need to pass before government funding expires Dec. 8.

    “I’m going to know whether or not those provisions made it” before final passage of a tax bill, Collins said. “That matters hugely to me.”

    “I’m going to know whether or not those provisions made it [before final passage of a tax bill]…That matters hugely to me.”

    Those were Collins’s words about the health care provisions she is demanding for a ‘yes’ vote. And yet it’s already pretty clear that those provisions aren’t going to make it into the final version of the bill. That’s according to the chair of the House ‘Freedom Caucus’:


    Conservatives in the House Freedom Caucus, a group of about 40 Republicans that frequently buck their party’s leadership, rejected the notion of supporting those health care bills or other provisions thought to be key to garnering enough tax votes in the Senate.

    “I don’t see supporting a [continuing resolution] with Alexander-Murray attached to it,” said House Freedom Caucus Chair Mark Meadows (R-N.C.).

    Other members of the group said they opposed amendments that would raise the proposed corporate income tax rate above 20 percent, and bristled at the idea of a delayed cut, which the Senate’s bill does largely due to budgetary rules.

    So Susan Collins is increasingly basing her ‘yes’ vote on assurance that something that increasingly looks unlikely to happen will happen. And the tiny deficit hawk faction won’t get the “trigger” it wants and might have to settle for automatic tax hikes that the rest of the GOP caucus probably won’t accept.

    But it gets worse in terms of securing those 50 votes. Because don’t forget that she’s already expressed concerns over the $25 billion in Medicare cuts that will be mandated if the deficit rises thanks to the “pay-as-you-go” rules Congress has to follow. And as the following article lays out, that $25 billion in Medicare cuts will be just one part of $150 billion in federal spending cuts that will likely happen year after year, potentially forcing the slashing and potential elimination of a number of federal programs. In other words, there is actually a “trigger” that’s going to be pulled by this tax bill. It’s the pay-as-you-go trigger that mandates spending cuts and it’s a trigger that’s already law and it can’t be overturned without 60 votes in the Senate which means Democrats would need to cooperate.

    So what’s the GOP’s plans for dealing with $150 billion in forced federal spending cuts that guaranteed to be highly unpopular? Demand the Democrats vote with the GOP to waive the pay-as-you-go rules. So the GOP’s tax bill creates a situation where Democrats are going to decide between allowing massive federal spending cuts happen or allow the deficits to spike in order to finance massive tax cuts for corporations and the super-rich. In other words, the GOP’s plan is to hold virtually all federal programs hostage in order to extract from the Democrats a concession to waive the deficit-control rules and allow the deficits to go much, much higher to pay for a massive tax cut for corporations and the super-rich:

    Politico

    Tax bill could trigger historic spending cuts

    By ADAM CANCRYN and SARAH FERRIS
    11/30/2017 08:28 PM EST

    Republicans are on the verge of a massive tax overhaul that would hand President Donald Trump his first major legislative victory. But the $1.5 trillion tax package could trigger eye-popping cuts to a slew of federal programs, including Medicare.

    Unless Congress acts swiftly to stop it, as much as $150 billion per year would be cut from initiatives ranging from farm subsidies to student loans to support services for crime victims. Medicare alone could see cuts of $25 billion a year. And the specter of those cuts has thrust Congress into a high-stakes game of political chicken.

    With so much attention focused on the tax bill itself neither lawmakers nor many of the advocacy groups had paid as much attention to the depth and breadth of the cuts that will ensue unless the House and Senate come up with a bipartisan deal to stop them. Some groups had run Medicare ads, but they were largely overshadowed by the tax debate itself.

    The tax bill hit snags in the Senate late Thursday, as Republicans worked on ways to ease the concerns of deficit hawks. Leaders were still scrambling for votes.

    But within the GOP, leaders are confident that once the tax bill is passed, they can strike a quick deal to waive the federally mandated cuts. But Democrats deeply opposed to the tax bill aren’t making any promises they’ll agree to bail out their rivals — raising the risk of a historic gutting of government programs.

    “This would be unprecedented,” said William Hoagland, a senior vice president at the Bipartisan Policy Center and a former GOP Senate staffer with expertise on the budget. “The law never envisioned that we’d eliminate programs.”

    GOP leaders are asking moderates like Susan Collins (R-Maine) to back the tax package with the mere promise that lawmakers can find a bipartisan solution during an already divisive year-end crunch that could lead to a government shutdown.

    One senior House GOP source was confident a deal on spending would go through. “A statutory PAYGO sequester has never happened, and we will prevent one from being triggered,” the source said, adding that Congress has until the end of the year to work it out.

    The far reach of the Republican tax plan is the consequence of limitations placed on Congress under the “pay-as-you-go” rule. The decades-old law, revamped during the Obama presidency, requires Congress to offset the cost of each piece of legislation or risk spending cuts painful to both parties.

    Lawmakers have repeatedly voted to waive this rule, a total of 16 times, for major bills like the Obama-era stimulus and multiple tax cut packages under George W. Bush.

    The GOP’s $1.5 trillion tax plan would trigger $150 billion in cuts to domestic programs every year for a decade if Congress doesn’t step in, according to the CBO. That would include $25 billion from the money Medicare pays health care providers.

    “You’re likely to have doctors who will see less patients; you’re likely to have hospitals and other health care facilities cut back on certain services,” said David Certner, legislative counsel for the AARP, which has loudly opposed cutting Medicare. “It really affects the program.”

    The fallout for numerous smaller federal programs would be even more drastic, effectively zeroing out their budgets. And while conservatives want smaller government, they don’t necessarily want programs lopped off across the board.

    The largest chunk would come from health and domestic programs like the Social Services Block Grant, which stands to lose $1.7 billion, and the Federal Hospital Insurance Trust Fund, which would lose $715 million. Obamacare’s Public Health and Prevention Fund — long a target for Republicans — would be wiped out.

    Agriculture is usually a spending priority for conservatives, but the tax bill could put $20 billion of farm aid on the chopping block. Nearly all federal programs aiding farmers would see funding evaporate.

    “Basically, Mr. Perdue would only have the food stamp program to work with,” Hoagland said, referring to the Trump administration’s Agriculture secretary.

    Those cuts would also kick in for the Department of Education’s student loan repayment services, U.S. Customs and Border Protection and the unemployment trust fund.

    Republican leaders rushing to pass the tax package have so far dismissed that doomsday scenario as far-fetched — although they were still making last-minute changes on Thursday to address fiscal concerns and stay within Senate budget rules.

    Collins, a key moderate holdout on the tax bill, said she received a personal assurance from Majority Leader Mitch McConnell on Wednesday that the cuts would be waived — one day after she threatened to oppose the bill over the severe reductions. She said House Speaker Paul Ryan had made the same promise.

    “I am confident that neither side of the aisle wants that to occur,” Collins said Thursday morning at an event hosted by the Christian Science Monitor, adding that GOP leaders will likely strike a year-end deal to waive the pay-as-you-go requirement.

    But the price tag could raise some thorny questions for Republican leaders desperate for a legislative win in the waning weeks of the year — a year in which they controlled the House, Senate and White House and have little to show for it.

    Some deficit hawks have already objected to ballooning the national debt, pushing instead for required tax hikes if the bill fails to pay for itself — as many economic analysts predict, including Congress’ own Joint Committee on Taxation. Raising taxes would effectively have the same overall impact on the deficit as allowing the spending cuts to take place.

    “A vote to block that sequester becomes an awkward vote for some Republicans who said we should be cutting spending,” said Ed Lorenzen, a senior adviser at the Committee for a Responsible Federal Budget. “It is ironic that congressional leadership is simultaneously telling members that they’re going to block the sequester at the same time they’re negotiating a trigger that’s supposed to have tax increases.”

    The looming threat of the cuts, known as sequestration, has been a political gift for Democrats as they’ve attempted to kill the GOP’s tax bill.

    Publicly, at least, some Democrats have suggested that they could play hardball — withholding their votes to waive the cuts and forcing Republicans to take the fall.

    But privately, longtime Capitol Hill veterans say Democrats would never allow spending cuts, even if they could avoid the blame.

    “Medicare is underfunded as it is. If we have to change the PAYGO rules, we’ll just change ‘em,” said Rep. Phil Roe (R-Tenn.). “At the end of the day, we — Republicans and Democrats — have to go home and face our constituents. I wouldn’t want to go home and face my constituents if I’d cut Medicare.”

    ———-

    “Tax bill could trigger historic spending cuts” by ADAM CANCRYN and SARAH FERRIS; Politico; 11/30/2017

    “Unless Congress acts swiftly to stop it, as much as $150 billion per year would be cut from initiatives ranging from farm subsidies to student loans to support services for crime victims. Medicare alone could see cuts of $25 billion a year. And the specter of those cuts has thrust Congress into a high-stakes game of political chicken.”

    A high-stakes game of political chicken. But it’s a game of chicken that won’t be played until after the tax bill becomes law. As a result, the GOP leadership is basically promising Senator Collins that this game of chicken will be won and the Democrats will ultimate agree to waive the pay-as-you-go rules in order to avoid those mandatory cuts:


    But within the GOP, leaders are confident that once the tax bill is passed, they can strike a quick deal to waive the federally mandated cuts. But Democrats deeply opposed to the tax bill aren’t making any promises they’ll agree to bail out their rivals — raising the risk of a historic gutting of government programs.

    “This would be unprecedented,” said William Hoagland, a senior vice president at the Bipartisan Policy Center and a former GOP Senate staffer with expertise on the budget. “The law never envisioned that we’d eliminate programs.”

    GOP leaders are asking moderates like Susan Collins (R-Maine) to back the tax package with the mere promise that lawmakers can find a bipartisan solution during an already divisive year-end crunch that could lead to a government shutdown.

    “GOP leaders are asking moderates like Susan Collins (R-Maine) to back the tax package with the mere promise that lawmakers can find a bipartisan solution during an already divisive year-end crunch that could lead to a government shutdown.”

    Yep, this pay-as-you-go debate could happen as part of the looming government shutdown showdown. And it sounds like the GOP’s mere promise to “find a bipartisan solution” might be correct. Democrats probably are going to agree to waive the pay-as-you-go rules. Because as tempting as it might be to allow the GOP’s tax bill to force wave after wave of politically disastrous cuts to programs like Medicare, the Democrats still probably aren’t going to allow that to happen:


    Publicly, at least, some Democrats have suggested that they could play hardball — withholding their votes to waive the cuts and forcing Republicans to take the fall.

    But privately, longtime Capitol Hill veterans say Democrats would never allow spending cuts, even if they could avoid the blame.

    “Medicare is underfunded as it is. If we have to change the PAYGO rules, we’ll just change ‘em,” said Rep. Phil Roe (R-Tenn.). “At the end of the day, we — Republicans and Democrats — have to go home and face our constituents. I wouldn’t want to go home and face my constituents if I’d cut Medicare.”

    “But privately, longtime Capitol Hill veterans say Democrats would never allow spending cuts, even if they could avoid the blame.”

    And while it might seem like the GOP is dodging a bullet on this pay-as-you-go debate because the Democrats will probably agree to waive the rules, keep in mind that there’s probably going to be a big fight before that ultimately happens and this fight is going to probably happen during the upcoming government shutdown showdown. And that’s going to give the Democrats a very high-profile platform to make the case to the US public that the GOP’s tax cut is creating a national choice between much higher deficits or massive spending cuts to almost all federal programs.

    Also don’t forget, any scenario of the passage of this tax bill that’s based on the assumption that the pay-as-you-go rules are going to waived is a scenario that’s probably not going to go down well with the deficit hawks.

    That’s all part of why this GOP tax cut bill is suddenly looking a lot shakier than it was just a day ago: The GOP leadership keeps making contradictory promises it can’t keep, and the more this process chugs along the more obvious this reality becomes. Additionally, the more this process chugs along, the more the public slowly learns about the bill and, in turn, the more the public hates it, giving political cover to any potential GOP ‘no’ votes.

    We’ll see how this all plays out, but it’s worth noting that the GOP wouldn’t be in this politically perilous position if its fascist mega-donor puppet masters weren’t demanding a massive tax cut regardless of the political and economic fallout. And that’s something the GOP in particular should keep in mind. Because if this tax bill fails to pass there’s going to be no shortage of intra-GOP finger-pointing. So why shouldn’t the GOPers point those fingers at the mega-donors who are demanding political suicide for a tax cut the US clearly can’t afford? Sure, the GOPers tend to be corrupt sellouts, but the demand that they pass a ‘tax cut’ that raises taxes on the middle-class to pay for cuts for the super-rich is mega-donor malpractice. Even for fascist mega-donors. This whole thing is so politically toxic and short-sighted that there’s no reason the GOPers shouldn’t be utterly enraged with the Koch brothers and the GOP mega-donor network for demanding that they piss away their political careers. Yes, the tax cut is a deeply immoral proposal. But it’s also deeply stupid. It’s excessively greedy even by the GOP’s ‘greed is great’ standards.

    And it’s not like there’s any reason to assume this stupid excessive greed demands from the mega-donors are going to end once this tax cut passes. If anything, they’re get even worse because that’s when their demands for politically toxic spending cuts kick in. In other words, one of the lessons the GOP should probably take from all this is that it’s not going to be as much fun being an elected GOP official as it might have been in the past because the mega-donors are now demanding the kind of stuff that’s going to make elected officials look like super-villains in the eyes of the public. And it’s only going to get worse.

    So if this tax scam does go down in flames and the GOP is forced to regroup, hopefully some of them will recognize that their primary political opponents at this point are the guys giving them all that money in exchange for doing stupidly awful things the public is guaranteed to hate.

    Posted by Pterrafractyl | November 30, 2017, 10:54 pm
  5. Welp, they did it. After a flurry of last minute changes, the Senate GOP passed the tax bill and sent it to the conference committee on a 51 – 49 vote. The sole GOPer to vote against it was retiring Tennessee Senator Bob Corker over deficit concerns. So now the fate of the tax bill is going to be up to the final votes in the House and Senate after the conference committee creates a joint version.

    So now finding a way to create a GOP ‘No’ coalition in the House or Senate is a top priority for the American public. Given that dire imperative, it’s worth keeping in mind that the many dire consequences of this tax bill represent many opportunities to shame a large enough coalition of House or Senate GOPers to kill the bill in one of the chambers in the final vote after the conference committee. But even more importantly at this point, it’s worth keeping in mind that this bill is so politically toxic that a GOP ‘No’ faction can probably come out ahead by opposing their own party’s signature legislation. And that’s because of the provision in the Senate’s version of the tax bill that eliminates the state and local tax (SALT) deductions in order to help finance tax cuts for the super-rich and corporations is going to be so unpopular in higher-tax Democratic-leaning ‘Blue’ states that tend to have better public services. Including with GOP voters. At least if a recent Harvard Harris poll is correct, the Senate tax bill’s elimination of the SALT deduction is even more unpopular with Republicans than Democrats (28 vs 35 percent approval).

    Recall that 13 House GOPers – 12 from New York, California, and New Jersey – voted against the House bill when the house passed its version a couple of weeks ago 227-205. So GOP can only afford to lose 22 more House votes and it’s entirely possible the House “Freedom Caucus” of uber-far-right members will find reasons to vote against the final version too. And it would probably be good politics for those ‘No’ vote Blue state GOPers because it really is an assault on their states.

    But there’s another reason a GOP ‘No’ faction could come out politically ahead by helping to kill the bill: A key desired side-effect of of eliminating the SALT deduction is to basically force Blue states into a massive crisis of either cutting taxes or and cutting state services. That’s the and it’s a plan that obviously shifts more demand for public services to federal programs. And while it’s true that the elimination of the Federal programs that the GOP is also planning on slashing. And when those federal programs are slashed, they’re going to get slashed on every state in the US. In other words, the elimination of the SALT deductions is probably going to exacerbate the strain on federal programs and that impacts every state as Blue state public services are starved.

    Also don’t forget that these SALT deduction eliminations are basically being dont to increase the sze of the cuts targeting corporations and the super-rich. Yes, it will be argued that they reduce the deficit and finance public spending. But in reality the SALT deduction elimination was done to increase the size of the tax cuts that are almost entirely for the rich and corporations.

    And yes, these same Blue state GOPers routinely plot the demise of the same government programs that will be destroyed by the state and federal cuts that will be prompted by the tax cut and exacerbated in the Blue states. But there’s a big reason Blue state GOPers should be especially concerned about keeping the SALT deductions in place: the GOP’s whole long-term plan for federal services is to block grant them to states and then steadily shrink the block grants. That’s not a great time get rid of state and local tax deductions because state and local taxes are going to be the new financial base of most government programs once the GOP is done “deconstructing the administrative state” as Steve Bannon would put it. So the higher-tax Blue state GOPers can frame opposition to the bill over opposition to the SALT deduction eliminations even from a GOP perspective: Getting rid of the SALT deductions makes block granting a lot more painful for everyone. And, of course, the rest of the tax cut also makes block granting a more difficult for states by also encouraging significant federal cuts which translates into faster shrinking block grants.

    Yes, the fact that obstacle the tax cut and SALT deduction eliminations creates an obstacle for the GOP’s long-term block granting agenda isn’t actually a good reason for keeping the SALT deductions. But if we can get the GOP to do the right thing for the wrong reasons that’s pretty much as good as it gets these days. Beggars can’t be choosers.

    It’s also worth keeping in mind that lower taxes in the Blue states will inevitably cut into the competitive advantage Red states get by generally having lower, more regressive taxes that offer fewer public services and charge the poor and middle-class for much of it. Eliminating the SALT deduction is clearly intended to make higher-tax/higher-service Blue states more like lower-tax/lower-service Red states. Why exactly are Red states that rely on that competitive advantage happy about this?

    As we can see, there’s an array of reason for a faction of the GOP to emerge that opposing this bill and sinks it while gaining politically. But here’s perhaps the reason Blue state GOPers will find the most persuasive: wealthy GOP donors in Blue states are super pissed about the SALT deduction elimination:

    The Washington Examiner

    GOP donors in New York sour on party’s tax plan.=

    by David M. Drucker | Dec 1, 2017, 12:01 AM

    Wealthy Republican donors in the Northeast are closing their wallets, livid with the party for supporting a federal tax overhaul that penalizes their lifestyle and, in their view, abandons core tenets of conservative fiscal policy.

    In gruff phone calls and angry emails, loyal GOP financiers have declined invitations to fundraisers and refused meetings with prominent Republican officials. The rejection has been especially acute in New York, a liberal bastion, but a major source of the party’s campaign cash.

    “I think checkbooks stay closed until they see how it plays out,” said Eric R. Levine, a Manhattan attorney and Republican donor who bundled contributions for Sen. Marco Rubio, R-Fla., in 2016. “I’m not even trying to raise money in the fourth quarter.”

    During former President Barack Obama’s tenure, GOP donors pumped millions into the party to help Republicans win control of Congress and the White House on the promise that they would enact reform that cuts taxes across the board and treats all industries equally, ending Washington’s practice of picking winners and losers.

    Upscale Republicans, donors and voters in high-tax blue states like New York, fear that’s not what they’re getting under the House-passed overhaul or legislation moving through the Senate, both with the support of President Trump.

    They foresee higher personal taxes under a plan that axes deductions for state and local taxes without offering what they consider compensatory reductions in marginal income rates, even with the repeal of the Alternative Minimum Tax that hits many upper-middle-class Americans. They resent that the bill excludes their white-collar service professions — think law, finance, and consulting — from the bill’s lower small-business rate, even as it shrinks the corporate levy to 20 percent from 35 percent.

    The unfolding package is a disappointing development for many donors and voters, who are socially moderate to progressive and affiliate with the Republicans primarily because of the party’s conservative approach to economics and foreign policy. Republican pushback, that they should blame any tax hike on their liberal state and local governments, is falling flat.

    “I’ve heard from a lot of different kinds of people with their feedback,” said Rep. Lee Zeldin, R-N.Y., who represents a prosperous suburban district on Long Island, many of whose residents work in New York City. “They’re running the numbers and realizing that their taxes are going to go up.”

    Zeldin voted against the bill and remains opposed to it in current form, as do other blue-state Republicans. Rep. Tom MacArthur, R-N.J., among the few Northeastern Republicans to support the package, has fielded similar questions from constituents, donors, and voters about the impact of the bill.

    “I find when I walk people through it, some of them settle down, some of them don’t, and I think it boils down to who they trust,” MacArthur said. “If they trust the Left for their news, they don’t like the bill. If they trust the Right for their news, they’re willing to give it the benefit of the doubt.”

    Republicans are in a tough spot, politically. Several weeks ago, their donors were threatening to close the spigot, if they did not pass tax reform by year’s end. They were angry about the collapse of legislation to repeal and replace Obamacare and lack of other accomplishments.

    Now, the party is on the cusp of the nation’s first tax overhaul since 1986 and fulfilling a key 2016 campaign promise, and many of the deep-pocketed New York donors they need to help them protect their majorities in 2018 are protesting. Meanwhile, rank-and-file voters don’t like the Tax Cuts and Jobs Act, either.

    Ironically, many voters appear inclined to agree with the Democrats that the bill was made to order for the GOP’s deep-pocketed contributors, at the expense of the middle class, despite the fact that Republicans wrote the plan to avoid such charges, at risk of alienating some of their staunchest supporters such as upper-middle-class voters who live in tony suburbs.

    Just 36 percent of registered voters backed the legislation in a recent Politico/Morning Consult tracking poll. House Speaker Paul Ryan, R-Wis., said Thursday that public opinion will improve after the package is enacted and the economy takes off, creating jobs and lifting wages.

    In interviews, Republican donors praised provisions of the tax overhaul that would impact corporations. They see merit in reducing the corporate tax rate and believe elements to encourage firms to transfer their overseas cash to U.S. banks and invest domestically could pay dividends.

    Though that is not enough for many to look past what they believe are the plan’s severe flaws, some veteran GOP contributors concede that if it delivers the robust economic growth that Trump and GOP leaders predict, their views of the plan could change, loosening purse strings in time for the midterm.

    “These individuals are pragmatists,” said a Republican operative who interacts with the donor community. “They recognize that this plan benefits the vast majority of middle-class Americans and it’s the right thing to do.”

    ———-

    “GOP donors in New York sour on party’s tax plan” by David M. Drucker; The Washington Examiner; 12/01/2017

    “They foresee higher personal taxes under a plan that axes deductions for state and local taxes without offering what they consider compensatory reductions in marginal income rates, even with the repeal of the Alternative Minimum Tax that hits many upper-middle-class Americans. They resent that the bill excludes their white-collar service professions — think law, finance, and consulting — from the bill’s lower small-business rate, even as it shrinks the corporate levy to 20 percent from 35 percent.”

    It’s not just an attack on Blue states. The GOP donors in Blue states appear to view this as an attack on them too. It’s a fascinating political development.

    And note the amusing back and forth between the GOP factions on this issue, with Rep. Lee Zeldin of New York noting how his wealthy constituents simply ran the numbers and realized that they would see their taxes rise, while the GOP defenders of the bill dismissed that as liberal news propaganda:


    The unfolding package is a disappointing development for many donors and voters, who are socially moderate to progressive and affiliate with the Republicans primarily because of the party’s conservative approach to economics and foreign policy. Republican pushback, that they should blame any tax hike on their liberal state and local governments, is falling flat.

    “I’ve heard from a lot of different kinds of people with their feedback,” said Rep. Lee Zeldin, R-N.Y., who represents a prosperous suburban district on Long Island, many of whose residents work in New York City. “They’re running the numbers and realizing that their taxes are going to go up.”

    Zeldin voted against the bill and remains opposed to it in current form, as do other blue-state Republicans. Rep. Tom MacArthur, R-N.J., among the few Northeastern Republicans to support the package, has fielded similar questions from constituents, donors, and voters about the impact of the bill.

    “I find when I walk people through it, some of them settle down, some of them don’t, and I think it boils down to who they trust,” MacArthur said. “If they trust the Left for their news, they don’t like the bill. If they trust the Right for their news, they’re willing to give it the benefit of the doubt.”

    Trust me, not your lying eyes and accountants and the liberal media. That was the message from New Jersey Rep. Tom MacArthur, one of the few Northeastern GOPers to support the House bill. But not surprising, it doesn’t sound like his Sith Lord mind tricks are working on his wealthy constituents, which is why most Northeastern GOPers voted against the billl. So is MacArther going to continue supporting the bill as more and more of his donor base learns about how they’re getting scammed too. This was suppose to be a rich vs everyone else smash and grab but now it turns out the Blue state rich Republicans are getting smashed and grabbed a bit too. It’s like the point in a movie when the bad guys all start turning on each other while consumed with greed.

    But the Blue state wealthy GOP donors aren’t the only ones to get a nasty surprise in this tax bill. Even the mega donor kingpins like the Kochs might be setting themselves up for a nasty surprise. Because if they succeed in their quest to shift burdens onto states while encouraging a nation-wide competitive tax cutting race to the bottom, we’re going to see an entire nation of states in a fiscal crisis. And the most effective solution will be to raise taxes at the federal level and those taxes will most likely primarily be raised on the wealthy and corporations because all states will be broke and public services will be in permanent crisis mode after the massive GOP cuts in federal spending shift costs to the states. The GOP mega-donors are creating a disaster that may hit Blue states harder but it still hits all states enough to be disastrous to the whole nation and eventually to the GOP mega-donors. Taxing the hell out of mega-donors and big profit centers in the economy and a national focus on wrestling control of the levers of political power away from the Koch/Mercer-led cabal of billionaires that inflicted this disaster for their benefit will be a widely seen national imperative.

    This is all why a GOP ‘No’ faction really would save the GOP from dramatically escalating its war on government programs Americans love and doing it in an open egregiously blatant way. It’s political malpractice and it’s being done at the behest of mega-donors that appear to be mad with power. In response to that kind of elite madness, raising federal taxes specifically on the wealthy and big business is almost a national security issue just to avoid such mad men grabbing even more wealth and power.

    Heck, if this tax scam becomes reality, maybe a national movement to overturn Citizens United and end unlimited political spending and get big money out of politics could seriously emerge. Which can only happen with a broad-based Democratic take over at the federal level so the Supreme Court can be moved to the left. It’s both an urgent and long-term project and this gigantic tax scam makes it all the more urgent now and all the more important to follow through on in the long-run. Getting big money out of politics is a national security issue. If that wasn’t completely obvious before hopefully it’s obvious now. After all, we’re now witnessing big money that’s so big and so bold that it’s not just shaking down the poor and middle-class. It’s also shaking down other wealthy people. It’s a remarkable development in the evolution of the American oligarchy. Oligarch bum fights. It’s a thing now apparently. When big money is shaking down less big money in addition to everyone else as part of a giant smash-and-grab designed to create future fiscal crises that can be used for future smash-and-grabs that seems like a good time to focus on getting big money out of politics. Let’s hope that’s part of the backlash.

    Posted by Pterrafractyl | December 2, 2017, 3:02 am
  6. Senate majority leader Mitch McConnell had some very apt comments on the giant scammy tax bill that the Senate just passed early Saturday morning. Apt in the sense that it succinctly encapsulate one of the key elements underpinning the GOP’s Big Lie approach to policy: the American people have the memory of a gold fish and the That GOP can do whatever it wants because it can explain it away without fail no matter how outlandish the explanation. That may not have been what Mitch McConnell said, but he clearly communicated it:

    Associated Press

    McConnell In Kentucky: Tax Bill Won’t Add To Nation’s Debt Woes

    By BRUCE SCHREINER
    Published December 2, 2017 5:14 pm

    LOUISVILLE, Ky. (AP) — Fresh off his biggest legislative victory of the Trump era, Senate Majority Leader Mitch McConnell on Saturday disputed projections that the Senate’s tax bill would add to the nation’s debt woes.

    Back home in Kentucky just hours after the Senate narrowly pushed through the nearly $1.5 trillion tax bill, McConnell predicted that the boldest rewrite of the nation’s tax system in decades would generate more than enough economic growth to prevent the burgeoning deficits being forecast.

    “I not only don’t think it will increase the deficit, I think it will be beyond revenue neutral,” he told reporters. “In other words, I think it will produce more than enough to fill that gap.”

    Over the next decade, Republicans’ tax plan is projected to add at least $1 trillion to the national debt. That would be on top of an additional $10 trillion in deficits over the same period already being forecast by the Congressional Budget Office.

    “I’m not one of the total supplier siders who just believes that if you cut taxes, no matter what amount, you turn out ahead,” McConnell said. “I still believe in revenue neutrality for tax reform, and I believe this is a revenue neutral tax reform bill.”

    McConnell’s hometown congressman, Democrat John Yarmuth, said Senate Republicans had “abdicated any claim they had to being the party of fiscal responsibility.”

    “There is nothing remotely responsible about forcing through a … hastily conceived bill to give tax cuts to the already wealthy and multi-national corporations,” Yarmuth said in a statement.

    McConnell predicted that the GOP-led House and Senate can resolve differences over the tax legislation and get it to President Donald Trump before Christmas. McConnell said he doesn’t foresee any compromises that would threaten the Senate Republican coalition supporting the bill.

    Sen. Bob Corker, R-Tenn., was the only lawmaker to cross party lines, voting in opposition along with Democrats.

    McConnell also disputed claims by the bill’s critics that it focuses its tax reductions on businesses and higher-earning individuals, while giving more modest breaks to others.

    “I haven’t run into anybody during this whole tax discussion who’s very successful who thinks they’re benefiting from it,” the Senate leader said.

    The bill would award about $2,200 a year in tax relief to the average family of four, McConnell said. “And that’s pretty darn important to them,” he said.

    Voters ultimately can look to the nation’s economic performance to determine whether Republicans or Democrats were right in the bitter tax debate.

    “Look, a year or two from now, you guys can make an assessment which one of us was right,” he said to reporters. “The proof will be in whether or not the economy picks up and things get better.”

    McConnell, the state’s longest-serving senator, also indicated during his appearance in Louisville that he plans to run for another Senate term in 2020.

    ———-

    “McConnell In Kentucky: Tax Bill Won’t Add To Nation’s Debt Woes” by BRUCE SCHREINER; Associated Press; 12/02/2017

    “Back home in Kentucky just hours after the Senate narrowly pushed through the nearly $1.5 trillion tax bill, McConnell predicted that the boldest rewrite of the nation’s tax system in decades would generate more than enough economic growth to prevent the burgeoning deficits being forecast.”

    Yes, Majority Leader McConnell confidently predicted that, despite all the economic models predicting the tax cut would add over a trillion dollars over 10 years to the national debt, the tax cut would more than pay for itself from the economic growth it will create. And then he says he’s “not one of the total supplier siders who just believes that if you cut taxes, no matter what amount, you turn out ahead,” and it apparently wasn’t intended to be sarcastic:


    “I not only don’t think it will increase the deficit, I think it will be beyond revenue neutral,” he told reporters. “In other words, I think it will produce more than enough to fill that gap.”

    Over the next decade, Republicans’ tax plan is projected to add at least $1 trillion to the national debt. That would be on top of an additional $10 trillion in deficits over the same period already being forecast by the Congressional Budget Office.

    “I’m not one of the total supplier siders who just believes that if you cut taxes, no matter what amount, you turn out ahead,” McConnell said. “I still believe in revenue neutrality for tax reform, and I believe this is a revenue neutral tax reform bill.”

    Does Mitch McConnell assume everyone has dementia? It seems like it.

    But in McConnell’s defense, it’s possible he was actually just doing a poor job of executing a standard lie. How so? Well, note the other blatant fabrication he delivered moments later:


    McConnell also disputed claims by the bill’s critics that it focuses its tax reductions on businesses and higher-earning individuals, while giving more modest breaks to others.

    “I haven’t run into anybody during this whole tax discussion who’s very successful who thinks they’re benefiting from it,” the Senate leader said.

    Yes, the tax bill that clearly predominantly benefits the wealthy doesn’t actually benefit the wealthy according to the Senate Majority Leader. We’ll just give Mitch the benefit of the doubt and assume he was intentionally trying to deceive his home state audience and doesn’t, himself, have dementia. So it’s possible when he hilariously asserted that the tax cut would pay for itself and then called himself a non-believer in tickle-down economics he was actually intending to make that laughable statement within the context of his deception about the tax cut not primarily benefiting the wealthy.

    In other words, maybe he was trying to assert that the tax cut was actually targeting the poor and middle-class and that’s why he was confident it would more than pay for itself. He came out and said he’s not a “total supply-sider” and that sure sounds like he was refuting a basic tenet of the contemporary GOP. Is the GOP’s leader in the Senate saying that supply-side economics doesn’t work and the party’s confidence that the tax cut will pay for itself is rooted in a conviction that tax cuts targeting the middle-class and not the rich is the proper tax cut design for this moment? Shouldn’t we get some clarification on that?

    It’s a reminder that if the GOP is going to laughably assert that its tax cut is targeting middle-class, it raises a question about whether or not the GOP still officially believes in supply-side economics. They can’t have it both ways. Well, they can have it both ways, but only if they aren’t called on it.

    It’s also a reminder that if the money spent on tax cuts for the wealthy and big corporations reaping record profits during a time of relatively low unemployment was instead spent on government programs targeting the poor and middle-class for and addressing things like student debt and inadequate retirement savings that plague American society, that would probably be a far more beneficial use of that money for the wealthy and big corporations. Taxing the rich to pay for things for everyone else stabilizes capitalism. Of course, since the Kochs and Mercers and like-minded oligarchs would like to see a mass far-right revolution that makes it easier for them to grab even bigger slices of the pie and trap the masses in powerless penury, unstable capitalism is a feature, not a bug.

    It’s also of reminder of the important fact that one the far-right’s constant and most effective propaganda techniques is for its public figures to play dumb in a manner that enables them to say preposterous things without smirking in order to dumb down the national discourse in order to make their lies easier to believe. So was Mitch McConnell playing dumb or lying? It’s the unfortunately never-ending question when it comes to the contemporary GOP. Although In fairness, it’s not always a ‘playing dumb or outright lying’ binary question. Sometimes we can’t rule out dementia.

    Posted by Pterrafractyl | December 2, 2017, 9:13 pm
  7. Oh look at that: At the same time the GOP’s giant tax cuts for the rich and corporations is moving its way through Congress, GOP leaders are already talking about cuts to entitlements and other federal programs. Surprise!:

    The New York Times

    Heading Toward Tax Victory, Republicans Eye Next Step: Cut Spending

    By KATE ZERNIKE and ALAN RAPPEPORT
    DEC. 2, 2017

    As the tax cut legislation passed by the Senate early Saturday hurtles toward final approval, Republicans are preparing to use the swelling deficits made worse by the package as a rationale to pursue their long-held vision: undoing the entitlements of the New Deal and Great Society, leaving government leaner and the safety net skimpier for millions of Americans.

    Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.”

    Their nearly $1.5 trillion package of tax cuts, a plan likely to win final approval in the coming days, could be the first step. But their strategy poses enormous risks, not only for millions of Americans who rely on entitlement programs, but also for Republicans who would wade into politically difficult waters, cutting popular benefits for the elderly and working poor just after cutting taxes for profitable corporations.

    Even if the tax cut sparks the kind of economic growth that Republicans advertise, the tax bill will increase the deficit by $1 trillion over 10 years, the nonpartisan congressional Joint Committee on Taxation said.

    And it was passed along sharply partisan lines, offering nothing to Democrats, and leaving them with no obligation or incentive to negotiate cuts to Medicare, Medicaid and Social Security, the entitlement programs that are driving up spending, but are also the pride of the Democratic Party.

    For his part, Mr. Trump spent his campaign promising not to cut Medicare and Social Security. And Republicans will probably find, as they did when they failed to repeal the Affordable Care Act, that the public rises up to defend the programs they are trying to cut. Whatever political boost the Republicans could get for passing a tax cut could evaporate fast.

    “Republicans are going to find that Democrats treat this tax bill the way Republicans treated Obamacare — it’s not trusted by people on the other side of the aisle,” said former Senator Judd Gregg, who was chairman of the Budget Committee and a member of the Simpson-Bowles commission, a bipartisan group of lawmakers and budget experts that produced a deficit reduction plan in 2010. “It will become a target, a rallying cry, which is unfortunate, because good tax reform, when done right, is not only good for the economy, it’s good for the parties.”

    Many of the Republicans’ natural allies have criticized the bill for adding to the deficit and not dealing with the costs that were already driving up the government’s red ink. In an op-ed in The Washington Post, the leaders of that 2010 commission, former Senator Alan Simpson of Wyoming, a Republican, and Erskine Bowles, a Democrat who is a former White House chief of staff, accused the Republicans of “deficit denial,” saying the bill incorporated only “goodies” and virtually no “hard choices.”

    “Republicans have been telling themselves for years that they wanted to get into power so they could balance the budget, reduce the debt, cut spending and fix entitlements,” Ms. MacGuineas said. “They’ve just made it harder, not easier.”

    For weeks, Democrats and their allies have been accusing Republicans of a “two-step” deceit, warning that they would cut taxes now and then use the increase in the deficit they caused to demand entitlement cuts later.

    “When you run up the deficit, your next argument will be, ‘Gee, you’ve got a large deficit,’” Senator Bernie Sanders of Vermont, a former Democratic presidential candidate, said in an interview.

    Now Republicans are beginning to acknowledge as much. Mr. Ryan said at a town hall-style meeting last month that Congress had to spur growth and cut entitlements to reduce the national debt.

    The Republican tax plan, he said “grows the economy.” But, he added, “we’ve got a lot of work to do in cutting spending.”

    Senator Marco Rubio of Florida was more specific on Wednesday, telling business leaders that the tax cuts were just the first step; the next is to reshape Social Security and Medicare for future retirees.

    “Many argue that you can’t cut taxes because it will drive up the deficit,” he said. “But we have to do two things. We have to generate economic growth, which generates revenue, while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.”

    The Congressional Budget Office projects that spending on Social Security, Medicare and Medicaid will cost the federal government $28.6 trillion through 2027. The tax cut, estimated at nearly $1.5 trillion, makes the problem only mildly worse.

    But if that trillion-dollar boost to the government’s yawning fiscal hole is comparatively small mathematically, it could add up to much more politically if it keeps Democrats away from the negotiating table.

    And even if Republicans do not pursue changes to entitlements, the tax bill will trigger pay-as-you-go requirements that Congress cut spending. That would be a particularly big hit to Medicare, which would face a $25 billion cut for the current fiscal year. Groups like AARP, the lobby for older Americans, warn that it would force doctors and hospitals to turn away patients because reimbursements would be cut so drastically.

    Mr. Ryan and Senator Mitch McConnell of Kentucky, the majority leader, released a statement Friday saying that the so-called pay-go cuts “will not happen” because Congress would waive the law, as it has in the past. But they will need Democratic votes to do that, in a climate that is unusually partisan.

    Regardless of whether Republicans can waive these cuts, David Certner, legislative counsel for AARP, said, “You know they’re going to come back and say, ‘We need to make more cuts to deal with the growing debts and deficit.’”

    Some deficit hawks complain that Republicans have cast away any mantle of fiscal responsibility.

    Robert L. Bixby, the executive director of the Concord Coalition, a nonpartisan organization that encourages fiscal responsibility, complained of hypocrisy from Republicans who have been clamoring to lift the spending caps that were created by the 2011 Budget Control Act.

    If the tax cuts do not generate the revenue Republicans are expecting, he predicted, “people will say, ‘No, we’re not getting the growth because we should have cut taxes even more.’”

    The United States is already facing a gloomy fiscal landscape. The federal deficit this year topped $660 billion, despite healthy economic growth, and the national debt now exceeds $20 trillion. Janet L. Yellen, the outgoing chairwoman of the Federal Reserve, appointed by President Barack Obama, warned last week that the national debt “is the type of thing that should keep people awake at night.”

    But Democrats and their allies — and even some usual Republican allies — complain that Republicans are dishonest not to debate changes in spending and tax cuts at the same time, as the Simpson-Bowles commission did.

    Sharon Parrott, a senior fellow at the left-leaning Center on Budget and Policy Priorities, said Republicans understood how bad it would look to cut food benefits for poor families and health care for the elderly at the same time they were cutting taxes for corporations and the highest earners.

    “There’s a reason they separate them,” she said. “They think they can get away with it.”

    But in an election year with high political engagement, she said, “I think it’s wrong to count out the idea that the public will figure it out.”

    ———-

    “Heading Toward Tax Victory, Republicans Eye Next Step: Cut Spending” by KATE ZERNIKE and ALAN RAPPEPORT; The New York Times; 12/02/2017

    “Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.””

    Cutting entitlements and other public services. That’s the plan. A plan with rather obvious political risks. And those risks are only made worse by the fact that the GOP is about to do a big trickle-down tax cut for the rich and corporations during a time of yawning wealth inequality, low unemployment, and stocks at all time highs and record profits for big corporations. It’s like throwing a big party where everyone is invited, giving the wealthiest guests fabulous door prizes, and then handing a giant bill to all the other attendees that they’ll have to pay out of their retirement savings. That would be a crappy party. A crappy, very memorable party that no one in their right mind would want to attend again. And it’s exactly the kind of party the Republican party appears to be planning for the American electorate. Which seems risky:


    Their nearly $1.5 trillion package of tax cuts, a plan likely to win final approval in the coming days, could be the first step. But their strategy poses enormous risks, not only for millions of Americans who rely on entitlement programs, but also for Republicans who would wade into politically difficult waters, cutting popular benefits for the elderly and working poor just after cutting taxes for profitable corporations.

    For his part, Mr. Trump spent his campaign promising not to cut Medicare and Social Security. And Republicans will probably find, as they did when they failed to repeal the Affordable Care Act, that the public rises up to defend the programs they are trying to cut. Whatever political boost the Republicans could get for passing a tax cut could evaporate fast.

    And this spending cut chatter is happening before the tax cut is even made law. It just adds to the bitter taste of it all. But bitter pills is what the GOP’s agenda is generally all about these days so a bitter taste is sort of unavoidable:


    “When you run up the deficit, your next argument will be, ‘Gee, you’ve got a large deficit,’” Senator Bernie Sanders of Vermont, a former Democratic presidential candidate, said in an interview.

    Now Republicans are beginning to acknowledge as much. Mr. Ryan said at a town hall-style meeting last month that Congress had to spur growth and cut entitlements to reduce the national debt.

    The Republican tax plan, he said “grows the economy.” But, he added, “we’ve got a lot of work to do in cutting spending.”

    Senator Marco Rubio of Florida was more specific on Wednesday, telling business leaders that the tax cuts were just the first step; the next is to reshape Social Security and Medicare for future retirees.

    “Many argue that you can’t cut taxes because it will drive up the deficit,” he said. “But we have to do two things. We have to generate economic growth, which generates revenue, while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.

    Couldn’t Paul Ryan and Marco Rubio at least wait until after the scammy tax bill to talk about this? Perhaps, but perhaps not because it’s very possible they feel the need to talk about spending cuts right now in order to appease the handful of genuine ‘deficit hawks’ left in the party and just can’t avoid it.

    And notice how Rubio made his comments on Wednesday, right in the middle of the Senate’s scramble to find the votes to appease a handful of deficit hawks. It’s conspicuous timing for talk of upcoming spending cuts that raises a massively important question heading into the conference committee workup of the bill: are promises of upcoming entitlement cuts going to be part of deal to win over any ‘Freedom Caucus’ hold outs? Specifically, secret promises? It’s an obviously important question that the GOP obviously won’t answer, but we should probably still be asking it. Loudly.

    But regardless of the motivations of whether or not secret agreement to move ahead on big spending cuts soon really are happening right now as part of the tax bill negotiations, don’t forget that existing pay-as-you-go rules are going to implement quite a few cuts without anything being done. Unless Democrats join Republicans in waiving the pay-as-syou-go rules. But as the AARP representative warns people, even if the Democrats agree to waiving the pay-as-you go rules, the Republicans are still going to ask for more spending cuts in the future, likely citing rising deficits and framing that as out-of-control spending instead of out-of-control tax-cutting:


    And even if Republicans do not pursue changes to entitlements, the tax bill will trigger pay-as-you-go requirements that Congress cut spending. That would be a particularly big hit to Medicare, which would face a $25 billion cut for the current fiscal year. Groups like AARP, the lobby for older Americans, warn that it would force doctors and hospitals to turn away patients because reimbursements would be cut so drastically.

    Mr. Ryan and Senator Mitch McConnell of Kentucky, the majority leader, released a statement Friday saying that the so-called pay-go cuts “will not happen” because Congress would waive the law, as it has in the past. But they will need Democratic votes to do that, in a climate that is unusually partisan.

    Regardless of whether Republicans can waive these cuts, David Certner, legislative counsel for AARP, said, “You know they’re going to come back and say, ‘We need to make more cuts to deal with the growing debts and deficit.’”

    “Regardless of whether Republicans can waive these cuts, David Certner, legislative counsel for AARP, said, “You know they’re going to come back and say, ‘We need to make more cuts to deal with the growing debts and deficit.’””

    And that accurate observation from the AARP’s legislative counsel is part of what makes this current talk of upcoming spending cut plans is that it hands the Democrats an obvious easy retort to the upcoming show-down over the pay-as-you-go waivers: Why should Democrats give the GOP political cover over the deficits the GOP’s tax cut is creating – because pay-as-you-go cuts are in direct response to the deficits created by new legislation – when the GOP is planning more cuts anyway. In other words, the upcoming negotiations over waiving these pay-as-you-go cuts double as a great opportunity for Democrats to highlight the GOP’s stated plans of upcoming spending cuts including entitlement cuts to programs like Social Security and Medicare.

    And note the observation by the executive director of the Concord Coalition – “nonpartisan organization that encourages fiscal responsibility” that’s actually a pro-austerity group dedicated to cutting entitlements and government spending in general – that if the tax cuts don’t generate the promised growth the Republicans will demand more tax cuts in response:


    Some deficit hawks complain that Republicans have cast away any mantle of fiscal responsibility.

    Robert L. Bixby, the executive director of the Concord Coalition, a nonpartisan organization that encourages fiscal responsibility, complained of hypocrisy from Republicans who have been clamoring to lift the spending caps that were created by the 2011 Budget Control Act.

    If the tax cuts do not generate the revenue Republicans are expecting, he predicted, “people will say, ‘No, we’re not getting the growth because we should have cut taxes even more.’”

    “If the tax cuts do not generate the revenue Republicans are expecting, he predicted, “people will say, ‘No, we’re not getting the growth because we should have cut taxes even more.’””

    Yep, it’s hard to imagine that isn’t exactly what will happen. Calls for more tax cuts, likely followed immediately by more spending cuts. Just like right now. And before. Over and over. And let’s not forget that this is exactly what the “time-inconsistency” strategy the GOP uses over and over that former Reagan economic advisor Bruce Bartlett recently warned us all about. It’s actually remarkable. This whole situation is almost exactly the way Bruce Bartlett warned us it would play out. Except it’s even more blatant than what Bartlett predicted.

    So with the eerily predictive power of that Bartlett article in mind, let’s take another look at the piece and Bartlett’s description of the time-inconsistency strategy and the GOP’s history of using it. And let’s and marvel at how it’s already playing out the way Bartlett want us. Marvel and shudder. Because it’s happening again. It’s one of the quirks about applying the “time-inconsistency” strategy: if the strategy works once it will probably work more than once because it only works in an environment when the target audience (the American public, in this case) isn’t paying attention and accumulating a memory of what happened. In that kind of an environment, the strategy can work over and over because when it works the audience can’t adapt to it because, by definition of the strategy working, the target audience never realized the strategy was used in the first place. In other words, the “time-inconsistency” strategy can be a remarkably consistent strategy and has been for the GOP.

    And there’s a particular element of the strategy that Bartlett describes that gives us an idea of whether or not the GOP is actually planning something as electorally insane as pushing big spending and entitlement cuts shortly after its big tax cut for the rich. Because it really is an incredibly politically risky move for the GOP to do a big spending/entitlement cut push next year or even in 2019. If the tax cut has a short-term economic boost and does better than expect, people will be like “why then need for all the cuts?” But if the tax cut doesn’t have that effect and the economy disappoints, people will be like “these cuts are to pay for the tax cuts for the rich you guys did.” What Paul Ryan and Marco Rubio have been talking about is political poison after a tax bill like what they crafted. One that raises taxes on the middle-class by the time it expires. It’s politically insane..unless the plan involves the assumption that the GOP loses power in 2018 in Congress and 2020 in the White House.

    And losing upcoming elections is precisely part of the “time-inconsistency” plan Bruce Bartlett warns us the GOP has now and has had many times before. But there’s one big inconsistency between the “time-inconsistency” strategy Bartlett describes an the one the GOP would be playing out of it unilaterally pushed for big spending cuts and entitlement reform next year or in 2019 after the mid-terms: The strategy Barlett describes assumes the spending cuts happen after the Democrats regain control of Congress or the White House and the Democrats and GOP are sharing power. So the cynical “time-inconsistency” strategy Bartlett’s is describing assumes the GOP isn’t shameless enough to do this tax cut and then immediately push for big spending and entitlement cuts. Deflecting the long-term blame for the spending cuts is the whole point of the plan. And yet we have GOPers talking about spending and entitlement cuts now. So is the GOP actually planning on unliteral spending and entitlement cuts or going to wait for the Democrats to share control? It’s hard to say given how politically insane the GOP is in general these days. It’s reminder that one of the consistent things about the GOP is that its behavior can always get worse:

    The Guardian

    Republican tax cuts will hurt Americans. And Democrats will pay the price

    The consequences of the tax program will shelve support for the Republicans, but once in power the Democrats’ hands will be financially bound for years

    Bruce Bartlett
    Monday 20 November 2017 09.10 EST
    Last modified on Monday 20 November 2017 10.35 EST

    I think many Democrats and independent political observers are puzzled by the intensity with which Republicans are pursuing their tax cut. It’s not politically popular and may well lead to the party’s defeat in next year’s congressional elections. So why do it?

    The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.

    The theory was laid out almost 30 years ago by two Swedish economists, Torsten Persson and Lars EO Svensson. In a densely written article for the Quarterly Journal of Economics in 1989, they explained why a stubborn conservative legislator would intentionally run a big budget deficit.

    It has to do with what economists call time inconsistency – the consequences of actions taken today may not appear until the future, when a different political party will be in power. Thus the credit or blame will accrue to that party rather than the one that implemented the policy, because voters tend to attribute whatever is happening today to the party in power today even if that party had nothing to do with it.

    Thus Barack Obama got blamed for a recession and resulting budget deficits he had nothing to do with originating. No matter how many times the Congressional Budget Office showed that the vast bulk of the budget deficits in his administration were baked in the cake the day he took office, Republicans nevertheless blamed him and his policies exclusively for those deficits.

    Of course, another reason for those deficits is that Republicans systematically decimated the federal government’s revenue-raising capacity during the George W Bush administration with one huge tax cut after another. All of these were sold as necessary to get the economy growing again. The failure of the economy to respond positively was never taken as evidence of the failure of those tax cuts, but rather as showing the need for even more and bigger tax cuts.

    The payoff for this orgy of tax-cutting came when Obama took office. All of a sudden, Republicans noticed that there were large deficits and insisted that Obama do something about them right this minute! They even made the nonsensical argument that spending cuts would stimulate growth by reducing the burden of government.

    Democrats did a poor job of explaining how Franklin Roosevelt tried exactly that in 1937, slashing government spending because his treasury secretary told him it would restore business confidence. The result was a sharp downturn that raised unemployment, which had been trending down.

    Obama’s hands were tied by the deficit hawks in his own party as well and prevented from offering an economic stimulus adequate to offset the loss of aggregate demand resulting from the great recession that began in December 2007 on Bush’s watch. Obama even joined with Republicans to slash spending in the 2011 budget deal and put in place budget controls that made it virtually impossible to pursue any positive Democratic initiatives for the balance of his presidency. No wonder Trump won.

    I think Republicans remember better than Democrats the lesson of 1993 as well. Bill Clinton was elected in 1992 on an activist agenda. But once in office, he was persuaded to reverse course and put all his efforts into deficit reduction. This transformation was spelled out in detail in Bob Woodward’s 1994 book, The Agenda. Its key element was a significant tax increase that every Republican in Congress voted against. They said it would crash the economy, but was instead followed by an economic boom. Unfortunately, the boom didn’t become apparent until after the 1994 election in which Democrats took heavy losses – in large part because of the tax increase. Republicans got control of both houses of Congress for the first time in 40 years.

    Clinton remained beholden to the deficit hawks for his entire presidency, doing nothing with the vast budget surpluses that emerged and hoarding them like a modern day Midas, despite pressing economic needs and growing financial problems withsocial security and Medicare that those surpluses could have fixed. Clinton simply bequeathed them to Bush, who promptly dissipated them with tax cuts and a huge new spending program, Medicare Part D, not to mention wars in the Middle East that continue to this day.

    I believe that the same cycle will rerun over the next few years. Should Democrats get control of the House and/or Senate next year, Trump and his party will insist that deficit reduction be the only order of business. Automatic spending cuts resulting directly from the tax cut will start to bite, hurting the poor and middle class primarily, according to the Congressional Budget Office, and making them forget that they resulted from a huge tax give-away to the wealthy that increased the deficit by $1.5tn. Democrats will get much of the blame due to time-inconsistency.

    It’s possible that Trump’s appointees to the Federal Reserve may be so alarmed by the inflationary potential of the growing deficits that they will raise interest rates in response. This could trigger a recession that will be blamed on a Democratic president taking office in 2021, just as happened with Obama. But that president may not be able to enact any stimulus at all because deficits crowd out any fiscal space. By 2022, Republicans will be back in control of Congress and in the White House by 2024. In 2025, they will demand still more tax cuts.

    Keep in mind that no matter how big the deficit gets from the tax cut Republicans are rushing to enact, none of them will ever vote to undo those cuts or raise taxes except, perhaps, in ways that further burden the poor, such as raising the gasoline tax. That is because they all signed a tax pledge promising never to raise taxes. Therefore, any deficit reduction will either consist solely of spending cuts or pass with only Democratic votes, as was the case in 1993.

    The originator of the pledge, Grover Norquist, planned it this way. I doubt he has ever read Persson and Svensson, but understood intuitively that the tax pledge was guaranteed to ratchet down the size of government forever. It wouldn’t happen all at once, but over a period of decades. The history of fiscal policy since the pledge was originated in 1988 is, sadly, proof that it has worked exactly as he hoped.

    ———-

    “Republican tax cuts will hurt Americans. And Democrats will pay the price” by Bruce Bartlett; The Guardian; 11/20/2017.

    “The answer is that Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.”

    An act of strategic political suicide. That’s how Bruce Bartlett interprets the GOP’s behavior. The tax cut creates a fiscal time-bomb designed to force massive government cuts and this bomb is planted by a political-suicide-bombing party carrying out a strategy of winning in the long-term now by losing in the short-term. Winning by losing. It’s a potent strategy if carried out competently. And it’s a strategy that would be severely undermined by a unilateral GOP big entitlement ‘reform’ push that didn’t include Democrats.

    So what’s the GOP’s plan on pushing for big spending cuts? It’s a super relevant question right now, especially if there are any secret promises of future cuts in the ongoing tax bill negotiations. Is the GOP going to push for big cuts in a unilateral manner before the mid-terms in 2018? Or will the GOP wait to lose either a house of Congress or the White House in 2020 before it tries to force a bipartisan giant spending/entitlement cut bill that Democrats have to sign on to as a result of all the deficits caused by the tax cuts? We’ll see, but regarding the possibility that the GOP could push ahead with cuts unilaterally, let’s not rule out the possibility that the GOP like it assumes the electorate has no memory and will believe pretty much anything at any given point in time. And who could blame them if they assumed this was true. The GOP has complete control of the federal government. It’s clear the American public really does have some sort of severe collective learning disability. Otherwise a party with the contemporary GOP’s track record wouldn’t be remotely near any levers of power. Even dog catcher (especially dog catcher).

    So perhaps the GOP really might be pushing for a GOP-only spending cut push following these tax cuts and make use of this window of complete federal control, damn the political consequences. The GOP will pass all the cuts (tax and spending cuts) on its own, plan on losing power in a voter backlash, wait a few election cycles for the Democrats to get power and wrestle with the consequences while the GOP brays about deficits and obstructs everything, and eventually the public will forget what the GOP did in 2017 in 2018 and they’ll be rewarded with power again some time in the 2020’s. Could that be the plan? It’s sort of a variant on the “time-inconsistency” scenario, but a more extreme scenario that assumes a more forgetful public than the one Bruce Bartlett describes.

    But let’s also not forget that gerrymandering, voter-suppression, vote-machine-rigging, billionaire mega-donors and the GOP’s anything-goes dirty-tricks machine threatens to give the party a near unbreakable lock on power even if it pisses a majority voters off. The Democrats are going to need large margins of victory spread out across gerrymandered districts to really take back control, and the GOP knows this. So maybe the GOP isn’t planning on losing power because it can’t assume it will lose control of Congress even if it passes horrible laws the vast majority of voters hate. Is the system too rigged to execute a “time-inconsistency” strategy that assumes the GOP loses control so the GOP is just going to go ahead with its agenda and try to hold on to power by any means necessary? We can’t rule it out.

    It’s a fascinating, if grim, question: what will the GOP do with this rare window of unified power? The party’s biggest agenda goals are all political poison that’s basically a fascist Koch brothers-style pro-oligarch nightmare agenda so it can’t overreach casually. Unless its long-term game plan of building up an advantage in gerrymandering, voter-suppression, vote-machine-rigging, billionaire mega-donors and political dirty-tricks (dirty-tricks that includes hacking it appears) has resulted in such a massive systemic advantage that the GOP can pass unpopular policies without necessarily losing control of power and it knows it.

    And while gerrymandering only helps the GOP in the House, don’t forget that the Democrats have three times as many Senators up for reelection in 2018, so the GOP’s calculus in terms of doing horrible policies that the public will hate heading into 2018 are probably pretty unusual. The GOP can potentially get away with being more irresponsible than normal given that numerical advantage that just happens to have hit this year by chance. Could the GOP’s grip on power be strong enough to withstand a significant voter backlash? Or is the GOP planning on a voter backlash in order to pass a political hot potato to the Democrats. The answer isn’t obvious. But it’s hard to imagine the GOP is placing major bets on the GOP winning the White House in 2020 even if they expect to hold on to Congress. We can’t rule it out a GOP White House win in 2020 but it’s hard to rule it in either for obvious reasons. The most stable aspect of President Trump is his consistent instability. And that has to weigh heavily on the GOP strategists’ decision-making…the GOP knows it might have full control of the House, Senate, and the White House up through 2020 even even if the party gets routed somewhat in the 2018 midterms thanks to all the systemic advantages the GOP built for itself. Will the GOP use the power it has now to pass politically unpopular policies or will it defer and wait for shared control. It’s not obvious what the GOP is going to do but the range of possible GOP behaviors is immense.

    What is obvious is that someone should probably tell Donald Trump that the the GOP’s time-inconsistency strategy just might mean the legislative agenda his GOP colleagues in Congress are handing him might be made by people planning on him losing in 2020 as part of the time-inconsistency strategy Bruce Bartlett warned us about.

    Posted by Pterrafractyl | December 3, 2017, 11:35 pm
  8. As the GOP scrambles to find a compromise version of the party’s tax scam monstrosity that can satisfy all the factions of the party and pass both the House and Senate, it’s not surprising that the elimination of the state and local tax (SALT) deductions remains a sticking point in the negotiations. It’s obviously flirting with political suicide for Republicans in Congress from the higher-tax ‘Blue’ states like New York, New Jersey, and California to vote for a tax bill that suddenly triggers a big tax shock from the loss of those SALT deductions.

    What is surprising is that the elimination of the SALT deductions is being viewed as something exclusively impacting ‘Blue’ states. Lower-tax ‘Red’ states are going to be impacted too. How so? Well, there’s the obvious problem with the loss of relative tax competitiveness if ‘Blue’ states do actually end up lowering their taxes in response to the loss of the SALT deductions.

    But a far more direct reason this tax plan is going to harm ‘Red’ states is that the whole GOP vision for the ‘deconstruction of the Administrative State’, as Steve Bannon would put it, is to first transfer federal programs to states and then encourage states cut those programs in response to state-level pressure to cut taxes. Under this GOP vision every state is slated to have much higher costs for all sorts of things pushed on them and that’s inevitably going to involve a choice between higher-taxes or reduced public services. Costs slated to grow year after year for decades to come relating to everything from Medicare and Medicaid to virtually all federal safety-net programs under that GOP vision. And the state and local taxes paid to finance those costs aren’t going to be tax deductible anymore. All so the GOP can cut taxes for corporations and the super-rich.

    It’s an obvious consequence of the GOP’s SALT deduction elimination, but it’s only obvious when viewed in the context of the GOP’s larger plan to block-grant federal programs to the states with steadily shrinking block grants. And that’s one reason why it’s so important to keep in mind the GOP’s long-term agenda of transferring responsibilities and costs from the federal government to states for as many programs as possible as the GOP continues to try to sell its tax bill. Because one of the sales pitches its perversely using to get ‘Red’ state voters behind the bill is the pleasure of a tax bill that screws over ‘Blue’ states the right-wing media loves to get its audience to hate.

    And as the following article makes clear, the GOP and right-wing pundit aren’t just using the pleasure of screwing over Democrat-leaning states with the SALT deduction elimination as a selling point for their tax bill. They’re also using screwing over Democrats as an bonus effect for an array of other provisions in the bill, like making it more expensive to go to graduate school and eliminating the ability of school teachers to deduct the personal money they spend on classroom supplies.

    Oh, and the elimination of the individual mandate in Obamacare that’s expected to cause a premium-spike death-spiral in the individual health insurance markets is also being sold as a bonus because it hurts Obamacare which is portrayed by the tax bill backers as exclusively hurting Democrats for some bizarre reason.

    That’s all being sold as an attack on Democrats. Instead of an attack on everyone who wants to live in an educated society with functioning health insurance markets:

    Bloomberg Politics

    ‘Death to Democrats’: How the GOP Tax Bill Whacks Liberal Tenets

    * SALT deductions, education benefits among those under attack
    * Conservatives bolstered by other provisions in GOP tax plans

    By Sahil Kapur
    December 5, 2017, 3:00 AM CST

    Some of the biggest losers under the Republican tax overhaul include upper-middle class families in high-tax areas like New York City, graduate students, government workers and public school teachers.

    The one thing they have in common? They’re mostly Democrats.

    President Donald Trump and GOP leaders have promised that the two main goals of a tax code revamp are to benefit middle-class families and to slash the corporate tax rate. But paying for those changes has come in large part at the expense of breaks that are important to residents of high-tax states, which tend to be Democratic.

    Benefits used by universities and graduate students are also on the chopping block. And the repeal of the Obamacare individual mandate to buy insurance — a centerpiece of Democrats’ biggest achievement in a generation — is estimated to generate some $300 billion to pay for tax cuts.

    “It’s death to Democrats,” said conservative economist Stephen Moore, who advised Trump’s campaign on tax policy.

    “They go after state and local taxes, which weakens public employee unions. They go after university endowments, and universities have become play pens of the left. And getting rid of the mandate is to eventually dismantle Obamacare,” Moore said in an interview, arguing that it would accelerate “a death spiral” in the health-care law’s marketplaces.

    The tax overhaul represents the GOP-controlled Congress’s best chance for a policy win this year and looms large in the 2018 congressional elections. Not a single Democrat voted for either the House or the Senate bill. No Democratic amendments were approved in committee or on the floor of either chamber — and the final House-Senate joint product is all but guaranteed to come from Republicans-only negotiations.

    SALT Deductions

    One of the most controversial measures in the House and Senate tax plans calls for repealing state and local tax deductions — save for a $10,000 cap for property tax deductions. The benefit is most important for residents of high-tax states.

    Conservatives say they hope the change will mean lower state taxes and smaller governments. “One hopefully positive result of this legislation will be that state and local officials will be less eager to jack up the taxes on hard working Americans,” Senator Ted Cruz of Texas said after the bill passed. He mentioned California, New Jersey and New York explicitly.

    Democratic governors in those SALT-dependent states were furious about the provision — New York’s Andrew Cuomo called it “political retaliation through the tax code.”

    In addition to hitting certain middle-class and upper-middle class families, the removal of the state and local tax break could hurt public sector jobs and programs. State and local deductions ease the burden of state taxes — without the breaks, the taxes are politically harder to impose and maintain. Public employee unions, a robust Democratic constituency, rely on state taxpayers for jobs and pensions.

    “This is going to be a direct hit on us,” said Peter MacKinnon, president of the Massachusetts-based SEIU Local 509.

    For some Republicans, the union anger is a feature of the plan, not a bug. Given the “high cost of unionized government employees” in states like Illinois, “the fact that government employee unions oppose reforms makes the need for them all the more clear,” said Michael Steel, who served as a spokesman for former House Speaker John Boehner.

    ‘Policy Not Partisanship’

    House Ways and Means Chairman Kevin Brady says there’s no effort to target Democrats, and the revenue offsets are about lowering rates for all Americans.

    “Chairman Brady has met repeatedly with Democrats in Congress and also union leaders and members about pro-growth tax reform. He always welcomed their ideas and their consideration during this process,” Emily Schillinger, a spokeswoman for Brady, said in an email. “On SALT, the chairman has also said that he is working to lower taxes for Americans — regardless of which state they live in. This tax reform issue is about policy — not partisanship.”

    Several provisions in the tax bills could affect educational institutions. The plans call for a new levy of 1.4 percent on colleges’ annual investment income. Under the House version of the bill, U.S. schools with funds of more than $250,000 per student would be affected, but the Senate proposal raised that to $500,000.

    A Cruz amendment added to the bill late would allow tax-advantaged contributions to 529 plans for private education and home-schooling expenses for K-12. The move could hurt public schools, according to the National Education Association, a teachers’ group that tends to back Democrats.

    “Expanding education tax loopholes in order for wealthy families to stash away money for religious school will hurt neighborhood public schools and students,” said Lily Eskelsen García, NEA president.

    Other measures in the House bill would eliminate deductions for student loans, treat graduate tuition waivers as taxable income, and prevent deductions for classroom expenses by public school teachers.

    Reagan, Bush Cuts

    The last major tax cuts — in the 1980s under Ronald Reagan and early 2000s under George W. Bush — were approved with bipartisan support. Until the ACA, which extended coverage to millions of Americans by imposing higher taxes on wealthy people and health industry groups, major legislation was often done with the backing of both parties.

    Whatever their motives may be for particular provisions, Republicans are well-aware of their effects, said William Galston, a senior fellow in governance studies at the Brookings Institution.

    “One of the definitions of justice offered in Plato’s Republic is doing good to your friends and harm to your enemies,” Galston said. “I think it’s fair to say the Republican leadership takes that definition of justice very seriously.”

    ———-

    “‘Death to Democrats’: How the GOP Tax Bill Whacks Liberal Tenets” by Sahil Kapur; Bloomberg Politics; 12/05/2017

    ““It’s death to Democrats,” said conservative economist Stephen Moore, who advised Trump’s campaign on tax policy.”

    “It’s death to Democrats.” That’s become a key part of the the GOP’s sales pitch for the tax bill, which is rather chilling in and of itself. But it’s the things that are celebrated as “death to Democrats” that make it extra chilling: state-level spending, graduate education, university endowments, teacher who spend their own money on classroom supplies, and the individual health insurance markets. GOP voters are supposed to celebrate a systematic attack on education and health care because doing so hurts Democrats. That’s seriously part of the GOP’s sales pitch. And such attacks on health care and education do indeed harm Democrats. It just also hurts everyone else, except apparently Stephen Moore and his billionaire bosses:


    “They go after state and local taxes, which weakens public employee unions. They go after university endowments, and universities have become play pens of the left. And getting rid of the mandate is to eventually dismantle Obamacare,” Moore said in an interview, arguing that it would accelerate “a death spiral” in the health-care law’s marketplaces.

    Several provisions in the tax bills could affect educational institutions. The plans call for a new levy of 1.4 percent on colleges’ annual investment income. Under the House version of the bill, U.S. schools with funds of more than $250,000 per student would be affected, but the Senate proposal raised that to $500,000.

    A Cruz amendment added to the bill late would allow tax-advantaged contributions to 529 plans for private education and home-schooling expenses for K-12. The move could hurt public schools, according to the National Education Association, a teachers’ group that tends to back Democrats.

    “Expanding education tax loopholes in order for wealthy families to stash away money for religious school will hurt neighborhood public schools and students,” said Lily Eskelsen García, NEA president.

    Other measures in the House bill would eliminate deductions for student loans, treat graduate tuition waivers as taxable income, and prevent deductions for classroom expenses by public school teachers.

    And, of course, it’s not just education and health care that the GOP is casting as falling int the ‘Demoncrat’ domain and worthy of attack. It’s also state spending. State-level services are also framed as Democratic in this ‘death to Democrats’ sales pitch. Which is pretty remarkable when you recall that one of the GOP’s mantras for decades has been the virtue of transferring federal spending to states. But that state-level spending is now also tainted with the Democratic party and needs to be pared back, according to Stephen Moore and his fellow GOPers:


    SALT Deductions

    One of the most controversial measures in the House and Senate tax plans calls for repealing state and local tax deductions — save for a $10,000 cap for property tax deductions. The benefit is most important for residents of high-tax states.

    Conservatives say they hope the change will mean lower state taxes and smaller governments. “One hopefully positive result of this legislation will be that state and local officials will be less eager to jack up the taxes on hard working Americans,” Senator Ted Cruz of Texas said after the bill passed. He mentioned California, New Jersey and New York explicitly.

    Democratic governors in those SALT-dependent states were furious about the provision — New York’s Andrew Cuomo called it “political retaliation through the tax code.”

    In addition to hitting certain middle-class and upper-middle class families, the removal of the state and local tax break could hurt public sector jobs and programs. State and local deductions ease the burden of state taxes — without the breaks, the taxes are politically harder to impose and maintain. Public employee unions, a robust Democratic constituency, rely on state taxpayers for jobs and pensions.

    “This is going to be a direct hit on us,” said Peter MacKinnon, president of the Massachusetts-based SEIU Local 509.

    For some Republicans, the union anger is a feature of the plan, not a bug. Given the “high cost of unionized government employees” in states like Illinois, “the fact that government employee unions oppose reforms makes the need for them all the more clear,” said Michael Steel, who served as a spokesman for former House Speaker John Boehner.

    Conservatives say they hope the change will mean lower state taxes and smaller governments. “One hopefully positive result of this legislation will be that state and local officials will be less eager to jack up the taxes on hard working Americans,” Ted Cruz of Texas said after the bill passed. He mentioned California, New Jersey and New York explicitly.”

    Lower state-level spending – as a consequence of lower state-level taxes as a consequence of the loss of the SALT deductions – is the stated goal of GOP Senators like Ted Cruz. In part because the GOP has long hoped to destroy public employee unions by generating public support for turning state-level public sector jobs into low-wage, low-benefit highly undesirable positions. But pressuring cuts to state spending is also a key GOP goal now that the GOP is putting into place its larger agenda of transferring federal spending to states and then encouraging states to do all the cuts to those programs. Indefinitely. It’s an agenda that’s obviously going to include indefinite state-level cuts to ‘Red’ states too.

    And as the following article from back in November when the House passed its version of the bill, it’s not just the elimination of SALT deductions that’s going to hit states unequally at first but eventually all states as growing levels: The House bill (and Senate bill) also includes the elimination of personal loss deductions for thing like wild fires, hurricanes, earthquakes, and other natural disasters. Or non-natural disasters. Like if your home burns down. Or losses from theft or vandalism. That’s all currently deductible for your federal taxes. But it won’t be once this tax bill passes.

    Hurricanes Harvey, Maria, and Irma are going will be grand-fathered in and losses from those will be allowed to be deducted, along with losses from the recent Northern California wildfires (not the currently raging fires). But going forward, when anyone in the US experiences a disastrous loss, they’re going to have to hope that it happens in the context of a major event that causes mass losses in their area. Because special Congressional laws that address the victims of specific disasters are going to be the only way the public gets to write off the losses from a disaster.

    Remember when all those GOP Congressmen refused to vote for federal disaster relief for Hurricane Sandy, which hit the ‘Blue’ Northeast states, but then all voted for federal relief for Hurricanes Harvey after it hit Texas? Yeah, that’s going to be the politics behind all federal disaster relief going forward if this tax bill passes. GOPers in Congress are even defending the elimination of the disaster loss deductions by assuring the public that Congress can still pass special bills for individual disasters. How assuring.

    And that loss of disaster losses deductions is obviously going to hit states unequally. Because some states are just more prone to disasters than others. Although natural disasters and personal disasters like theft, vandalism, or your home burning down obviously can hit everywhere and there’s little chance Congress will pass special federal relief for those events. But for the big natural disaster those are obviously going to hit some states more than others. And it won’t be a ‘Red’ vs ‘Blue’ divide. It will be a ‘more disaster-prone’ vs ‘less disaster prone’ divide:

    The Los Angeles Times

    GOP tax bill would end deduction for wildfire and earthquake victims — but not recent hurricane victims

    By Jim Puzzanghera
    Nov 07, 2017 | 2:50 PM

    The House Republican tax bill would eliminate the deduction for personal losses from wildfires, earthquakes and other natural disasters, but keep the break for victims of the recent severe hurricanes.

    If the bill becomes law, the deduction would disappear next year, but would be available for victims of the massive wildfires that struck Northern California last month — as long as they can figure out their uninsured losses and include them on their 2017 tax return.

    The legislation specifically repeals the deduction for personal casualty losses. The Internal Revenue Service describes casualty losses as including those from “natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.”

    In the case of a major disaster, Congress still would be able to pass special legislation offering tax breaks for victims, as it has done in the past.

    But such bills would be difficult to pass for smaller scale incidents that still are devastating to the victims, said Rep. Brad Sherman (D-Porter Ranch).

    “Let’s say your home burns down and it isn’t a disaster that CNN covers,” he said. “You’re affected the same way, whether it’s nine of your neighbors or 900 of your neighbors that lose homes.”

    Rep. Mike Thompson (D-St. Helena) called the elimination of the deduction “cruel” and “heartless.” He planned to try to amend the bill and restore the deduction on Tuesday, but that amendment was expected to fail.

    “Do you really think that we’re going to be able to go in, assess all of the costs, get everything cleaned up, figure out where people are going to stand in time to do their taxes?” Thompson told colleagues on the House Ways and Means Committee on Monday night as they began debating the legislation. “It’s not going to happen.”

    Rep. Tom Rice (R-S.C) said California residents could file amended 2017 returns later. And Rep. Kevin Brady (R-Texas), the committee’s chairman, said he planned to introduce legislation within the next month offering special tax relief for wildfire victims.

    But Thompson and some California officials are concerned that killing the deduction would hurt people in the state.

    “Eliminating the deduction will place even greater strain on residents of our region at a time when our county is most in need of assistance,” Shirlee Zane, chair of the Sonoma County Board of Supervisors, wrote to Thompson.

    The Northern California wildfires last month destroyed nearly 8,800 structures and killed 43 people, she said.

    Even more frustrating to some California officials is the decision by Brady to grandfather in losses from hurricanes Harvey, Irma and Maria. Brady’s district is just north of Houston, which was severely damaged by Hurricane Harvey.

    Santa Rosa Mayor Chris Coursey said that move “smacks of political favoritism.”

    “Please, let’s not play politics with families who are suffering the very real impacts and challenges of recovering from this fire disaster,” Coursey wrote to Thompson in urging him to fight the tax change.

    The deduction for personal casualty losses is one of many individual breaks that would be eliminated in the House Republican tax bill in an effort to streamline the tax code and produce more revenue to help offset cuts to corporate, business and individual rates.

    The deduction covers “losses arising from fire, storm, shipwreck or other casualty, or from theft,” according to a summary of the bill, which was unveiled last week.

    The legislation would continue the special disaster relief tax breaks included in legislation in September aimed at victims of hurricanes Harvey, Irma and Maria.

    That bill, signed into law by President Trump, expanded the personal casualty deduction for those disasters. It waived the requirements that taxpayers itemize their returns and that losses must exceed 10% of adjusted gross income.

    “So the folks in Texas who lost their homes in a hurricane, you take care of them,” Thompson told Brady.

    “But anybody else who gets a disaster, the 9,000 people in California … most of which are in my district, who just lost their homes to the worst fires we’ve ever seen, you’d take away the ability to benefit from the tax code,” Thompson said. “Why would you have done that?”

    Brady said he hoped to pass a special disaster relief bill similar to the one for the hurricanes that would allow last month’s California wildfire victims to claim losses even if they don’t itemize their deductions.

    “If you’d like to work together to provide relief not just for those who itemize but [for] those who do not in those wildfires then let’s work together,” Brady told Thompson. Thompson said he would work with Brady on that legislation.

    Sherman, whose district was hit by the Northridge earthquake in 1994, said the tax bill change would leave Americans dependent on congressional action in the case of a disaster. Such special legislation to allow personal loss deductions would add to the cost of disaster aid bills and might mean less federal funding for other recovery assistance, he said.

    “Imagine if, God forbid, we have an earthquake and the California delegation is back here trying to fight simultaneously for disaster relief to rebuild infrastructure on the one hand and fair treatment of individuals on the other,” he said. “If we have to fight two battles, we might only win one.”

    ———-

    “GOP tax bill would end deduction for wildfire and earthquake victims — but not recent hurricane victims” by Jim Puzzanghera; The Los Angeles Times; 11/07/2017

    The legislation specifically repeals the deduction for personal casualty losses. The Internal Revenue Service describes casualty losses as including those from “natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.””

    The tax bill passed by the House repeals the federal deduction for personal casualty losses. And this includes fires, accidents, thefts or vandalism. To pay for more tax cuts for the rich and corporations. How nice:


    In the case of a major disaster, Congress still would be able to pass special legislation offering tax breaks for victims, as it has done in the past.

    But such bills would be difficult to pass for smaller scale incidents that still are devastating to the victims, said Rep. Brad Sherman (D-Porter Ranch).

    “Let’s say your home burns down and it isn’t a disaster that CNN covers,” he said. “You’re affected the same way, whether it’s nine of your neighbors or 900 of your neighbors that lose homes.”

    The deduction for personal casualty losses is one of many individual breaks that would be eliminated in the House Republican tax bill in an effort to streamline the tax code and produce more revenue to help offset cuts to corporate, business and individual rates.

    The deduction covers “losses arising from fire, storm, shipwreck or other casualty, or from theft,” according to a summary of the bill, which was unveiled last week.

    But at least the victims of Harvey, Irma, and Maria will be spared. Future disaster victims will just have to hope Congress is feeling generous:


    The legislation would continue the special disaster relief tax breaks included in legislation in September aimed at victims of hurricanes Harvey, Irma and Maria.

    That bill, signed into law by President Trump, expanded the personal casualty deduction for those disasters. It waived the requirements that taxpayers itemize their returns and that losses must exceed 10% of adjusted gross income.

    “So the folks in Texas who lost their homes in a hurricane, you take care of them,” Thompson told Brady.

    “But anybody else who gets a disaster, the 9,000 people in California … most of which are in my district, who just lost their homes to the worst fires we’ve ever seen, you’d take away the ability to benefit from the tax code,” Thompson said. “Why would you have done that?”

    Sherman, whose district was hit by the Northridge earthquake in 1994, said the tax bill change would leave Americans dependent on congressional action in the case of a disaster. Such special legislation to allow personal loss deductions would add to the cost of disaster aid bills and might mean less federal funding for other recovery assistance, he said.

    “Imagine if, God forbid, we have an earthquake and the California delegation is back here trying to fight simultaneously for disaster relief to rebuild infrastructure on the one hand and fair treatment of individuals on the other,” he said. “If we have to fight two battles, we might only win one.”

    So that’s all something to look forward to…and wince at in anticipation: routinely politicized congressional disaster relief responses. Again, don’t forget Hurricane Sandy relief and the viciously cynical GOP response. That’s what the GOP wants to be able to do much, much more in the future. Apparently. It’s the GOP’s tax bill so the party is presumably interested in a lot more congressional control over federal disaster responses knowing full well that the party’s toxic politics is going to recreate the Hurricane Sandy/Harvey ‘approve Red state disaster relief but vote down Blue state disaster relief’ dynamic over and over in the future. It’s grimly cynical.

    Given all this, it’s probably worth keeping in mind that climate changes is almost certainly going to be a driving factor behind much of the state-level disaster costs in coming decades. And according to a new study that factors in state-specific risk models for climate change’s economic costs to each US state, climate change is going to result in an increasingly unequal distribution of costs. And it also roughly breaks down on ‘Red’ state vs ‘Blue’ state lines, because it largely breaks down on latitude and the fact that warmers states are going to be hurt a lot more by a warming climate:

    The New York Times

    As Climate Changes, Southern States Will Suffer More Than Others

    By BRAD PLUMER and NADJA POPOVICH
    JUNE 29, 2017

    As the United States confronts global warming in the decades ahead, not all states will suffer equally. Maine may benefit from milder winters. Florida, by contrast, could face major losses, as deadly heat waves flare up in the summer and rising sea levels eat away at valuable coastal properties.

    In a new study in the journal Science, researchers analyzed the economic harm that climate change could inflict on the United States in the coming century. They found that the impacts could prove highly unequal: states in the Northeast and West would fare relatively well, while parts of the Midwest and Southeast would be especially hard hit.

    In all, the researchers estimate that the nation could face damages worth 0.7 percent of gross domestic product per year by the 2080s for every 1 degree Fahrenheit rise in global temperature. But that overall number obscures wide variations: The worst-hit counties — mainly in states that already have warm climates, like Arizona or Texas — could see losses worth 10 to 20 percent of G.D.P. or more if emissions continue to rise unchecked.

    “The reason for that is fairly well understood: A rise in temperatures is a lot more damaging if you’re living in a place that’s already hot,” said Solomon Hsiang, a professor of public policy at the University of California, Berkeley, and a lead author of the study.

    “You see a similar pattern internationally, where countries in the tropics are more heavily impacted by climate change,” he said. “But this is the first study to show that same pattern of inequality in the United States.”

    The greatest economic impact would come from a projected increase in heat wave deaths as temperatures soared, which is why states like Alabama and Georgia would face higher risks while the cooler Northeast would not. If communities do not take preventative measures, the projected increase in heat-related deaths by the end of this century would be roughly equivalent to the number of Americans killed annually in auto accidents.

    Higher temperatures could also lead to steep increases in energy costs in parts of the country, as utilities may need to overbuild their grids to compensate for heavier air-conditioning use in hot months. Labor productivity in many regions is projected to suffer, especially for outdoor workers in sweltering summer heat. And higher sea levels along the coasts would make flooding from future hurricanes far more destructive.

    The authors avoided delving into politics, but they warned that “climate change tends to increase pre-existing inequality.” Some of the poorest regions of the country could see the largest economic losses, particularly in the Southeast. That pattern would hold even if the world’s nations cut emissions drastically, though the overall economic losses would be considerably lower.

    Predicting the costs of climate change is a fraught task, one that has bedeviled researchers for years. They have to grapple with uncertainty involving population growth, future levels of greenhouse-gas emissions, the effect of those emissions on the Earth’s climate and the economic damage higher temperatures may cause.

    Previous economic models have been relatively crude, focusing on broad global impacts. The new study, led by the Climate Impact Lab, a group of scientists, economists and computational experts, took advantage of a wealth of recent research on how high temperatures can cripple the economy. And the researchers harnessed advances in computing to scale global climate models down to individual counties in the United States.

    “Past models had only looked at the United States as a single region,” said Robert E. Kopp, a climate scientist at Rutgers and a lead author of the study. “They missed this entire story of how climate change would create this large transfer of wealth between states.”

    There are still limitations to the study. It relies heavily on research showing how hot weather has caused economic losses in the past. But society and technology will change a lot over the next 80 years, and people may find novel ways to adapt to steadily rising temperatures, said Robert S. Pindyck, an economist at the Massachusetts Institute of Technology who was not involved with this study.

    Urban planners could set up cooling centers during heat waves to help vulnerable people who lack air-conditioning, as France did after a heat wave killed 14,802 people in 2003. Farmers may adopt new crop varieties or shift planting patterns to cope with the rise in scorching heat.

    Notably, the model also does not account for the effects of future migration within the United States. If Arizona becomes unbearable because of rising temperatures, more people may decide to move to states like Oregon or Montana, which would largely escape intolerable heat waves and could even see an increase in agricultural production. Such migration could reduce the country’s overall economic losses, said Matthew E. Kahn, an economist at the University of Southern California.

    Other outside experts praised the study, but cautioned that it may have underestimated certain kinds of damages. Economic losses on the coasts could be far higher if ice sheets in Antarctica and Greenland disintegrate faster than expected. And climate change could bring other calamities that are harder to tally, such as the loss of valuable ecosystems like Florida’s coral reefs, or increased flows of refugees from other countries facing their own climate challenges.

    The study also does not factor in how reduced labor productivity could compound over time, leading to slower rates of economic growth, said Frances C. Moore, a climate expert at the University of California, Davis.

    The researchers at the lab plan to expand their model to include more possible impacts and provide a detailed view of what individual counties can expect, so policymakers can begin to prepare far in advance.

    ———-

    “As Climate Changes, Southern States Will Suffer More Than Others” by BRAD PLUMER and NADJA POPOVICH; The New York Times; 06/29/2017

    “Past models had only looked at the United States as a single region,” said Robert E. Kopp, a climate scientist at Rutgers and a lead author of the study. “They missed this entire story of how climate change would create this large transfer of wealth between states.”

    A large relative transfer of wealth from southern warmer states to northern colder states. That’s one of the general trends we should expect from a warming planet, and the warmer it gets, the greater that transfer gets. And it’s an increasing number of disasters like heat waves in already hot climates that’s going to going to be a key driver:


    In a new study in the journal Science, researchers analyzed the economic harm that climate change could inflict on the United States in the coming century. They found that the impacts could prove highly unequal: states in the Northeast and West would fare relatively well, while parts of the Midwest and Southeast would be especially hard hit.

    In all, the researchers estimate that the nation could face damages worth 0.7 percent of gross domestic product per year by the 2080s for every 1 degree Fahrenheit rise in global temperature. But that overall number obscures wide variations: The worst-hit counties — mainly in states that already have warm climates, like Arizona or Texas — could see losses worth 10 to 20 percent of G.D.P. or more if emissions continue to rise unchecked.

    “The reason for that is fairly well understood: A rise in temperatures is a lot more damaging if you’re living in a place that’s already hot,” said Solomon Hsiang, a professor of public policy at the University of California, Berkeley, and a lead author of the study.

    “You see a similar pattern internationally, where countries in the tropics are more heavily impacted by climate change,” he said. “But this is the first study to show that same pattern of inequality in the United States.”

    The greatest economic impact would come from a projected increase in heat wave deaths as temperatures soared, which is why states like Alabama and Georgia would face higher risks while the cooler Northeast would not. If communities do not take preventative measures, the projected increase in heat-related deaths by the end of this century would be roughly equivalent to the number of Americans killed annually in auto accidents.

    “The greatest economic impact would come from a projected increase in heat wave deaths as temperatures soared, which is why states like Alabama and Georgia would face higher risks while the cooler Northeast would not.”

    Climate change isn’t going to be felt equally and it’s the ‘Red’ states in the South and parts of the Midwest US that are going to be on the short end of that inequality. And thanks to the GOP’s tax bill, the losses from those coming climate change-related disasters aren’t going to be federally deductible. Unless Congress makes an exception.

    But even if Congress does make lots of tax deduction exceptions to for future climate change-related disasters, that’s only going to be the case for big disasters that get congressional attention. Not the individual cases of things like theft, vandalism, nasty storms, and a home burning down. And yet it’s hard to imagine that the heat waves and other natural disasters that will disproportionately hit ‘Red’ states in the Southern parts of the US harder won’t lead to increases in things like theft, vandalism, nasty storms and homes burning down. Part of what makes the giant disaster of climate change so disastrous is that it stresses out things – ecosystems, human societies and economies – and makes mini-disasters much more likely to happen. Mini-disasters that are no longer going to be deductible from federal taxes thanks to the GOP’s big tax bill.

    And the costs of those future climate change disasters aren’t just going to be felt by individuals. The states are obviously going to have their own disaster responses. Which will probably involve raising taxes at the state and local level. And the worse climate change gets, the more likely we could see a scenario for today’s southern ‘Red’ states are effectively forced to be higher-tax states than their northern neighbors simply because the cost of dealing with the high cost of climate change damage will just keep growing and growing. Those SALT deductions sure will be nice for disaster-prone states. But away they go. To pay for the tax cuts.

    It’s all a reminder that the GOP’s tax bill doesn’t just punish Democratic states. The tax bill punishes all states. It’s just more obvious when it comes to the ‘Blue’ states and the SALT deduction elimination because the GOP is trying to make that a sadistic selling point to distract from the fact that this bill is more of an S&M thing.

    Posted by Pterrafractyl | December 11, 2017, 12:00 am
  9. Remember when the Trump administration released its 2018 budget blueprint back in March that was almost comically draconian due to the fact that it gutted almost all federal spending, especially for safety-net programs? And remember how Trump’s big $1 trillion dollar infrastructure plan rapidly morphed into a mass infrastructure privatization plan? Well, it sounds like those budget and infrastructure plans are going to more or less have to be adopted if the GOP’s giant tax scam becomes law. Yep.

    And why is are joke monstrosities going to be required? Because as the GOP scrambles to come up with a joint bill that can pass both the House and Senate, the need to fulfill the Senate’s “Byrd rule” – the rule that a spending bill can pass the Senate with a bare majority (no filibuster) as long as it’s expected to be budget neutral in a decade – is one of the key constraints on the final shape of the bill. And according to a new one-page report from the Treasury Department, the Treasury has officially concluded that the only way the GOP’s tax bill can be budget neutral over the next decade is if the Trump administration also carries out the ‘welfare reform’ (gutting safety-net programs), ‘infrastructure development’ (mass privatization and toll roads everywhere) and mass deregulation, only then will the US economy grow fast enough over the next decade for the tax scam to pay for itself. Because gutting the safety-net, mass privatization of infrastructure, and mass deregulation is apparently good for the economy.

    And note that it doesn’t look like this is a report the Treasury Department actually wanted to release. It only came to light after the department’s inspector general went hunting for it after people kept asking why the Treasury wasn’t issuing a report on the matter after it promised to do so. And it’s not surprising the Treasury wasn’t enthusiastic about releasing this report because it basically admits that the GOP’s pledge that the tax bill will pay for itself over the next decade is a fraud. Demanding ‘welfare reform’ and ‘infrastructure development’ is basically code for cutting spending so making those two major legislative initiatives assumptions in the Treasury argument that the tax bill will be budget neutral is basically an acknowledgment by the Treasury that the tax bill isn’t actually budget neutral.

    So, to summarize:

    1. We have the Treasury Department first promising to issue a report on the budget impact of the tax bill.

    2. Then it apparently forgets to actually issue the report.

    3. Then, after people start asking about the missing report, the department’s inspector general goes looking for it.

    4. Then the department suddenly issues the report. It’s one page.

    5. The report says the tax bill will pay for itself…if the government also proceeds to ‘reform welfare’ (gut the safety-net). And ‘develop infrastructure’ (privatize everything public assets). And pursue mass deregulation. If all that happens, the magic of trickle-down economics will allow the tax cut for corporations and the rich to pay for itself in 10 years.

    That was what the Treasury Department just told the American public. Grudgingly and belatedly. And also deceptively since the surface argument the Treasury is making is that slashing the safety-net and privatizing infrastructure will synergistically work with the tax bill to create a sustained elevated economic boom that will make the tax cuts budget neutral. Which ignores how the mass cuts in spending and the temporary one-time revenue boost from the mass infrastructure privatization probably won’t do much to help the economy but would be very useful for covering the costs of the tax cut.

    But at least the Treasury Department finally admits that the tax bill won’t pay for itself. Indirectly, belatedly, and grudgingly:

    Talking Points Memo
    DC

    Trump’s Treasury Department Admits Tax Cuts Don’t Pay For Themselves

    By Alice Ollstein
    Published December 11, 2017 1:09 pm

    When the House and Senate passed different versions of a bill to slash corporate tax rates and eliminate the deductions millions of people depend upon, GOP lawmakers insisted that the bill would pay for itself and then some. They presented no evidence to back up this claim, and multiple reports from government experts and outside groups found instead that the bills would increase the federal deficit by at least $1 trillion.

    The Treasury Department promised to release an analysis ahead of last week’s Senate vote, but it was nowhere to be seen, and whistleblowers at the Department told the New York Times they were never even instructed to crunch the numbers. On Monday, after the department’s inspector general opened an investigation into the whereabouts of the promised report and whether Secretary Steve Mnuchin was attempting to mislead the public about the impact of the tax plan, the Treasury Department quietly released a one-page document.

    Treasury’s quickie analysis is basically in agreement with other respected assessments of what the tax cuts will do to the deficit absent economic growth: reduce tax revenue by $1 trillion. But the Treasury analysis accepts as a given the White House’s projection for 2.9 percent economic growth over 10 years, which turns that $1 trillion addition to the deficit into a $300 billion net gain in government revenue. But even the rosy Treasury analysis conceded that the tax cuts alone will not spur this growth.

    Instead, the report says the tax cuts “as well as from a combination of regulatory reform, infrastructure development, and welfare reform as proposed in the Administration’s Fiscal Year 2018 budget” will do the trick. Exactly what those “reforms” will entail is not described, but the reference to Trump’s 2018 budget is telling. That budget—which even Republicans staunchly opposed—would have gutted the State Department, public schools, the Coast Guard, and nearly every single federal agency and program that helps low-income people. This spring, the GOP-controlled Congress ignored this budget, and passed a temporary one that maintained and in several areas increased the funding for programs Trump aimed to cut.

    So, essentially, Treasury is saying that corporate tax cuts, plus a budget Congress will never pass that defunds Meals on Wheels etc., will save the government money in the long run.

    The new Treasury report also uses economic growth estimates that the White House put out before the tax bill was even drafted.. They’re estimating 2.9 percent growth every year for the next 10 years, while the non-partisan but GOP-led Congressional Budget Office says 1.9 percent is much more realistic.

    ———-

    “Trump’s Treasury Department Admits Tax Cuts Don’t Pay For Themselves” by Alice Ollstein; Talking Points Memo; 12/11/2017

    “The Treasury Department promised to release an analysis ahead of last week’s Senate vote, but it was nowhere to be seen, and whistleblowers at the Department told the New York Times they were never even instructed to crunch the numbers. On Monday, after the department’s inspector general opened an investigation into the whereabouts of the promised report and whether Secretary Steve Mnuchin was attempting to mislead the public about the impact of the tax plan, the Treasury Department quietly released a one-page document.”

    “We promise a report. What report? Oh look, an inspector general coming after the report we promised. Here it is.” That’s what just happened to the Treasury Department. At least we have the report. As chilling as that report may be when you consider what it actually recommends:


    Treasury’s quickie analysis is basically in agreement with other respected assessments of what the tax cuts will do to the deficit absent economic growth: reduce tax revenue by $1 trillion. But the Treasury analysis accepts as a given the White House’s projection for 2.9 percent economic growth over 10 years, which turns that $1 trillion addition to the deficit into a $300 billion net gain in government revenue. But even the rosy Treasury analysis conceded that the tax cuts alone will not spur this growth.

    Instead, the report says the tax cuts “as well as from a combination of regulatory reform, infrastructure development, and welfare reform as proposed in the Administration’s Fiscal Year 2018 budget” will do the trick. Exactly what those “reforms” will entail is not described, but the reference to Trump’s 2018 budget is telling. That budget—which even Republicans staunchly opposed—would have gutted the State Department, public schools, the Coast Guard, and nearly every single federal agency and program that helps low-income people. This spring, the GOP-controlled Congress ignored this budget, and passed a temporary one that maintained and in several areas increased the funding for programs Trump aimed to cut.

    So, essentially, Treasury is saying that corporate tax cuts, plus a budget Congress will never pass that defunds Meals on Wheels etc., will save the government money in the long run.

    “So, essentially, Treasury is saying that corporate tax cuts, plus a budget Congress will never pass that defunds Meals on Wheels etc., will save the government money in the long run.”

    Yep, as long as Congress passes the insanely draconian Trump budget – a budget that shocked the public back in March because it even cut things like Meals on Wheels (meals/check ups for old people) – the tax bill will eventually pay for itself. That was the message at the core of the Treasury’s report. It’s one-page report that it only released after the inspector general came after it.

    And lets not forget that a key element of the GOP’s ‘welfare reform’ plans is blockgranting those programs and sending them to the states where the cutting and work-requirements will become the norm. Work-requirements that will be in place whether or not that makes sense for people’s individual circumstances. While a subset of people using welfare programs don’t work by choice, the rest that don’t work don’t have a real choice due to circumstance. And yet they’ll all be expected to find any minimum wage job available, likely dragging down wages for working class Americans everywhere.

    Don’t forget that ‘welfare reform’ in the US already happened. Two decades ago. And there’s still lots of poverty. It’s just a much, much meaner welfare system to deal with all that poverty than existed before and now it’s about get A LOT meaner. Imagine people who don’t work and utilize welfare services because they can’t work because they need to stay at home taking care of relatives with medical needs. Those people are going to have to find jobs and if it leads to disaster for that family, oh well. That’s what the GOP’s ‘welfare reform’ has long entailed and the Treasury Department just basically declared that the only way the GOP’s tax bill would pass the Senate’s “Byrd rule” is if that long-held GOP goal of ‘welfare reform’ is made a reality soon. Along with the privatization of public infrastructure and mass deregulation. That’s all going to have to happen in order to pay for the tax cuts for the super-rich and corporations.

    Although there is one notable alternative area of government spending cuts that the GOP might pursue instead: Entitlement cuts. Large cuts to Medicare, Medicaid, and Social Security is like GOP fever dream and 2018 is the party’s big historic chance to do it with control of Congress and the White House. Might that happen? If House Speaker Paul Ryan’s recent declaration that entitlement ‘reform’ (cuts) is the GOP’s plan for next year is accurate then, yes, the GOP might actually try to do entitlement reform next year (which shouldn’t be surprising after this tax scam nightmare):

    CNN

    Paul Ryan’s plans for Medicare are scary

    By Errol Louis, CNN Political Commentator
    Updated 2:17 PM ET, Fri December 8, 2017

    (CNN)Confirming the warnings and worst fears of progressives, House Speaker Paul Ryan made it plain this week: the ultimate aim of Republican lawmakers — and their number one priority in January — is to shrink the Medicare program that provides health insurance to the elderly and disabled.

    “Next year we’re going to have to get back at entitlement reform,” Ryan said on a Wisconsin radio talk show, calling Medicare the “biggest entitlement that’s got to have reform.”

    That’s code for resuming a decades-long fight against government-supported health care by conservatives, who fought bitterly against the creation of Medicare in 1965 and have been trying to cripple or kill the program ever since.

    Recall that the creation of health insurance for America’s poor and elderly — something that President Harry Truman attempted, without success, in 1945, 1947 and 1949 — was frustrated at every turn by conservatives in both political parties.

    As CNN contributor Julian Zelizer has recounted, the program finally got passed following the Democratic landslide of 1964, when President Lyndon Johnson’s re-election against Barry Goldwater swept commanding Democratic majorities into the House (295 seats) and Senate (68 seats).

    Democrats got the long-sought program for senior health care: in 1965 Johnson signed the Medicare bill into law with Truman sitting at his side. The ex-president was enrolled as the program’s first member.

    But conservative opposition never wavered or waned. In the closing weeks before final passage of the Medicare bill, Ronald Reagan — then a rising star in conservative Republican politics — recorded a famous message calling Medicare “socialism” and urging voters to contact member of Congress and urge a “no” vote.

    If Medicare should pass, Reagan warned, “behind it will come other federal programs that will invade every area of freedom as we have known it in this country. And if you don’t do this and if I don’t do it, one of these days we are going to spend our sunset years telling our children and our children’s children, what it once was like in America when men were free.”

    For a certain type of hard-right conservative Republican, Reagan’s call remains relevant and urgent to this day. Having failed to repeal Medicare outright — the program is wildly popular, serving more than 55 million seniors (about 15% of the US population, says AARP) and disabled Americans — Republicans have moved to a three-part “starve the beast” strategy.

    Part one is to slash taxes and drastically lower the amount of revenue available to the federal government. The tax bill that GOP majorities recently approved in both houses of Congress accomplishes that nicely, adding $1 trillion to the federal budget deficit under the most optimistic economic scenario, according to the nonpartisan Joint Committee on Taxation.

    Part two of the plan is to suddenly recoil in horror at the fact of the budget deficit (yes, the same one that Republicans happily conjured up by cutting taxes). Ryan’s radio interview is a step in that direction. “Frankly, it’s the health care entitlements that are the big drivers of our debt,” he said — just days after happily adding a trillion to the tab with tax cuts.

    Piling up debt and deficits sets the stage for the third and concluding strategy: to lower the debt by dialing back Medicare eligibility, lowering the benefits and otherwise crippling the program.

    ———-

    “Paul Ryan’s plans for Medicare are scary” by Errol Louis; CNN; 12/08/2017

    “Next year we’re going to have to get back at entitlement reform,” Ryan said on a Wisconsin radio talk show, calling Medicare the “biggest entitlement that’s got to have reform.”

    It doesn’t happen very often, but every once in a while you should take Paul Ryan at his word. And this is one of those times. Ominously.

    And how is the GOP planning on pulling this off? By doing the ol’ GOP three-step: cut taxes to drive up the deficits and then rail about deficits, demand spending cuts, and make those spending cuts a reality. Spending cuts that are going to be entitlement cuts this time. It’s the “time-inconsistency” strategy but applied over a compressed time-frame of just a couple of years:


    For a certain type of hard-right conservative Republican, Reagan’s call remains relevant and urgent to this day. Having failed to repeal Medicare outright — the program is wildly popular, serving more than 55 million seniors (about 15% of the US population, says AARP) and disabled Americans — Republicans have moved to a three-part “starve the beast” strategy.

    Part one is to slash taxes and drastically lower the amount of revenue available to the federal government. The tax bill that GOP majorities recently approved in both houses of Congress accomplishes that nicely, adding $1 trillion to the federal budget deficit under the most optimistic economic scenario, according to the nonpartisan Joint Committee on Taxation.

    Part two of the plan is to suddenly recoil in horror at the fact of the budget deficit (yes, the same one that Republicans happily conjured up by cutting taxes). Ryan’s radio interview is a step in that direction. “Frankly, it’s the health care entitlements that are the big drivers of our debt,” he said — just days after happily adding a trillion to the tab with tax cuts.

    Piling up debt and deficits sets the stage for the third and concluding strategy: to lower the debt by dialing back Medicare eligibility, lowering the benefits and otherwise crippling the program.

    And that’s all part of the stated GOP agenda for next year according to the House Speaker.

    So if the GOP guts Medicare and Social Security like Paul Ryan is predicting, hopefully the government won’t need to gut the safety-net for poor quite as much to pay for the tax cuts for the rich and corporations. Although the GOP wants to cuts all of these programs regardless of whether or not its ostensibly to pay for a trickle-down tax cut so we should probably expect maximum cuts for the poor regardless of circumstance.

    Posted by Pterrafractyl | December 12, 2017, 12:06 am
  10. Well that turned out to be an exciting special election: Roy Moore just lost the Alabama Senate race to replace Attorney General Jeff Sessions’s old seat to Doug Jones. A Democrat. Which is unusual for Alabama. For the first time since 1992, Alabama elected a Democratic Senator. It’s a positive kind of exciting outcome. And as we’ll see below, it’s an especially exciting positive outcome because it might

    But there’s a potentially negative exciting outcome that’s also developing: Roy Moore hasn’t conceded yet, announcing “It’s not over yet.” Maybe it’s just a temporary stalling while he waits to see if a miracle develops. But as we’ll also see below, the GOP is currently navigating very tricky timeline with its push to get the tax bill giant scam passed through the House and Senate and that timeline at this moment strongly incentivizes the GOP to prevent Doug Jones from getting certified as the final winner of this race for as long as possible. So if if Roy Moore doesn’t concede soon, the American public had better watch out for a stalling tactic intended to get the GOP’s horrible tax bill passed.

    Will Moore make a tactical non-concession effort or is a Moore concession coming soon after options like counting contested ballots get exhausted? That will be something to watch. But the loss of a GOP vote in the Senate makes the passage of an the tax bill down to a question of whether or not Maine’s Senator Susan Collins can be convinced to vote for it. And it’s very unclear they’ll be able to do so since there’s no real indication the final version will meet her key demands.

    Even worse, as the article below notes, the only ‘safe’ move for the GOP is to ram the tax bill through Congress before Doug Jones can get seated and they’re planning on doing exactly that next week.

    So the longer Roy Moore refuses to concede, the more time it gives the GOP to hastily and egregiously ram through the tax bill. And that’s all part of what it’s quite an exciting night for US politics in Alabama. It’s that latest reminder that, even in defeat, the GOP will do whatever it can to cut taxes for rich people. And probably more hastily in defeat:

    Vox

    Doug Jones’s stunning victory could be the beginning of the end of tax reform

    + Doug Jones and – Susan Collins = real trouble for the GOP’s big tax overhaul.

    By Dylan Scott
    Updated at Dec 12, 2017, 10:43pm EST

    It was supposed to be smooth sailing for the Republican tax plan from here on out. Both the House and the Senate have passed bills that would fundamentally change the tax code for the next generation. They still have some details to hash out between them, but Congress seemed on the verge of a sweeping tax overhaul.

    But then Doug Jones won a stunning victory in the Alabama Senate race.

    He has opened up a very real, if still perhaps unlikely, path for the GOP’s biggest legislative priority to fail. The worst-case scenario for Republicans — and the only plausible way for opponents to stop a dramatically unpopular tax proposal — has revealed itself.

    A Republican disaster begins in Alabama, where the party mostly if begrudgingly aligned itself behind Roy Moore in Tuesday’s special election despite credible allegations of sexual misconduct involving teenagers. President Trump himself made the calculation clear: They needed Moore’s vote for the tax bill.

    Democrats refusal to give even one vote for massive Tax Cuts is why we need Republican Roy Moore to win in Alabama. We need his vote on stopping crime, illegal immigration, Border Wall, Military, Pro Life, V.A., Judges 2nd Amendment and more. No to Jones, a Pelosi/Schumer Puppet!— Donald J. Trump (@realDonaldTrump) December 4, 2017

    But they didn’t get it. Jones stunned America with an upset victory over Moore in one of the reddest states in the country. If he reaches the Senate before Republicans pass their tax plan, it would be a huge blow to their tax reform dreams.

    Senate Republicans are passing their tax bill through the budget reconciliation process, which requires only 50 votes to advance instead of the usual 60. So Republicans can afford two defections from their 52 members. If Jones were to be sworn in before the tax bill is passed, suddenly Republicans would have only one vote to spare. With Sen. Bob Corker (R-TN) seeming implacable — he was the only Republican to oppose the Senate bill the first time — they could not survive any more desertions.

    But one GOP vote has been looking increasingly tenuous: Susan Collins of Maine, the most moderate Republican in the Senate. She gave her support to the tax bill, which would repeal Obamacare’s individual mandate, in part on the promise that Congress would also pass bills designed to stabilize the health care law.

    Very pleased @SenateMajLdr committed to support passage of two impt bills before year's end to mitigate premium increases: Alexander-Murray proposal to help low-income families afford insurance & my bipartisan bill to protect people w/ pre-existing conditions via high-risk pools. pic.twitter.com/UmOIbd0CQn— Sen. Susan Collins (@SenatorCollins) December 2, 2017

    In the past few days, House Speaker Paul Ryan has thrown cold water on those bills and the White House started to back away from its commitment. House Republicans have warned that there aren’t the votes in the lower chamber to pass the bills Collins supports.

    Collins has in turn started to leave herself room to oppose the final tax plan that House and Senate negotiators are working on, if her demands are not met.

    This path to failure has become clear: Jones wins in Alabama on Tuesday, the tax negotiations drag on long enough for him to be seated, and Collins flips to a “no” vote because her extracted concessions on health care fall through.

    Republicans are determined to make the tax plan happen, but failure is at least plausible. They don’t want to take any chances: One tax lobbyist told me Republican leaders are aiming to introduce a final bill by the end of this week and pass it in the Senate next Monday — before Jones is expected to be seated.

    So Congress is now in a race against the clock on the tax bill, trying to pass their biggest bill of the year before Doug Jones is sworn in and Susan Collins changes her mind.

    A Doug Jones win might be the first step to a GOP tax implosion

    This worst-case scenario begins once Jones takes office. Republicans are then down to 51 senators. Without Corker, who announced his retirement earlier this year and is against the tax plan because of its projected $1.5 trillion increase to the federal deficit, they would have just 50 votes for the tax bill. They can’t lose anyone else.

    Republicans have already been trying to eliminate the Jones factor by passing their tax plan before he could even get to the Senate. Jones won’t be sworn in right away — he has to wait until state officials certify the results and that could take weeks. According to lobbyists, Republicans are trying to introduce and pass their final tax legislation through the conference committee process in the Senate as soon as this coming Monday.

    But Republicans haven’t done a great job of meeting their ambitious legislative deadlines so far. They have some big problems to fix in the final bill, and every change shifts around tens of billions or hundreds of billions of dollars. It could get messy.

    If the House-Senate negotiations go south and Republicans can’t pass a bill before Jones is sworn in, they would have no more margin for error. Corker is a lost cause. Jones looks unlikely to vote for the GOP tax bill, even as a comparatively conservative Democrat, citing concerns that it would direct most of its benefits to wealthy Americans at the expense of the lower and middle classes.

    “What I have said all along is that I am troubled by tax breaks for the wealthy, which seem to be, in this bill, overloaded,” Jones told reporters last month. “I’m troubled by what appears to be, ultimately, tax increases or no tax cuts for the middle class.”

    All eyes would then turn to Collins.

    Susan Collins is the softest “yes” vote, and she could change her mind

    Collins, who had already defied her party on Obamacare repeal earlier this year, got almost everything she wanted in exchange for her vote on the Senate tax bill. Republican leaders met her demands on the state and local tax deductions and the tax deduction for medical expenses.

    But the biggest promises were about Obamacare. The Senate bill would repeal the Affordable Care Act’s individual mandate, the requirement that every American have insurance or pay penalty. The Congressional Budget Office projects that would lead to 13 million fewer Americans having health insurance and premiums increasing.

    Collins is worried about those consequences and wants to mitigate them. She has demanded that as the tax bill passes, Congress also pass two bills that are designed to help stabilize the Obamacare markets without the mandate. Experts are dubious about whether the proposals are actually enough to offset the loss of the mandate, but that is the price Collins placed on her vote.

    She said she got that commitment from Senate Majority Leader Mitch McConnell and from Trump, and so she voted for the Senate tax bill. But comments from Republican leaders and the White House in recent days cast doubt on whether Congress would actually follow through.

    First, Ryan’s office reportedly told his colleagues that they were not a party to the deal McConnell and Trump reached with Collins. Then a White House spokesperson appeared to back away slightly from the deal last week.

    “The President supports the repeal of the individual mandate,” Hogan Gidley, a deputy White House press secretary, told Bloomberg. “We have also had productive discussions with Congress about how to temporarily provide stability in the marketplace. However, we’re not going to get ahead of any negotiations until a bill is presented to us.”

    So it seems unlikely Collins’s hopes for Obamacare stabilization would be met before the tax bill comes up again — and maybe not ever. Collins would certainly have the pretext to flip her vote, already devastatingly unpopular, and progressive activists are still targeting her despite her support for the original Senate bill.

    Collins has left herself an opening to oppose the final tax package.

    “I always wait until the final version of the bill is brought before us before I make a final decision on whether or not to support it,” she said on CBS’s Face the Nation this weekend. “There are major differences between the House and Senate bills. And I don’t know where the bill is going to come out.”

    The tax bill has so far relied on speed and the GOP’s desperate desire for a “win.” That could still carry the plan through. If Republican leaders have their way, they won’t wait around for Jones to become a senator or for Collins to have a change of heart. They’re trying to send a tax overhaul to Trump’s desk in less than a week’s time. Just in case.

    ———-

    “Doug Jones’s stunning victory could be the beginning of the end of tax reform” by Dylan Scott; Vox; 12/12/2017

    “Senate Republicans are passing their tax bill through the budget reconciliation process, which requires only 50 votes to advance instead of the usual 60. So Republicans can afford two defections from their 52 members. If Jones were to be sworn in before the tax bill is passed, suddenly Republicans would have only one vote to spare. With Sen. Bob Corker (R-TN) seeming implacable — he was the only Republican to oppose the Senate bill the first time — they could not survive any more desertions.”

    A one vote margin. That’s all the GOP will have with its tax bill for the final vote in the Senate if Doug Jones gets seated before they make the final. Because otherwise it’s all down to Susan Collins, and she’s looking rather shaky since her major demands aren’t being remotely met:


    But one GOP vote has been looking increasingly tenuous: Susan Collins of Maine, the most moderate Republican in the Senate. She gave her support to the tax bill, which would repeal Obamacare’s individual mandate, in part on the promise that Congress would also pass bills designed to stabilize the health care law.

    In the past few days, House Speaker Paul Ryan has thrown cold water on those bills and the White House started to back away from its commitment. House Republicans have warned that there aren’t the votes in the lower chamber to pass the bills Collins supports.

    Collins has in turn started to leave herself room to oppose the final tax plan that House and Senate negotiators are working on, if her demands are not met.

    This path to failure has become clear: Jones wins in Alabama on Tuesday, the tax negotiations drag on long enough for him to be seated, and Collins flips to a “no” vote because her extracted concessions on health care fall through.

    Republicans are determined to make the tax plan happen, but failure is at least plausible. They don’t want to take any chances: One tax lobbyist told me Republican leaders are aiming to introduce a final bill by the end of this week and pass it in the Senate next Monday — before Jones is expected to be seated.

    So Congress is now in a race against the clock on the tax bill, trying to pass their biggest bill of the year before Doug Jones is sworn in and Susan Collins changes her mind.

    “So Congress is now in a race against the clock on the tax bill, trying to pass their biggest bill of the year before Doug Jones is sworn in and Susan Collins changes her mind.”

    It’s pretty remarkable. The GOP mega-donor class’s giant dream tax cut is at risk thanks to a GOP loss in Alabama. Baby Jeebus works in mysterious ways.

    But the GOP also works in mysterious ways since it’s always conniving for more tax cuts for the rich through any means necessary. And that’s why we can’t rule out a stalled concession from the Moore campaign that’s specifically designed to buy the GOP enough time to pass its reprehensible tax bill. It just seems like a very GOP-ish thing to do.

    And don’t forget, if Roy Moore concedes tomorrow, that just means the GOP is going to be even more pressed to hastily pass its historically awful tax bill before Jones is seated.

    That’s all why there’s a distinct negative excitement attached to the positive excitement of Doug Jones’s historic victory in Alabama: the GOP’s precious tax bill scam is even more at risk after Moore’s defeat and that alone might drive the party even more insane. Because when it comes to the GOP and tax cuts and insanity, where there’s a will there’s a way.

    Posted by Pterrafractyl | December 13, 2017, 12:18 am
  11. As the GOP continues to scramble to come up with a version of the GOP’s tax bill that can pass both the House and Senate, House Speaker Paul Ryan decided to troll the American public regarding his long-held dream of slashing entitlements like Social Security and Medicare that’s he’s already declared is a legislative goal of his in 2018: Paul Ryan laid out a 3 point GOP plan to get the US economy “humming to reach its potential”. The first two points are just the standard GOP agenda items of mass deregulation and tax cuts for the rich and corporations. It’s Ryan’s third point that’s extra-trollish: Americans need to have more babies in order to save programs like Social Security. Yep, in the middle of a GOP drive to slash immigration, do nothing about college expenses, and gut almost all government programs designed to help working parents afford the cost of raising kids, the GOP’s third big agenda item is to pretend that it’s encouraging Americans to have more kids:

    Talking Points Memo
    Livewire

    Paul Ryan to American Public: Do Your Patriotic Duty, Have More Kids

    By Matt Shuham
    Published December 14, 2017 1:12 pm

    House Speaker Paul Ryan (R-WI) thinks America has a people problem.

    “I’m riffing here,” the speaker admitted, before listing three bullet points of “things we’re trying to do right now to get this economy humming to reach its potential”: Fixing the “regulatory problem,” passing Republicans’ bill to slash taxes for corporations and the wealthy, and people.

    “People,” Ryan said bluntly. “This is going to be the new economic challenge for America. People. Baby boomers are retiring. I did my part, but, you know, we need to have higher birth rates in this country, meaning, baby boomers are retiring and we have fewer people following them in the work force.”

    By doing “his part,” Ryan seemed to be referring to his three children. Low birthrates negatively affect tax revenue: If there are fewer people paying taxes the government will take in less money, especially if Republicans succeed in massively lowering taxes for the country’s wealthiest individuals and corporations.

    According to disclosures they made during the 2012 presidential election, Paul and Janna Ryan paid an effective tax rate of 15.9 and 20 percent in 2010 and 2011, respectively.

    “We have something like a 90 percent increase in the retirement population in America, but only a 19 percent increase in the working population in America,” he continued. “So what do we have to do? Be smarter, more efficient, more technology? Still going to need more people. And when we have tens of millions of people right here in this country falling short of their potential, not working, not looking for a job, or not in school getting a skill to get a job, that’s a problem.

    It’s true that America’s birth rate has dipped over the past decade since the Great Recession, according to World Bank data. But, after a dramatic drop between 1960 and 1975 — reflected worldwide — it has stayed mostly fairly in the following decades.

    ———–

    “Paul Ryan to American Public: Do Your Patriotic Duty, Have More Kids” by Matt Shuham; Talking Points Memo; 12/14/2017

    ““People,” Ryan said bluntly. “This is going to be the new economic challenge for America. People. Baby boomers are retiring. I did my part, but, you know, we need to have higher birth rates in this country, meaning, baby boomers are retiring and we have fewer people following them in the work force.””

    And notice how Ryan isn’t just lamenting a lack of American babies (presumably American white babies given the GOP’s existential angst over non-caucasians). He’s also pointing to the “tens of millions of people right here in this country falling short of their potential, not working, not looking for a job, or not in school getting a skill to get a job”:


    “We have something like a 90 percent increase in the retirement population in America, but only a 19 percent increase in the working population in America,” he continued. “So what do we have to do? Be smarter, more efficient, more technology? Still going to need more people. And when we have tens of millions of people right here in this country falling short of their potential, not working, not looking for a job, or not in school getting a skill to get a job, that’s a problem.

    And keep in mind that the GOP’s long-standing goal – a goal Paul Ryan already pledged to make happen in 2018is to set up work-requirements for almost all government programs, state and federal, at the same time those programs are slashed. Also keep in mind that those “tens of millions people” includes the disabled, students, and other people who have very good reasons for not finding a job, like taking care of disabled family members.

    We already knew that the GOP’s agenda for “getting the economy humming” was to push those tens of millions of people who don’t have a job for whatever reason (including many very valid reasons) into the labor force for whatever minimum wage job they can find. But now it appears that the GOP is going to try to sell that work-requirement agenda as one that addressing a perceived baby-shortage.

    So with in mind, here’s a fun look at the demands Paul Ryan was making back in 2015 when the GOP was asking him to because the new House Speaker: Ryan demanded more time to spend with his wife and children. Which would be an admirable demand if it wasn’t for the fact that he was proposing cuts to child care subsidies:

    Think Progress

    Paul Ryan Wants To Preserve His Work/Family Balance While Making It Harder For Poor Parents

    Bryce Covert
    Oct 21, 2015, 2:10 pm

    After Republicans in the House have spent weeks scrambling to find a new speaker to unite behind, Rep. Paul Ryan (R-WI) is finally saying he might run, but under a number of conditions. One of those conditions is that the time he currently spends with his wife and children be preserved even if he assumes a more demanding job. “I cannot and will not give up my family time,” he said.

    Ryan has three young children who live in his hometown of Janesville, Wisconsin with his wife Janna Ryan, and he travels back every weekend to spend time with them. By continuing this tradition, he may have to forego some speaker duties, like traveling the country to raise money for the party. His demands may do a credit to parents across the country by making visible the challenge of juggling jobs and children.

    But while Ryan seeks to preserve his own balance between his work and his family, he’s pushed policies that would make doing so more difficult for others, particularly poor parents.

    Ryan has put forth a number of budgets and policy proposals that call for deep spending cuts. Some of those cuts take aim at an important tool for poor parents: child care subsidies. The sky-high cost of child care in the U.S. can dwarf a parent’s income, particularly a low-income parent. Child care subsidies help defray that cost, allowing a parent to find a place to leave their children while going to work and knowing that they don’t have to rely on family members or unsafe, unstable arrangements. Without them, however, poor parents can face a tough choice between continuing to work and simply staying home because the cost is too high.

    At the same time, however, he’s often said that more poor people need to be in the workforce and combat what he sees as a “culture problem” where they don’t value work. He has often cited the welfare reform enacted in the 1990s as a model of success. But by imposing incredibly strict work requirements in the name of forcing more poor people to work, the changes ensured that people who rely on cash benefits, mostly poor, single mothers, have had to hunt down any kind of job to stay enrolled. That can quickly eat into their work/family balance and take them away from time they may have spent raising their children. Today, any poor mother who needs welfare but also wishes to spend time at home raising her children will find it tough to do so.

    Ryan is fortunate to have a job where he has the power to demand time to go home and be with his children. But for the rest of the country, no one is guaranteed paid time off for illness, holidays, vacation, or the arrival of a new child. Even the weekend he uses to be with his family is not uniformly protected by law. Without paid family leave, many mothers end up back at work just weeks after giving birth. Without paid sick leave, parents can’t take time away from their jobs to care for their children if they get sick.

    Ryan’s statements are noteworthy for making explicit the conflict that can arise between work and family and for a father taking a stand to keep his job from cutting into the time he spends parenting. That burden still usually falls on women. More than 40 percent of mothers have cut back on work to care for family and 39 percent have taken a significant amount of time off; just 28 and 24 percent of fathers, respectively, have done the same.

    ———-

    “Paul Ryan Wants To Preserve His Work/Family Balance While Making It Harder For Poor Parents” by Bryce Covert; Think Progress; 10/21/2015

    Ryan has put forth a number of budgets and policy proposals that call for deep spending cuts. Some of those cuts take aim at an important tool for poor parents: child care subsidies. The sky-high cost of child care in the U.S. can dwarf a parent’s income, particularly a low-income parent. Child care subsidies help defray that cost, allowing a parent to find a place to leave their children while going to work and knowing that they don’t have to rely on family members or unsafe, unstable arrangements. Without them, however, poor parents can face a tough choice between continuing to work and simply staying home because the cost is too high.”

    Yep, at the same time Paul Ryan was demanding more time to spend with his family, he was calling for cuts in child care subsidies for poor parents, a move that would force those parents to choose between working or staying home to raise their kids. And this is at the same time he’s calling for work-requirements for poor people to actually access those poverty assistance programs he wants to cut:


    At the same time, however, he’s often said that more poor people need to be in the workforce and combat what he sees as a “culture problem” where they don’t value work. He has often cited the welfare reform enacted in the 1990s as a model of success. But by imposing incredibly strict work requirements in the name of forcing more poor people to work, the changes ensured that people who rely on cash benefits, mostly poor, single mothers, have had to hunt down any kind of job to stay enrolled. That can quickly eat into their work/family balance and take them away from time they may have spent raising their children. Today, any poor mother who needs welfare but also wishes to spend time at home raising her children will find it tough to do so.

    And don’t forget that child care subsidies is merely one of the programs for poor parents Ryan would like to cut. There’s also the Medicaid cuts, the school lunch program cuts, and his general plans for block-granting and transferring to states virtually all federal poverty programs so they can be cut at the state-level.

    It’s all party what made Paul Ryan’s “America needs more babies” rant such epic trolling. Because if there’s one massive reason not to have kids in America today, it’s people like Paul Ryan with immense power doing everything they can to turn the US into dystopian nightmare a mass poverty and despair.

    At the same time, one of the biggest callings in America today is raising a generation of kids that don’t suffer from the sickness infecting Paul Ryan’s heart and soul.

    So, in a way, Paul Ryan was correct. Americans do need to have more children. Specifically, more children who are raised in such a manner that they’re very unlikely to end up like Paul Ryan. More kids who recognize the peril of Paul Ryan’s worldview would probably be really helpful for the future of the US. And if these kids are raised with a desire to create a nation that sensibly and compassionately shares the wealth and a sensible understanding of economics, future challenges like a large aging population would be relatively easy to deal with without having to resort to baby-boom stimuluses. Let’s not forget that automation will go a long ways towards addressing future workforce shortages. We don’t actually need a big baby boom to deal with a large chunk of retirees. It just seems like we need that to people like Ryan who can’t imagine anything other than a Dickensian template for society.

    So let the baby-making commence, followed up with the kind of child rearing that produces a generation of adults capable of recognizing the peril someone like Paul Ryan represents to the future. Try not to go overboard with the baby-making.

    Posted by Pterrafractyl | December 14, 2017, 4:58 pm
  12. It grows closer. *shudder* The GOP’s highly unpopular tax scam bill is out of the conference committee and set to go back to the House and Senate for the final vote and it’s heading for a final vote before Christmas. So of course this massive reverse-Robin Hood Grinch attack by the GOP on behalf of its billionaire mega-donors is being branded as some sort of giant Christmas present to the American public.

    Ominously, the Joint Tax Committee already gave the conference committee version of the bill an official projected 10 year cost of ~$1.5 trillion, allowing it to pass the Senate with just a simply majority vote. More ominously, it appears the GOP has completely unified around the final version, with Tennessee GOP Senator Bob Corker – the sole ‘no’ vote in the initial Senate vote on the bill over its projected $1.5 trillion cost over the first decade and could easily be much, much more expensive – flipping to a ‘Yes’ despite none of his debt concerns being addressed. And the same is true for all of the rest of the Senate GOPers who previously expressed concerns about the bill despite none of their concerns being addressed in the final version. In other words, the GOP isn’t going to allow those few remaining shreds of integrity it possessed from stopping it from passing this tax bill.

    And while Bob Corker’s sudden flip might seem somewhat baffling given how unpopular the bill is with the public as a whole – with American voters opposing the bill by a 2-1 margin according to a recent poll – it’s worth noting that there are still a number of factors that may have led to Corker’s flip-flop: The first being that Corker is a possible replacement for Rex Tillerson as Trump’s Secretary of State. The Democrats in the Senate have already indicated they would support him in that role and Corker clearly wants to the job. And he must really want that job because Trump is like a political Monkey’s Paw: if you achieve your political dream via him you will regret it. So it’s very possible that Corker, really, really, really wants that Secretary of State job and, as such, has already come to terms with a future of political shamelessness working under Trump, in which case he might as well just vote for the bill.

    Another obvious reason why Corker might have felt compelled to flip and vote for the bill despite having none if his concerns addressed is that it’s not clear the GOP voter based shares those concerns. Because while this bill may not be popular with the public at large, it is popular with Republican voters. It’s an example of what a political conundrum this tax bill represents for the GOP officials: GOP voters support it, but that’s largely it and most other voters hate it. It’s a polarizing issue that GOPers will feel compelled to vote for despite more of the electorate hating it.

    Of course, that’s how most of the GOP’s pro-super-rich agenda works politically and the GOP is in complete control of the government. Winning elections with an agenda most people hate is a GOP specialty. But that’s also what makes this tax bill extra-risky for the GOP: if the GOP ever crosses a line and becomes so blatantly corrupt that even its expert use of political dark arts – weaponized disinformation and propaganda, voter suppression/rigging, Roger Stone/James O’Keefe-style dirty tricks, and now political document hacks – can’t prevent GOP voters from realizing they’re getting totally scammed by professional con artists, the whole GOP facade risks crumbling down. Not crossing that line of overly blatant looting and corruption is a constant risk for the GOP and its allied right-wing disinfortainment media complex because the ‘Big Lie’ strategy of mass deception and confusion is the movement’s primary strategy at this point.

    So while there is a certain political logic behind the GOP’s near-unified support for this bill – namely that the GOP based overwhelmingly supports it thanks to that Big Lie disinfotainment-complex – it’s logic that can’t logically be followed too aggressively without running the risk of overwhelming the power of that Big Lie disinfotainment complex by being too blatantly corrupt. In other words, Bob Corker’s political conundrum over this tax bill is really just the microcosm of the GOP macrocosm of constantly having to walk that line of placating the demands created by the GOP Big Lie disinfotainment complex without looking too irresponsible. And it’s not an easy line to walk because it keeps moving. The right-wing Big Lie disinfotainment complex is constantly pushing that line more towards requiring blatantly corrupt or irresponsible behavior while the larger public backlash to that increasingly blatant corruption pushes the line back towards not acting too blatantly corrupt. It’s a difficult tightrope act even by tightrope act standards.

    And that tension brings us to the third reason Bob Corker may have been tempted to vote ‘Yes’: a provision was added to the bill at the last minute that will directly benefit Corker’s personal investments. While with this reason probably isn’t the primary reason he flipped to ‘Yes’ – being Secretary of State and not angering the GOP base in order to get that job seems like the most likely reasons – the last minute provision that will directly benefit Corker’s investments probably don’t hurt in terms of sweetening the deal. At least, it probably wouldn’t hurt as a deal sweetener if Corker didn’t have to be worried about voting for a tax bill that crosses the line of being too blatantly corrupt and irresponsible. But he clearly does have to be worried about crossing that line with this tax bill, as does the rest of the GOP because this same provision that will help Corker’s personal business interests also appear to be tailor made to benefit President Trump’s and Jared Kushner’s real estate empires. Yep, the GOP added a provision to the final version of the bill at the last minute that specifics benefits companies with a few number of employees and large investments in real estate.

    Now, it’s true, the GOP does have a long track-record of successfully employing the “time-consistency” strategy – the tactic of passing irresponsible tax cuts targeting the rich and avoiding blame for the negative consequences and lack of “trickle-down” benefits that play out years later. But that long track-record is what makes this overly blatantly tax scam such a big risk. Passing a tax bill with temporarily tiny benefits for the middle-class and permanent massive cuts for the wealth and corporations is bad enough, but adding a last minute provision specifically benefiting real estate moguls when the president and his son-in-law are both real estate moguls is just rubbing everyone’s face in it and people are a lot more likely to remember something negative when they’ve had their faces rubbed in it which is exactly what could undermine the “time-consistency” strategy.

    But despite that risk, the Christmas present the GOP is preparing to give to American household really is coal for almost everyone to pay for the giant Christmas gift for Trump and Jared Kushner and their billionaire brethren, which seems like crossing the line in a memorable manner:

    International Business Times

    Donald Trump And GOP Leaders Could Be Enriched By Last Minute Tax Break Inserted Into Final Bill

    By David Sirota AND Josh Keefe
    On 12/15/17 AT 9:33 PM

    Republican congressional leaders and real estate moguls could be personally enriched by a real-estate-related provision GOP lawmakers slipped into the final tax bill released Friday evening, according to experts interviewed by International Business Times. The legislative language was not part of previous versions of the bill and was added despite ongoing conflict-of-interest questions about the intertwining real estate interests and governmental responsibilities of President Donald Trump — the bill’s chief proponent.

    The Trump organization and the Kushners (the family of Ivanka’s husband, Jared) have overseen vast real estate empires, and top GOP lawmakers writing the tax bill collectively have tens of millions of dollars of ownership stakes in real-estate-related LLCs. The new tax provision would specifically allow owners of large real estate holdings through LLCs to deduct a percentage of their “pass through” income from their taxes, according to experts. Although Trump, who became famous for his real estate holdings, has transitioned into branding in recent years, federal records show Trump has ownership stakes in myriad LLCs.

    The new provision was not in the bill passed by the House or the Senate. Instead, it was inserted into the final bill during reconciliation negotiations between Republicans from both chambers. The provision, said experts, would offer a special tax cut to LLCs with few employees and large amounts of depreciable property assets, namely buildings: rent generating apartment and office buildings.

    “This helps people who have held property for awhile, like Donald Trump,” David Kamin, an New York University law professor who served as a special assistant to the president for economic policy in the Obama administration, told IBT. “If you’ve got an LLC that’s a trade or business with a bunch of real estate holdings and few employees, [I] think you’re now golden. You get the deduction.”

    Similarly, Urban-Brookings Tax Policy Center senior fellow Steve Rosenthal told IBT the provision would specifically benefit real estate investors.

    “It would benefit real estate businesses especially, which typically operate as pass-through businesses, most often LLCs,” said Rosenthal, a former tax attorney at Ropes & Gray. “An LLC’s building, and other depreciable property, would be ‘qualified property’ for purposes of the new test, as long as the LLC had not fully depreciated the property. That would be unlikely, as commercial real property is currently depreciated over 39 years.”

    IBT previously reported that 13 GOP lawmakers directly sculpting the bill —including U.S. House Speaker Paul Ryan — have between $36 million and $163 million worth of ownership stakes in real estate-related LLCs. Those entities generated between $2.6 million and $16 million in “pass through” income and could benefit from the new provision.

    Sen. Bob Corker, who was considered a potential “no” vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.

    “Pass throughs” are business entities that don’t pay corporate income taxes, like partnerships, LLCs and S-Corporations. Instead, they “pass through” income to partners, who then pay personal income taxes on the money they receive. The Senate version of the tax bill would have added a 23 percent deduction for income from pass-throughs to the tax code. The new reconciled tax bill shrinks that deduction to 20 percent but, in a last minute change, added a new way around restrictions that would have kept pass-throughs with large income but few employees from benefiting.

    The new bill still has the same income provision but adds a loophole: depreciable property. So instead of being being able to get a large tax cut only if you pay a lot of wages, now you can get the tax cut if you own a lot of property.

    “If they were saying before Trump wouldn’t get this because his pass-through firms don’t have employees, that’s clearly no longer the case,” Kamin said.

    ———-

    “Donald Trump And GOP Leaders Could Be Enriched By Last Minute Tax Break Inserted Into Final Bill” by David Sirota AND Josh Keefe; International Business Times; 12/15/17

    “The new bill still has the same income provision but adds a loophole: depreciable property. So instead of being being able to get a large tax cut only if you pay a lot of wages, now you can get the tax cut if you own a lot of property.”

    A giant last minute gift to wealthy real estate entities that don’t employ very many people. And Senator Corker was the only GOP lawmaker who will benefit:


    IBT previously reported that 13 GOP lawmakers directly sculpting the bill —including U.S. House Speaker Paul Ryan — have between $36 million and $163 million worth of ownership stakes in real estate-related LLCs. Those entities generated between $2.6 million and $16 million in “pass through” income and could benefit from the new provision.

    Sen. Bob Corker, who was considered a potential “no” vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.

    And, of course, there’s two of the prime beneficiaries: the president and his son-in-law:


    The Trump organization and the Kushners (the family of Ivanka’s husband, Jared) have overseen vast real estate empires, and top GOP lawmakers writing the tax bill collectively have tens of millions of dollars of ownership stakes in real-estate-related LLCs. The new tax provision would specifically allow owners of large real estate holdings through LLCs to deduct a percentage of their “pass through” income from their taxes, according to experts. Although Trump, who became famous for his real estate holdings, has transitioned into branding in recent years, federal records show Trump has ownership stakes in myriad LLCs

    So does a last minute provision that specifically helps wealthy entities with few employees – and significantly helps Trump and Kushner – cross a line with a American electorate? We’ll find out.

    But let’s also not forget that this last minute real estate mogul provision is just the one piece of coal the GOP’s Christmas gift to America. There’s lots of coal in this bill and much if it is the kind of memorable coal that could leave a bad memories about this Christmas gift lingering in the minds of American voters for years to come. For instance, check out the giant piece of coal the GOP is giving to Americans in jobs at risk of offshoring…

    The Washington Post

    Trump promised ‘America First’ would keep jobs here. But the tax plan might push them overseas.

    By David J. Lynch
    December 15, 2017

    On the Friday before Thanksgiving, Kenny Johnson left the Nelson Global Products plant in Clinton, Tenn., for the last time. Having devoted nearly 13 years to making tractor-trailer exhaust pipes, Johnson, 41, spent some of his final weeks at the plant watching Mexican workers train to take his job.

    “They brought three or four groups at different times,” he said. “To learn the jobs that are going to Mexico.”

    This was the kind of economic dislocation that President Trump vowed to prevent with his “America First” policies. Over the past year, he threatened to impose a new tax on companies eyeing offshore locales and repeatedly proclaimed the imminent return of millions of lost American jobs from overseas.

    But presidential jawboning has been no match for the market. To cut costs in a competitive global environment, Nelson Global executives in May announced the closure of the Clinton facility and a sister plant in Minnesota.

    Clinton’s 149 jobs and equipment were distributed among company facilities in North Carolina and Monterrey, Mexico, workers said, even as the president trumpeted his agenda of economic nationalism in Washington.

    “He hollered that he was going to put a stop to that,” Johnson said. “And he obviously did not.”

    Trump, in fact, might actually make things worse.

    What happened to the workers in Clinton, tax experts say, will probably happen to more Americans if the Republican tax overhaul becomes law. The legislation fails to eliminate long-standing incentives for companies to move overseas and, in some cases, may even increase them, they say.

    “This bill is potentially more dangerous than our current system,” said Stephen Shay, a senior lecturer at Harvard Law School and former Treasury Department international tax expert in the Obama administration. “It creates a real incentive to shift real activity offshore.”

    This year, companies such as Wells Fargo, Microsemi and Caterpillar have announced plans to shift work overseas from U.S. sites, according to a Labor Department office that determines worker eligibility for retraining aid. Along with relocating assembly lines, other companies, such as Apple and Microsoft, have avoided U.S. taxes by formally assigning the intellectual properties behind innovative products — and the profit that comes from them — to foreign jurisdictions.

    The United States loses about $100 billion annually in forgone tax payments to corporate profit shifting, said Kimberly Clausing, an economics professor at Reed College who specializes in the taxation of multinational firms.

    The final version of the tax bill would reduce the U.S. corporate tax rate from 35 percent, one of the world’s highest, to 21 percent. That change, a response to long-standing pleas from the business community, is designed to encourage more investment in the United States, which in turn would create more jobs and lift wages.

    Yet as Congress nears a final vote on the almost-500-page legislation, some workers have soured on the plan.

    “Knowing President Trump, it’ll probably benefit companies and the higher-up people more than everyday workers like us,” said Johnson, who earned $16 an hour as a materials handler.

    Under current law, the 35 percent corporate tax is due on profit earned overseas only when it is returned stateside. The legislation, however, would permit the estimated $2.6 trillion that corporations have stockpiled outside the country to return to the United States subject to a rate expected to be around 15 percent.
    In the future, corporations would be required to pay about a 10 percent minimum tax on overseas income above a certain level. The provision is billed as a way to discourage the movement of jobs and profit overseas. But the fine print of the new global minimum tax would make the problem worse, several tax specialists said.

    “The overall effects of this are going to be unambiguously bad for the workers that it’s ostensibly designed to help,” Clausing said.

    There are three reasons, according to nonpartisan tax experts. First, a corporation would pay that global minimum tax only on profit above a “routine” rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn. The legislation thus offers corporations “a perverse incentive” to shift assembly lines abroad, said Steve Rosenthal of the Tax Policy Center.

    Second, the bill sets the “routine” return at 10 percent — far more generous than would typically be the case. Such allowances are normally fixed a couple of percentage points above risk-free Treasury yields, which are currently around 2.4 percent.

    As a result, a U.S. corporation that builds a $100 million plant in another country and makes a foreign profit of $20 million would pay roughly $1 million in tax versus $4 million on the same profit if earned in the United States, said Rosenthal, who has been a tax lawyer for 25 years and drafted tax legislation as a staffer for the Joint Committee on Taxation.

    Finally, the minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profit from U.S. locations to tax havens such as the Cayman Islands.

    It’s unclear how taxes affected Nelson Global’s restructuring decision. Company officials did not respond to telephone and email requests for comment. As a rule, factors such as relative wage rates, proximity to customers and availability of workers shape corporate location decisions.

    To really slam the door on offshoring, the minimum tax should be calculated on a country-by-country basis, and the rate should be set closer to the 21 percent U.S. rate, Rebecca Kysar, a professor at Brooklyn Law School who specializes in international tax law, and other analysts say.

    Companies also are likely to continue to locate valuable intellectual property overseas to pay a lower rate than what they would face in the United States, likely to be around 20 percent, analysts said.

    “The plan does not meaningfully reduce the incentives for companies to move their operations and shift their income overseas,” Kysar said. “You could say it will make things worse.”

    Apple is perhaps the most prominent among many corporations that have legally avoided billions of dollars in U.S. taxes through paper maneuvers that assign lucrative intellectual properties behind products such as software to low-tax foreign jurisdictions.

    By establishing foreign subsidiaries that legally had no tax residence — and in at least one case had no physical presence and no employees — the company escaped massive tax bills, according to a 2013 Senate investigation.

    Such gamesmanship leads to financial results that defy common sense. In 2008, the most recent year available, U.S. companies’ foreign units booked nearly $77 billion in profit in Ireland, one of Europe’s smallest countries, and just $22 billion in Germany, the most populated, according to the Bureau of Economic Analysis.

    The tax code’s role in encouraging U.S. companies to move jobs or profit to other countries has been a perennial source of political debate, especially among liberals. In 2004, Sen. John F. Kerry (D-Mass.) decried “Benedict Arnold” corporations for shirking their tax bills by slipping abroad.

    Eight years later, Barack Obama called Mitt Romney the “outsourcer in chief” for presiding over job movements as a private-equity executive at Bain Capital.

    In 2008, the $938 billion in profit reported by foreign subsidiaries of U.S. companies was more than triple the 2000 figure, while the number of workers employed by those units increased over the same period by just 21 percent.

    Still, it’s difficult to get a precise estimate of the number of jobs that have moved offshore since globalization kicked into high gear with China’s entry into the World Trade Organization in 2001. The Economic Policy Institute, a labor-union-backed think tank, says 3.2 million jobs were lost or displaced because of Chinese competition; Michael Hicks, an economics professor at Ball State University, says trade has cost the U.S. 750,000 workers.

    Over the past seven years, almost 1 million new factory jobs have been created in the United States. But total manufacturing employment remains at 12.5 million, almost exactly what it was in 1941, shortly after Nelson Global Products first opened its doors.

    In May, Steve Scgalski, the company’s chief executive, announced the plant closures in Tennessee and Minnesota, billing them as essential “to ensure cost effectiveness and the continued growth of the company.”

    Workers in Clinton like Robert Powell, 56, a forklift operator, struggled to understand the rationale. The plant was “doing pretty good,” he said. “Keeping up with orders, best safety record around.”

    In October, a Labor Department official in Washington ruled that the Nelson Global workers were eligible for retraining and health insurance through a federal program designed to help workers hurt by trade.

    With just a high school degree, Powell worries that his age and relative lack of education will hurt his prospects. But he hopes to use the retraining aid to earn a truck driver’s license.

    Powell clocked out from his $11.50-an-hour job for the last time Dec. 1, just a few hours before the Senate approved a $1.5 trillion tax cut on a nearly straight-party-line vote. The Republican measure is heavily tilted toward corporations and the well-to-do, analysts say, despite the president’s initial promise of delivering relief for the middle class.

    Powell lives in Morgan County, where Trump last year trounced Hillary Clinton 5,441 to 1,054. “He’s really wanting to do good stuff for us,” he said of the president. “He’s pretty popular around this area.”

    Asked whether he expects to benefit from the tax cut, Powell paused. “It’s hard to say,” he finally said. “I was hoping I would.”

    ———-

    “Trump promised ‘America First’ would keep jobs here. But the tax plan might push them overseas.” by David J. Lynch; The Washington Post; 12/15/2017

    “What happened to the workers in Clinton, tax experts say, will probably happen to more Americans if the Republican tax overhaul becomes law. The legislation fails to eliminate long-standing incentives for companies to move overseas and, in some cases, may even increase them, they say

    That’s a lot of coal. And it’s offshoring coal coming from Trump, which case it an extra-memorable coal gift for Christmas.

    And while it remains to be seen just how much offshoring this bill encourages, it’s undeniable that it encourages offshoring:


    “This bill is potentially more dangerous than our current system,” said Stephen Shay, a senior lecturer at Harvard Law School and former Treasury Department international tax expert in the Obama administration. “It creates a real incentive to shift real activity offshore.”

    Under current law, the 35 percent corporate tax is due on profit earned overseas only when it is returned stateside. The legislation, however, would permit the estimated $2.6 trillion that corporations have stockpiled outside the country to return to the United States subject to a rate expected to be around 15 percent.
    In the future, corporations would be required to pay about a 10 percent minimum tax on overseas income above a certain level. The provision is billed as a way to discourage the movement of jobs and profit overseas. But the fine print of the new global minimum tax would make the problem worse, several tax specialists said.

    “The overall effects of this are going to be unambiguously bad for the workers that it’s ostensibly designed to help,” Clausing said.

    There are three reasons, according to nonpartisan tax experts. First, a corporation would pay that global minimum tax only on profit above a “routine” rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn. The legislation thus offers corporations “a perverse incentive” to shift assembly lines abroad, said Steve Rosenthal of the Tax Policy Center.

    Second, the bill sets the “routine” return at 10 percent — far more generous than would typically be the case. Such allowances are normally fixed a couple of percentage points above risk-free Treasury yields, which are currently around 2.4 percent.

    As a result, a U.S. corporation that builds a $100 million plant in another country and makes a foreign profit of $20 million would pay roughly $1 million in tax versus $4 million on the same profit if earned in the United States, said Rosenthal, who has been a tax lawyer for 25 years and drafted tax legislation as a staffer for the Joint Committee on Taxation.

    Finally, the minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profit from U.S. locations to tax havens such as the Cayman Islands.

    “In the future, corporations would be required to pay about a 10 percent minimum tax on overseas income above a certain level. The provision is billed as a way to discourage the movement of jobs and profit overseas. But the fine print of the new global minimum tax would make the problem worse, several tax specialists said.”

    That’s right, the provision the GOP sold as way to prevent offshoring actually encourages it by using a single minimum corporate tax rate on overseas income that still makes it quite profitable to offshore US jobs in tax havens. And it doesn’t just encourage the offshoring of intellectual property to places like Ireland. It also encourages the offshoring of manufacturing plants. It That’s quite a lump of coal right there.

    As one tax expert, the only real way to use a minimum corporate tax rate on overseas profits to disincentivize offshoring is to have separate minimum corporate tax rates for each nation, with tax shelters getting extra high minimum rates to make them comparable to the US rats:


    To really slam the door on offshoring, the minimum tax should be calculated on a country-by-country basis, and the rate should be set closer to the 21 percent U.S. rate, Rebecca Kysar, a professor at Brooklyn Law School who specializes in international tax law, and other analysts say.

    It’s worth noting that this has some parallels to the vision laid out in the “America First” speech Trump gave in Asia last month when he proclaimed that, “I am always going to put America first the same way that I expect all of you in this room to put your countries first,” and called for the US to pursue bilateral trade-agreements instead of giant one-size-fits-all trade agreements. In other words, the GOP tax bill’s uniform treatment of corporate overseas profits is in direct contradiction to the principles of “America First” bilateral trade agreements Trump campaigned on, making it an extra large lump of coal for all those Trump voters who supported Trump primarily for his promises to bring back manufacturing jobs to the US.

    Will that cross a line for the Trump voters waiting to see their lost jobs return? Or will those voters remain captive to a right-wing Big Lie disinfotainment media complex and never learn about these parts of the GOP’s Christmas gift to America? Only time will tell, but if they do end up learning about this remember that Trump’s big tax bill ended up encouraging the offshoring of jobs that’s going to make it a lot harder for the GOP’s “time-inconsistency” strategy to work this time around.

    And it’s not like the first impression this tax bill gives to voters is necessarily going to be the final impression. It’s the gift that keeps on giving. Coal. For years. Which is what the “time-inconsistency” strategy is predicated on exploiting…all years required for something like a tax bill to finish giving all its gifts of coal to the rabble. Maybe the public will forget about the tax bill Christmas gift of 2017 when government programs are getting gutted over deficit concerns coming years? Or maybe not? It’s the core gamble the GOP is making as it finalizes the gift that keeps on giving coal for years to come.

    So with that in mind, check out one of the ‘gifts’ the GOP is going to be giving in coming years: a reduced incentive to donate to charities. Merry Christmas:

    The New York Times

    Charities’ Fear Under Tax Bill: Less Money to Help the Needy

    By ANN CARRNS
    DEC. 15, 2017

    Even before congressional Republicans finalized their tax bill, charities were worried.

    The final legislation roughly doubles the standard tax deduction, to $12,000 for individuals and $24,000 for couples. A higher standard deduction means fewer taxpayers will itemize their deductions on their tax returns, reducing the incentive to give to charities. Currently, only taxpayers who itemize — meaning, they detail gifts to charity and other spending on their returns — may deduct contributions.

    “The nonprofit sector is alarmed,” said Michael Thatcher, chief executive of Charity Navigator, a charity rating website. The change in the standard deduction is “the biggest cause of concern,” he said.

    Estimates of the impact from an increase in the standard deduction vary. According to the Tax Policy Center, more than 46 million filers would be expected to itemize in 2018 under current law, but that number would drop to under 20 million.

    “For charities who serve families in need, the projected declines in giving will devastate our ability to provide food assistance,” said Diana Aviv, chief executive of Feeding America, a network of food banks.

    For many charities, 2017 is shaping up to be a good one for fund-raising, as the economy hums along and the stock market booms. The United Way of Greater St. Louis, for instance, which serves Missouri and Illinois, expects top donors to contribute 6 percent more than what they gave in 2016, said Orvin Kimbrough, the group’s president and chief executive.

    But the future is cloudy under the new tax regime. The group estimates a potential drop in taxpayer giving to charities of $169 million annually in Missouri and $431 million in Illinois, under the new tax law. “That’s a lot of money,” Mr. Kimbrough said. “This is about people’s lives.”

    One short-term bright spot: Donors, uncertain about whether they can deduct a contribution next year, may be more generous this year, giving nonprofit groups a bump in 2017 fund-raising.

    Some fund-raisers are asking donors to consider doing just that.

    The Greater Milwaukee Foundation, which makes grants to support community and civic groups, sent an email to donors explicitly noting the effect of the tax overhaul. “If you are a taxpayer who itemizes,” the email said in part, “it probably makes sense to accelerate some charitable contributions into 2017 to get a larger income tax deduction this year.”

    Ellen Gilligan, the foundation’s chief executive, said the federal tax legislation moved so quickly that many donors were unaware of its provisions and how it might affect their taxes. Many have been appreciative of the notice, she said, and some have accelerated their contributions to the foundation’s donor-advised funds. (Donor-advised funds allow people to make contributions and take a tax deduction, while designating a choice of gift recipient at a later date.)

    Ms. Gilligan said the foundation has an endowment and doesn’t expect its grant programs to be significantly affected in 2018, but there is concern about the longer-term impact of the tax change. “Eliminating the tax incentive,” she said, “has the potential to have a very negative impact on charitable giving.”

    United Way Worldwide, ranked the largest charity in 2017 by donations by Forbes, is recommending that its community-based affiliates contact important contributors to highlight the changes that are coming, said Steve Taylor, the charity’s vice president of public policy. United Way Worldwide provides leadership and support to its network of groups across the country. “We’ve been urging them to reach out to big donors and talk to them about tax reform,” he said. Typically, the local United Way chief executive or head fund-raiser has a personal relationship with important donors, he said, and will talk by phone. (“My donors,” said Mr. Kimbrough of the United Way of Greater St. Louis, “have my cellphone.”)

    Some 26,000 to 28,000 major donors nationally give a total of about $500 million a year to United Way, in gifts of $10,000 or more, Mr. Taylor said. Some of those donors may be affected by the change in the standard deduction. Donors give for altruistic reasons as well as tax breaks, Mr. Taylor said, but the increase in the standard deduction is expected to have an impact.

    “They’ll still give,” Mr. Taylor said. “But they’re going to give less.”

    Major donors are often concerned about stability, Mr. Kimbrough said. So they may structure gifts to donate more this year and receive a larger deduction, but space out the funds for spending over several years to help smooth out any budget gaps.

    Elie Hassenfeld, co-founder and executive director of GiveWell, a nonprofit organization that recommends a handful of charities, said nonprofits are in a “zone of uncertainty.” But the group has frequent one-on-one conversations with its donors, he said, and is raising the issue of tax reform with them. The message? “You should be thinking about the possibility that your desire to deduct is going change from this year into the future,” he said.

    Eileen Heisman, chief executive of the National Philanthropic Trust, which oversees donor-advised funds, said the trust is seeing some larger gifts this season. “People would rather gift when they know what their tax benefit is going to be,” she said.

    “One thing is very consistent,” she said. “When there’s a threat, donors will front load, and we’re expecting that this year.”

    Some donors may be waiting to see the final bill approved by President Trump before making a decision about the size of their donations. So the usual burst of last-minute giving at the end of the year may be even more intense this year, said Pam Norley, president of Fidelity Charitable, a big donor-advised fund.

    But not all donors have the wherewithal to double their contributions on short notice, said Michael Kenyon, chief executive of the National Association of Charitable Gift Planners. “A lot of people don’t have the opportunity to give more now,” he said. That probably means, he said, that nonprofit groups are unlikely to recoup enough in donations this year to make up for what they will lose next year and beyond.

    “The honest answer is we don’t know how many people who donate to Direct Relief are motivated by deductibility,” said Thomas Tighe, chief executive of the group, which specializes in disaster relief. “It’s some cause for concern, but we don’t feel there’s anything we can do about it other than wait and see and hope people still see value in making a contribution.”

    ———-

    “Charities’ Fear Under Tax Bill: Less Money to Help the Needy” by ANN CARRNS; The New York Times; 12/15/2017

    “The final legislation roughly doubles the standard tax deduction, to $12,000 for individuals and $24,000 for couples. A higher standard deduction means fewer taxpayers will itemize their deductions on their tax returns, reducing the incentive to give to charities. Currently, only taxpayers who itemize — meaning, they detail gifts to charity and other spending on their returns — may deduct contributions.”

    That’s right, thanks to the doubling of the standard deduction from $12,000 to $24,000, the number of tax filers expected to itemize their tax returns is expected to fall from 46 million to 20 million. And while the GOP sells this as a major benefit in the bill because it’s easier to take the standard deduction than itemize (they sell that feature as if that’s an awesome benefit), that simplification has the perverse side effect if disincentivizing charitable giving.

    It’s kind of amazing. One of the few provisions in the bill that actually benefits the middle-class, double the standard deduction, simultaneously discourages people from donating to charity. It’s classic GOP badness distilled:


    “The nonprofit sector is alarmed,” said Michael Thatcher, chief executive of Charity Navigator, a charity rating website. The change in the standard deduction is “the biggest cause of concern,” he said.

    Estimates of the impact from an increase in the standard deduction vary. According to the Tax Policy Center, more than 46 million filers would be expected to itemize in 2018 under current law, but that number would drop to under 20 million.

    “For charities who serve families in need, the projected declines in giving will devastate our ability to provide food assistance,” said Diana Aviv, chief executive of Feeding America, a network of food banks.

    “For charities who serve families in need, the projected declines in giving will devastate our ability to provide food assistance”

    And keep in mind that this expected devastation of things like food assistance is happening at the same time the GOP is planning on gutting federal safety-net programs. So when there’s a future wave of desperately poor people cut off from government programs and unable to find a job (perhaps after their job gets offshored), that’s going to be another lump of coal from this tax bill.

    Of course, there’s no guarantee that doubling the standard deduction will reduce charitable giving. But if we assume that tax incentives are relevant to human behavior, which is GOP mantra, then it’s hard to see which reduced charitable giving won’t happen:


    Ms. Gilligan said the foundation has an endowment and doesn’t expect its grant programs to be significantly affected in 2018, but there is concern about the longer-term impact of the tax change. “Eliminating the tax incentive,” she said, “has the potential to have a very negative impact on charitable giving.”

    United Way Worldwide, ranked the largest charity in 2017 by donations by Forbes, is recommending that its community-based affiliates contact important contributors to highlight the changes that are coming, said Steve Taylor, the charity’s vice president of public policy. United Way Worldwide provides leadership and support to its network of groups across the country. “We’ve been urging them to reach out to big donors and talk to them about tax reform,” he said. Typically, the local United Way chief executive or head fund-raiser has a personal relationship with important donors, he said, and will talk by phone. (“My donors,” said Mr. Kimbrough of the United Way of Greater St. Louis, “have my cellphone.”)

    Some 26,000 to 28,000 major donors nationally give a total of about $500 million a year to United Way, in gifts of $10,000 or more, Mr. Taylor said. Some of those donors may be affected by the change in the standard deduction. Donors give for altruistic reasons as well as tax breaks, Mr. Taylor said, but the increase in the standard deduction is expected to have an impact.

    “They’ll still give,” Mr. Taylor said. “But they’re going to give less.”

    Of course, the GOP will no doubt argue that the massive “trickle-down” effect of their tax bill will include extra large charitable contributions as society grows wealthy from all the extra economic growth from the low taxes they’re predicting.

    And if that ends up happening that will be wonderful. It’s just not what the philanthropic sector is expecting. Although it is expecting a boost in giving this year. But only due to front-loading of next-year’s donations in order to take advantage of the additional savings that won’t be available next year. So a one-year boost in donations followed by a permanent reduction is what we should expect, which makes the GOP’s Christmas gift to charities a real gift this year followed by lumps of coal:


    Eileen Heisman, chief executive of the National Philanthropic Trust, which oversees donor-advised funds, said the trust is seeing some larger gifts this season. “People would rather gift when they know what their tax benefit is going to be,” she said.

    “One thing is very consistent,” she said. “When there’s a threat, donors will front load, and we’re expecting that this year.”

    Some donors may be waiting to see the final bill approved by President Trump before making a decision about the size of their donations. So the usual burst of last-minute giving at the end of the year may be even more intense this year, said Pam Norley, president of Fidelity Charitable, a big donor-advised fund.

    It’s one of those microcosm in the macrocosm moments: The charities get a short-term boost from an act that threatens to undermine them in the long-term, much like the GOP tax bill does to the broader society. Don’t forget the tax bill undermines a lot more than just the economy, especially when it’s part of a giant scheme to gut entitlements and government programs.

    The disincentivization of charitable giving that comes from cutting taxes is also a reminder that if you really want the wealth to “trickle down”, you should raise marginal tax rates on the wealthy. Make it more expensive for the rich to get richer and that wealth is inevitable going to trickle down, whether through taxation or more charitable giving or employee raises. Because why not give a raise to your employees or donate to charity if the dollars you’re trying to save for yourself by not giving those raises are going to be heavily taxed?

    The arguments the GOP uses to justify lower taxes on the wealthy – that it will shift incentives and stimulate investments which will strengthen the economy and “trickle-down” to all – are arguments rooted in the assumption that we can look at how taxes incentivize behavior and cause bring about big macro-effects. So why can’t we get big macro-effects like more charitable giving, wage growth, and a more equally distributed sharing of the overall wealth from higher marginal taxes? And why aren’t those highly desirable goals and a compelling argument for higher marginal taxes in an era of record inequality and a dangerously extra-bloated oligarchy?

    And there are the other obvious “trickle-down” benefits to taxing the wealthy more like generating revenues that can be spent on things like education, infrastructure, and programs like social security and Medicare that generate consumer demand and keep the population healthy. This whole tax bill disaster is a great reminder of all the useful things the government could do instead of giving Trump and Jared Kushner a big new tax cut.

    Don’t forget the creation of “middle-class America” in the post-WWII era happened with a 91 percent top marginal tax rate. And also don’t forget that the wildly disproportionate capture of overall wealth by the super-wealthy over the past four-ish decades (kicked off by Reagan in a big way), coincided with steady falls in tax rates. The egregious concentration of wealth is one of the great challenges of this era so this tax bill is a pretty good excuse to remind the public of the direct and obvious benefits of higher tax rates on the wealthiest as a highly effective means of dealing with that egregious concentration of wealth. And the US, as the leading global economy, is best positioned to lead in that area. Much higher taxes on people like the Koch brothers – and their Koch donor network of mega-donors who are demanding this bill – isn’t just great policy for dealing with the US’s own problem of the egregious concentration of wealth, it’s also an opportunity for the US to lead globally. Higher taxes on the wealthy as part of a broader push towards making a more balanced and self-sustaining society could be a competitive advantage in a ‘race to the bottom’ world and the US is the only country that could realistically lead in this area with the hope of getting other countries to follow. And if the US succeeded in such a drive, we could finally see a global economic boom that doesn’t involve the richest getting disproportionately richer relative to everyone else.

    A tax system designed to systematically disincentivize the concentration of wealth should be seen as a goal strongly in the public interest. Why wouldn’t we want to avoid a concentration of massive wealth? That’s clearly a massive threat.

    And that dangerous concentration of wealth about to get a lot worse thanks to this tax bill. Which is why this tax bill is a great reason to point out the numerous very positive systematic benefits from progressive tax rates on the very rich. More charitable giving. More raises. More tax revenues for public investment. And a less egregious divide between the wealthiest and everyone else. Higher progressive tax rates during a period like now, with record corporate profits and long inadequate public investment, is great policy and that’s important to point out as the GOP gets ready to delivery its big lump of coal to the American people for Christmas.

    It’s also worth keeping in mind that, while addressing the offshoring of jobs is indeed an important issue for the US to deal with, it’s also vital to point out that it’s insane for the US and every other country to be locked into a global ‘race to the bottom’ in an economy that systematically creates “winners and losers”. That’s just dangerous. It’s the kind of system that breeds poverty, grievances and terrorism. The planet needs a global system of trade that creates “winners and extra big winners” where economic conditions and human welfare everywhere are considered a global issue everyone cares about. Yes, everyone does actually have to care about everyone for this highly interconnected “global economy” thing to work well for everyone. A global economy that worked for everyone would be humanity’s ultimate gift to itself, which is also worth keeping in mind on Christmas. That’s kind of what Christmas is supposed to be about anyone, but it’s especially poignant amidst this year’s giant lump of GOP coal.

    And in the US we shouldn’t forget that Christmas is going to have to become a day of giving extra to charity going forward.

    Posted by Pterrafractyl | December 18, 2017, 12:02 am

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