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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

26 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 the 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
  13. Oh look at that: thanks to the flurry of the last minute changes to the GOP tax bill – soon to be tax law – the top one percent of wealthiest Americans no longer get 62 percent of the total benefits of the tax cuts. Now the top 1 percent get 83 percent of the benefits. And let’s not forget that this is just the distribution of the benefits that will be seen in the first decade. It’s going to get a lot more lopsided after that because the tax cuts for the middle-class were made to expire by 2025 in order to pay for the permanent tax cuts for the rich.

    Of course, the GOP would respond that, no, the top 1 percent won’t really receive 83 percent of the benefits because the tax cuts for the middle-class that are scheduled to expire within a decade (in order to pay for the permanent tax cuts for the wealthiest and corporations) won’t actually be allowed to expire because future Congresses will make those tax cuts permanent. It would just be political unimaginable not to extend those expiring middle-class tax cuts and make them permanent. That’s the spin.

    But as the following article reminds us, given that these tax cuts are going to be “paid for” with future cuts to spending – on things like Medicare, Social Security, and safety-net programs – extending those middle-class tax cuts in the future will simply mean even more future cuts to things like Medicare and Social Security under the GOP’s plans:

    New York Magazine

    The Trump Tax Cuts Just Got Even More Skewed to the Rich

    By Eric Levitz
    December 18, 2017 6:47 pm

    Two weeks ago, the Senate passed a tax-cut bill that would have delivered 62.1 percent of its benefits to the richest one percent of Americans.A slew of public opinion polls subsequently showed large majorities of the public opposing the GOP tax plan — with a USA Today/Suffolk University poll declaring it the least popular piece of major legislation in three decades. Virtually all of these surveys found that this widespread opposition was rooted in the perception that the bill would benefit the wealthy and corporations more than it would help the middle class.

    Republicans listened carefully to this feedback. And during deliberations in conference committee, the GOP leadership decided to change the bill in ways that would alter the distribution of its benefits: Now, instead of giving 62 percent of its tax cuts to the one percent, the Republican tax plan gives 83 percent of its tax cuts to the … one percent. Or so the Tax Policy Center finds in its new distributional analysis of the legislation.

    Now, that figure comes with a caveat: The Republican tax plan before 2025 is very different than the Republican tax plan after that year. Due to complicated Senate rules, GOP lawmakers had to prevent their tax package from adding to the deficit after 2027. But the party was ideologically committed to passing a permanent corporate tax cut — and politically committed to giving the middle-class a tax break in the immediate term.

    They squared this circle by writing a bill that cuts taxes on virtually everyone in the short-term — but only benefits the wealthy and corporations in the long run.

    Most Republican lawmakers say that they only phased out the middle-class tax cuts as a budget gimmick: No administration, Democratic or Republican, is going to allow a giant middle-class tax hike to take effect. After all, president Obama could have let George W. Bush’s middle tax cuts expire just by sitting on his thumbs — instead, the prospect of that happening was treated as a fiscal crisis.

    And next year, most middle-class Americans really will enjoy a tax cut. The division of these spoils, however, is still regressive. The poorest Americans — who generally pay sales and payroll taxes, but have no federal income liability — will get about $60 each. The middle class would get an average payout of $930, which is equal to about 1.6 percent of the cohort’s average income. Americans in the top 95th to 99th percentile (those earning between $307,900 to $732,800 a year) would see the biggest percentage income increase, with the average household getting $13,480 back. The biggest absolute tax break would go to the top 0.1 percent, which will see an average after-tax gain of $193,380.

    So: In its “progressive” phase, the tax plan redistributes $60 to the average poor family, and roughly $200,000 to the average super-rich household.

    Once the plan is fully phased in, however, taxes on the average household in the bottom 40 percent will go up; remain unchanged for the average household in the middle 40 percent; go down slightly for those in the 80 to 99 percent range; and fall sharply for the top one percent.

    Republicans can say that they don’t intend for the 2027 version of their bill to ever take effect. But if we are going to evaluate the tax plan on the basis of the GOP’s stated intentions then we need to assume that the 2018 version of the plan will be maintained indefinitely — with the cost offset by multitrillion-dollar cuts to Medicaid, Medicare, Social Security, food stamps, public schools, the Environmental Protection Agency, and virtually every other public institution that the middle class relies on more than the GOP donor class does.

    If you believe the GOP’s rhetoric, then its tax plan is a blueprint for redistributing resources away from ordinary people and to the Über-rich, by cutting services for the former and taxes on the latter. If you believe the GOP’s legislative text, then its tax plan is a blueprint for redistributing resources away from ordinary people and to the Über-rich, by raising taxes on the former and cutting taxes on the latter.

    ———-

    “The Trump Tax Cuts Just Got Even More Skewed to the Rich” by Eric Levitz; New York Magazine; 12/18/2017

    If you believe the GOP’s rhetoric, then its tax plan is a blueprint for redistributing resources away from ordinary people and to the Über-rich, by cutting services for the former and taxes on the latter. If you believe the GOP’s legislative text, then its tax plan is a blueprint for redistributing resources away from ordinary people and to the Über-rich, by raising taxes on the former and cutting taxes on the latter.”

    Want to make those middle-class tax cuts permanent? Then get ready for more spending cuts! That’s the hidden message the GOP has for voters when they predict a future extension of those expiring middle-class tax cuts. The message isn’t actually very hidden. That message is loud and clear when we find GOPers openly planning an attack on entitlement programs in the middle of this tax bill push. But it’s a message the GOP obviously does not want the public to hear, which is why they don’t say it out loud. But they are definitely saying it:


    Most Republican lawmakers say that they only phased out the middle-class tax cuts as a budget gimmick: No administration, Democratic or Republican, is going to allow a giant middle-class tax hike to take effect. After all, president Obama could have let George W. Bush’s middle tax cuts expire just by sitting on his thumbs — instead, the prospect of that happening was treated as a fiscal crisis.

    And next year, most middle-class Americans really will enjoy a tax cut. The division of these spoils, however, is still regressive. The poorest Americans — who generally pay sales and payroll taxes, but have no federal income liability — will get about $60 each. The middle class would get an average payout of $930, which is equal to about 1.6 percent of the cohort’s average income. Americans in the top 95th to 99th percentile (those earning between $307,900 to $732,800 a year) would see the biggest percentage income increase, with the average household getting $13,480 back. The biggest absolute tax break would go to the top 0.1 percent, which will see an average after-tax gain of $193,380.

    So: In its “progressive” phase, the tax plan redistributes $60 to the average poor family, and roughly $200,000 to the average super-rich household.

    Once the plan is fully phased in, however, taxes on the average household in the bottom 40 percent will go up; remain unchanged for the average household in the middle 40 percent; go down slightly for those in the 80 to 99 percent range; and fall sharply for the top one percent.

    Republicans can say that they don’t intend for the 2027 version of their bill to ever take effect. But if we are going to evaluate the tax plan on the basis of the GOP’s stated intentions then we need to assume that the 2018 version of the plan will be maintained indefinitely — with the cost offset by multitrillion-dollar cuts to Medicaid, Medicare, Social Security, food stamps, public schools, the Environmental Protection Agency, and virtually every other public institution that the middle class relies on more than the GOP donor class does.

    “Republicans can say that they don’t intend for the 2027 version of their bill to ever take effect. But if we are going to evaluate the tax plan on the basis of the GOP’s stated intentions then we need to assume that the 2018 version of the plan will be maintained indefinitely — with the cost offset by multitrillion-dollar cuts to Medicaid, Medicare, Social Security, food stamps, public schools, the Environmental Protection Agency, and virtually every other public institution that the middle class relies on more than the GOP donor class does

    Read between the lines, and you find Paul Ryan and the Koch network of mega-donors scheming multi-trillion dollar cuts to Medicaid, Medicare, Social Security, food stamps, public schools, the Environmental Protection Agency, and virtually every other public institution that the middle class relies on more than the GOP donor class does. It’s the loud and clear message the GOP dareth not speak, and they are shouting it from the rooftops every time they predict those expiring middle-class tax cuts will be extended.

    It’s also important to keep in mind when we read that the last-minute changes to the tax bill shifted the top 1 percent’s share of the overall benefits from 62 percent to 83 percent, that the ‘poor rich’ are also getting soaked to pay for extra large benefits for the ‘rich rich’. So that 62 to 83 percent shift towards the top 1 percent was actually a much bigger shift to the top 0.01 percent:


    Republicans listened carefully to this feedback. And during deliberations in conference committee, the GOP leadership decided to change the bill in ways that would alter the distribution of its benefits: Now, instead of giving 62 percent of its tax cuts to the one percent, the Republican tax plan gives 83 percent of its tax cuts to the … one percent. Or so the Tax Policy Center finds in its new distributional analysis of the legislation.

    The GOP’s dream bill just kept getting dreamier. Especially near the end. And then it became reality. But as the following article notes, that tax cutting dream didn’t quite become reality for a lot of wealthy Americans. Because their money was required to make the tax cut for the wealthiest Americans even bigger. The ‘poor rich’ getting soaked for the ‘rich rich’. Welcome to GOP unified rule:

    The New York Times
    DEALBOOK

    Tax Cuts Benefit the Ultra Rich, but Not the Merely Rich

    Andrew Ross Sorkin
    DEC. 18, 2017

    If you read the headlines, the spoils of the Republican tax plan will disproportionately benefit the wealthy. It’s been called a “tax cut for the rich,” “a Christmas gift for the wealthy” and more. And that’s true: Any back-of-the-envelope math shows that in both dollar terms and in percentage terms, the largest tax cuts clearly benefit the rich.

    And yet virtually every private conversation taking place on Wall Street and in corporate America among the wealthy these days seemingly comes to a different conclusion. Many complain bitterly that the new tax code will have them paying more, not less, in taxes. Accountants’ phones are ringing off the hook from their wealthy clients scrambling to understand how much bigger their bill will be and what steps can be taken to minimize their ballooning payment.

    Huh?

    That’s some disconnect.

    You’re probably asking how a tax plan that seems riddled with loopholes to benefit those who are well off — and the Trump family — can be raising the tax bill of the wealthy when we’ve been told the opposite.

    Here’s the nuance: The tax bill soaks some of rich Americans — but it does not soak the richest.

    It is the “pretty rich” right below that level that may get hit: the W2 employee making several hundred thousand dollars to millions of dollars a year with high state and local taxes that will not be fully deductible may see a higher tax bill. So will the chief executives of many large publicly traded companies who often itemize large, unreimbursed business expenses, which will no longer be allowed. Some executives are already calculating that they will be paying additional seven-figure sums in taxes.

    OK, you might want to get out get out your smallest violin.

    The distinction is there, though. If you’re a billionaire with your own company and are happy to use your private jet so you can “commute” from a low-tax state, the plan is a godsend. You can make an assortment of end-runs around the highest tax rates.

    The two most popular games for the very wealthy will be running their income through pass-through companies, which pay a lower rate, or using a corporation to pay themselves a tiny salary and huge dividends, which will be taxed at the lower capital gains rates. (Watch for this headline in 2018: “Record Number of New Start-Ups.” But don’t necessarily take that as good news; many of those “new” start-ups will be individuals incorporating themselves.)

    And private equity and real estate executives, as has been well documented, will make out like bandits under the new system.

    According to the Tax Policy Center, 5 percent of taxpayers would pay more in taxes in 2018; 9 percent in 2025 and 53 percent in 2027, if the plan is signed into law.

    That 5 percent paying more is not the top .01 of the 1 percent.

    A real estate investor, Jason Harbor, who will probably be a beneficiary of the tax plan, wrote on Twitter: “Why are my taxes going down and my assistant’s is going up? Can someone explain how that is fair?”

    In the world of public company chief executives — many based in states like New York, New Jersey, Massachusetts and California, where a big chunk of the largest companies in the country reside — several told me they expected their federal taxes to increase substantially because, unlike some of their wealthy peers in other industries, they cannot turn themselves into pass-through companies or other tax-dodging entities.

    At least one executive told me he wished he could turn himself into a company to save taxes, but he did not want to set a precedent that would induce other employees to do the same.

    The biggest hit for some will be the inability to deduct unreimbursed business expenses, like legal and accounting costs, beyond the new standard deduction. That deduction is almost doubled under the new plan, to $24,000 from $13,000, but it is still far below the costs of some of the services, which often are in the hundreds of thousands or even millions of dollars.

    Yes, the lower top tax rate will help some of these high earners, but probably not enough to compensate for the $10,000 cap on property tax deduction, especially if they own multiple homes worth millions of dollars.

    The great irony, of course, is that many of the same executives now complaining about these tax-raising changes voted for Democrats and said they supported higher taxes for the wealthy — until they got hit with the bill by Republicans.

    “My income taxes are going up,’’ a longtime commentator on financial topics with a cult following who goes by IvanK wrote on Twitter. “I wouldn’t mind this if I felt that the incremental amount was going to the right people, not the wrong people. GOP is a party of scam artists serving the donors. Despicable.”

    But for those whose taxes are going up, the displeasure seems to be bipartisan. “I’m a Trump Republican trapped in Taxachussets,’’ went one post on Twitter. “We have a never-Trump GOP Governor. My taxes are now going up, given the end of mortgage deduction > $750k & state tax deduction. I didn’t vote for this. I want low taxes for all — not ZERO for more folks. Where’s my dollar?”

    ———-

    “Tax Cuts Benefit the Ultra Rich, but Not the Merely Rich” by Andrew Ross Sorkin; The New York Times; 12/18/2017

    “Here’s the nuance: The tax bill soaks some of rich Americans — but it does not soak the richest.”

    Yep, some of the ‘pretty rich’ will indeed get soaked. In particular if they live in Blue states. But for the billionaires this tax bill is a godsend:


    It is the “pretty rich” right below that level that may get hit: the W2 employee making several hundred thousand dollars to millions of dollars a year with high state and local taxes that will not be fully deductible may see a higher tax bill. So will the chief executives of many large publicly traded companies who often itemize large, unreimbursed business expenses, which will no longer be allowed. Some executives are already calculating that they will be paying additional seven-figure sums in taxes.

    OK, you might want to get out get out your smallest violin.

    The distinction is there, though. If you’re a billionaire with your own company and are happy to use your private jet so you can “commute” from a low-tax state, the plan is a godsend. You can make an assortment of end-runs around the highest tax rates.

    The two most popular games for the very wealthy will be running their income through pass-through companies, which pay a lower rate, or using a corporation to pay themselves a tiny salary and huge dividends, which will be taxed at the lower capital gains rates. (Watch for this headline in 2018: “Record Number of New Start-Ups.” But don’t necessarily take that as good news; many of those “new” start-ups will be individuals incorporating themselves.)

    And private equity and real estate executives, as has been well documented, will make out like bandits under the new system.

    And the only reason it’s able to be such a godsend for billionaires – especially billionaire real estate developers and private equity executives – is because of all the areas the GOP found to raise taxes on the rabble. And that includes the ‘pretty rich’ rabble:


    According to the Tax Policy Center, 5 percent of taxpayers would pay more in taxes in 2018; 9 percent in 2025 and 53 percent in 2027, if the plan is signed into law.

    That 5 percent paying more is not the top .01 of the 1 percent.

    And note how one of the other areas where taxes are going up to raise the funds to pay for the billionaire tax cuts is eliminating business expense deductions. Which is probably going to make business a lot less fun. No more tax writeoffs for that lunch with a client:


    The biggest hit for some will be the inability to deduct unreimbursed business expenses, like legal and accounting costs, beyond the new standard deduction. That deduction is almost doubled under the new plan, to $24,000 from $13,000, but it is still far below the costs of some of the services, which often are in the hundreds of thousands or even millions of dollars.

    Let’s hope America’s businessmen remember that this lost deduction is pretty much exclusively getting funneled into the wallets of the super-rich. Compliments of the GOP mega-donors.

    And keep in mind that if the ‘pretty rich’ who are still smarting over their selective tax hike want to get their taxes back down to where they were before this bill, that also implies more spending cuts on entitlements and other federal programs. At least that’s the case if the GOP is in charge because those are the rules the GOP has made very clear: as long as the GOP has power, the only option for raising more money is tax hikes on the rabble – including the ‘pretty rich’ rabble – and spending cuts.

    And this GOP rule points us towards a critical fact that is also loud and clear but never gets spoken: if US politicians wanted a big federal tax cut for the middle-class and the poor, cutting something like the payroll tax, which funds Medicare and Social Security, is the tax you want to cut. Currently, its at 6.2 percent of income for the first $118,500. Barrack Obama cut it temporarilyand the public noticed when it rose again and wasn’t happy about that. Nearly half of American households don’t pay federal income taxes because they don’t make enough. But the most of those poor and middle-class households do pay that payroll tax. It’s a tax ripe for the cutting.

    At the same time, a payroll tax is a tricky thing to cut because that’s money intended for funding entitlements that are getting rerouted into a tax cut. Yes, it would be a far more effective tax to cut from a stimulus standpoint than tax cuts for bloated billionaires, but it’s still a tax cut that starves entitlements from funding. So, since the GOP is planning on cutting entitlements soon, they probably couldn’t include a payroll tax cut. It would be a bad look. And the GOP doesn’t need a worse look.

    But there’s another reason a payroll tax cut is tricky and it’s related to the difficulties of raising the cap on the income that faces the payroll tax (current $118,500 cap). Eliminating that cap and charging, say, Charles Koch the 6.2 percent payroll tax on the billions he might earn annually, instead of just his first $118,500, would be a great way to ‘Make America Great Again’ by financially shoring up Medicare and Social Security. Better yet, make it progressive, so the poorest have a very low payroll tax while it gets higher for millionaires and billionaires.

    So why can’t something like a progressive payroll tax and lifting of the cap happen? Well, because entitlement programs like Social Security and Medicare are designed to be self-funded by the recipients, which is perceived as “not welfare.” American culture suffers from a psychosis related to “welfare” and if Social Security and Medicare shifted into a program heavily financed by the wealthiest Americans, that would indeed change the nature of those programs into something more like a ‘welfare’ program. And all the Americans fed a diet of ‘rugged individualism’ mythology over the course of their lifetimes might have an identity crisis and support for programs like Medical and Social Security might erode.

    But if American culture adopted a more mature attitude towards welfare and safety-net programs and recognized their necessity in an era of extreme and growing wealth inequality, adopting a progressive payroll tax model would be a political winner. Especially when the only alternative the GOP is offering is entitlement cuts. And that really is the only alternative the GOP is offering so the future of entitlements in the US will either involve entitlement cuts – the GOP’s only option – or whatever the Democrats come up with.

    So what better time than right now for the Democrats to make the point that the massive shift of wealth towards the rich is going to make things like a progressive payroll tax without a cap is both fair and necessary to keep these programs afloat without massive cuts. If the rich want to get richer, they should pay much higher taxes to keep society afloat and that includes things like Medicare and Social Security. And there’s no shame in the public demanding this. There should, however, be some shame in the public not demanding this because that would make the public a bunch of suckers.

    And what better time than now to point out that the endless attempts by the super-rich to slash public spending on things like entitlements and the safety-net actually call for things like a payroll tax without a cap. A special tax that nails billionaires to finance the safety-net is clearly needed. Just look at the behavior of the mega-donors. That’s the evidence of the need.

    So given that the GOP’s mega-donors just looted the country and are getting ready to liquidate and slash what’s left over, and given that these mega-donors are basically giving the US middle-class the choice of extending the expiring middle-class tax cuts or cutting entitlement spending more, perhaps the American public should make the super-rich GOP mega-donors a counter set of choices: support or oppose a push to drops the payroll cap and imposes a substantial progressive payroll tax that applies to ALL income and becomes particularly onerous for billionaires. The choice won’t be over whether or not it happens because that should happen regardless of the wishes of the mega-donors. The mega-donors get to choose whether they agree and want to help shape that policy or oppose it every step of the way which is what the will likely do. That seems like the kind of choice the American public should be giving these mega-donors.

    Posted by Pterrafractyl | December 20, 2017, 11:49 pm
  14. Check out what Attorney General Jeff Sessions just did right on the heals of Congress passing the giant GOP tax cut for the super-rich: Sessions has been rescinding numerous Obama-era “letters” – Justice Department legal guidance letters – with all sorts of horrible consequences. But in light of the new tax law, there’s one particular letter Sessions just rescinded that just jaw-droppingly egregious. And cruel and twisted too, of course. It was a letter written in 2016 directing local prosecutors to review their policies and keep in mind that they should be factoring in whether or not someone is very poor or indigent when deciding whether or not to imprison someone for not paying their debts incurred by law enforcement action done primarily to raise revenues. The letter cited the pattern of people getting repeatedly thrown in prison for not paying debts they can’t pay because they were very poor. In other words, the Justice Department reminded local prosecutors that they shouldn’t be sending the very poor and homeless to prison for not being able to pay fines put in place to raise public revenues. And that’s the “letter” Jeff Sessions just rescinded. A “please no debtors prison” letter.

    It’s an egregious act for a number of reasons. There’s the obvious juxtaposition with the giant tax cut for the rich that did almost nothing for the poor and is setting up massive cuts to programs for the poor.

    There’s also the fact that the big infrastructure plan Trump and the GOP have in mind is largely going to involve privatization and a wave of new fees and tolls. So charging everyone, including the very poor, regular fees just to use public services and infrastructure is about to get A LOT more expensive.

    And let’s not forget that the GOP’s grand schemes involve transferring as much of the cost of government onto states as possible, and when states raise revenues, it tends to be fees. It’s exactly the kind of plan that could lead to a surge in people with debts to the state they can’t afford to pay.

    And then there’s the fact that Sessions has already directed prosecutors to pursue the most severe penalties possible in cases, even when it could trigger a mandatory minimum prison sentence. And he’s restored the use of private prisons for federal prisoners.

    So we are poised to see big cuts to the safety-net that will make the poor poorer right before the big “tolls everywhere” infrastructure privatization plan, and Jeff Sessions orders prosecutors to pursue the harshest penalties possible, including prison. Oh, and he brought back private prisons for federal prisoners. And states are going to have to raise more revenues in general in coming years and that means more state and local feeds. So after all that, Jeff Sessions decides to rescind the letter that told local prosecutors to avoid throwing poor people in prison for not paying fees:

    The Washington Post

    Sessions rescinds Justice Dept. letter asking courts to be wary of stiff fines and fees for poor defendants

    By Matt Zapotosky
    December 21, 2017 at 8:08 PM

    Attorney General Jeff Sessions is rescinding an Obama-era Justice Department letter that asked local courts across the country to be wary of slapping poor defendants with fines and fees to fill their jurisdictions’ coffers, part of a broad rollback of guidance that Sessions believes overreached.

    It’s the latest move in Sessions’s effort to dramatically reshape the Justice Department by undoing many of the reforms imposed by his predecessors and giving the institution a harder edge. Sessions is revoking 25 previous guidance documents dating back decades and covering topics as diverse as ATF procedures and the Americans With Disabilities Act.

    In a statement, Sessions said he was ending “the long-standing abuse of issuing rules by simply publishing a letter or posting a web page.”

    “Congress has provided for a regulatory process in statute, and we are going to follow it,” Sessions said. “This is good government and prevents confusing the public with improper and wrong advice.”

    In less than a year in office, Sessions has imposed a new charging policy that calls for prosecutors to pursue the most serious offenses possible, even when that might trigger stiff mandatory minimum sentences. He has restored the use of private prisons. And he has adjusted the department’s legal stances on issues involving voting rights and lesbian, gay, bisexual and transgender individuals in ways that put him at odds with his most immediate predecessors.

    Sessions previewed the most recent shift in a November speech at the National Lawyers Convention, where he revealed he was directing Justice Department officials to stop issuing guidance documents that try “to impose new obligations on any party outside the executive branch,” saying too that he would “review and repeal existing guidance documents that violate this common-sense principle.”

    By then, the department already had revoked the Obama-era guidance on federal protections for transgender students, and it was clear others were potentially in the crosshairs. Sessions views many of his policy changes as restoring a strict, by-the-book interpretation of federal law. Civil liberties advocates say the changes are misguided and they disenfranchise or otherwise harm poor minorities and LGBT people.

    The letter on fines and fees is not the only guidance that Sessions plans to revoke, though it is particularly significant.

    The letter, which was sent in March 2016 to the chief judges and court administrators in all 50 states, noted that illegal imposition of fines and fees had been receiving significant attention, and that the Justice Department had a “strong interest” in making sure the rights of citizens were protected. The White House and the department had recently convened a summit on the issue, and the Justice Department had alleged in a lawsuit that officers in Ferguson, Mo., were violating citizens’ civil rights in part because their policing tactics were meant to generate revenue.

    Though it did not seek to force any new policy, the letter urged court officials to review their rules and procedures. It detailed seven principles to consider when imposing fines and fees, among them that courts should not jail people for nonpayment of fines and fees without first determining whether the non-payer was indigent and then establishing that the failure to pay was “willful,” and that courts should consider alternatives to jail for indigent defendants.

    “Individuals may confront escalating debt; face repeated, unnecessary incarceration for nonpayment despite posing no danger to the community; lose their jobs; and become trapped in cycles of poverty that can be nearly impossible to escape,” the letter said. “Furthermore, in addition to being unlawful, to the extent that these practices are geared not toward addressing public safety, but rather toward raising revenue, they can cast doubt on the impartiality of the tribunal and erode trust between local governments and their constituents.”

    Vanita Gupta, who was one of the letter’s authors while leading the Justice Department’s Civil Rights Division during the Obama administration, said the guidance was not meant to create new law, but instead to clarify what the law said — and thus its retraction might have a somewhat muted impact.

    But she said Sessions taking it back “seems like an abdication of the Justice Department’s responsibility” to help local jurisdictions comply with their legal obligations, and those resistant to change might feel emboldened to continue imposing inappropriate fines and fees.

    ———–

    “Sessions rescinds Justice Dept. letter asking courts to be wary of stiff fines and fees for poor defendants” by Matt Zapotosky; The Washington Post; 12/21/2017

    “It’s the latest move in Sessions’s effort to dramatically reshape the Justice Department by undoing many of the reforms imposed by his predecessors and giving the institution a harder edge. Sessions is revoking 25 previous guidance documents dating back decades and covering topics as diverse as ATF procedures and the Americans With Disabilities Act.”

    Yep, the rescinding of this letter, while egregious, is merely one of 25 previous guidance “letters” Sessions is rescinding. Including rescinding previous guidance against automatically pursuing the harshest penalties and private prisons:


    In less than a year in office, Sessions has imposed a new charging policy that calls for prosecutors to pursue the most serious offenses possible, even when that might trigger stiff mandatory minimum sentences. He has restored the use of private prisons. And he has adjusted the department’s legal stances on issues involving voting rights and lesbian, gay, bisexual and transgender individuals in ways that put him at odds with his most immediate predecessors.

    And after doing all this, Sessions rescinds the ‘no debtors prison please’ letter. Because apparently sending poor people to prison is now a Trump administration priority:


    The letter, which was sent in March 2016 to the chief judges and court administrators in all 50 states, noted that illegal imposition of fines and fees had been receiving significant attention, and that the Justice Department had a “strong interest” in making sure the rights of citizens were protected. The White House and the department had recently convened a summit on the issue, and the Justice Department had alleged in a lawsuit that officers in Ferguson, Mo., were violating citizens’ civil rights in part because their policing tactics were meant to generate revenue.

    Though it did not seek to force any new policy, the letter urged court officials to review their rules and procedures. It detailed seven principles to consider when imposing fines and fees, among them that courts should not jail people for nonpayment of fines and fees without first determining whether the non-payer was indigent and then establishing that the failure to pay was “willful,” and that courts should consider alternatives to jail for indigent defendants.

    “Individuals may confront escalating debt; face repeated, unnecessary incarceration for nonpayment despite posing no danger to the community; lose their jobs; and become trapped in cycles of poverty that can be nearly impossible to escape,” the letter said. “Furthermore, in addition to being unlawful, to the extent that these practices are geared not toward addressing public safety, but rather toward raising revenue, they can cast doubt on the impartiality of the tribunal and erode trust between local governments and their constituents.”

    Vanita Gupta, who was one of the letter’s authors while leading the Justice Department’s Civil Rights Division during the Obama administration, said the guidance was not meant to create new law, but instead to clarify what the law said — and thus its retraction might have a somewhat muted impact.

    Individuals may confront escalating debt; face repeated, unnecessary incarceration for nonpayment despite posing no danger to the community; lose their jobs; and become trapped in cycles of poverty that can be nearly impossible to escape,” the letter said. “Furthermore, in addition to being unlawful, to the extent that these practices are geared not toward addressing public safety, but rather toward raising revenue, they can cast doubt on the impartiality of the tribunal and erode trust between local governments and their constituents.”

    A real life debt trap that destroys lives and families. That’s what the letter stated local prosecutors should avoid. Both because that’s the law, but also because it’s inevitably going to destroy relations between local governments and the public. And that’s one of the 25 letters Jeff Sessions just repealed.

    In other news…

    Posted by Pterrafractyl | December 22, 2017, 12:13 am
  15. Senate Majority Leader Mitch McConnell made a potentially significant statement a couple days ago when talking about is expectations of what he’s going to be working on in 2018: McConnell said he didn’t think the GOP’s 2018 agenda would include welfare reform. This is in contrast to House Speaker Paul Ryan’s prediction that welfare reform and other spending cuts would indeed be next on the agenda.

    Given the incredibly bad look of ‘reforming’ (slashing) welfare programs right after a massive tax cut for the super-rich and big corporations, it’s entirely possible that McConnell is correct and the GOP is deciding to strategically put that off until 2019 or so. But, of course, it’s possible McConnell was lying and just said that because he realized how bad it looked when Paul Ryan said he wanted to cut welfare next just a few weeks ago. Why give the rabble more reason to resent the tax scam? Pretending he’s not planning on welfare ‘reform’ in 2018 could easily just be a ploy.

    So we’ll see what the GOP does with welfare ‘reform’ next year. 2018 is an election year so, on the one hand, cutting welfare is a potentially risky move because it could motivate Democratic-leaning voters to vote. But on the other hand, those voters are already motivated to vote by Donald Trump’s bombastic insanity and the GOP’s general treachery. So it’s possible the GOP views cutting welfare is as something they might as well do because they have nothing to lose. Cutting welfare – likely by block-granting it all and starting a race to the bottom between states – might even motivate the GOP base and win over some independent voters. Americans love to hate the poor hating the poor is part of the GOP’s ‘secret sauce’. It’s one of the few things the party delivers to the common man since the rest of the party’s agenda is about fleecing and manipulating that common man. We can’t discount the possibility that the GOP sees welfare ‘reform’ as a politically winning issue. It’s a polarizing ingredient in the GOP ‘secret sauce’ that wins over average voters so it can only be deployed strategically because it might backfire.

    Given how much Trump already motivates Democrats to vote, we can’t forget that the GOP might just decide that it has nothing to lose by going full steam ahead on as much of its agenda as it can pass. The party might end up extra unpopular, but Trump more or less ensures the party of going to be extra unpopular anyway. In other words, Trump’s horrible behavior might actually be enabling the GOP to behave as badly as it can get away with because the mass backlash the party has always feared if it went through with its agenda is already guaranteed by Trump.

    Thanks to Trump the party has little to gain by pretending to be good and little to lose by being extra bad. Trump has already strongly energized Democratic base. That’s part of the reason we shouldn’t assume welfare reform won’t be on next year’s agenda. They have nothing to lose so why not be extra bad and unilaterally pass as much of the GOP agenda as they can during this window of unified power across the federal government.

    So with that look at the GOP’s Trumpian bad-behavior incentive structure in mind, here’s an article in Harpers that makes some critical points the American public needs to think long and hard about when the GOP makes its welfare reform pitch: the automation of welfare eligibility using Big Data is creating a kind of welfare surveillance state. A Big Data Big Brother. And if this Big Brother system targeting the poor keep growing, it’s going to be targeting a lot more than the poor. But America’s tradition of hating on the poor and kicking the poor makes this a political ‘oldie but goodie’ and hard to stop. An oldie but goodie that is morphing into a Big Data panopticon. And the GOP’s welfare ‘reform’ agenda is going to go make the government’s appetite for Big Data to find which poors to punish is going to get a lot bigger:

    Harpers

    The Digital Poorhouse

    By Virginia Eubanks
    From the January 2018 issue

    By Virginia Eubanks, from Automating Inequality, which was published this month by St. Martin’s Press. Eubanks is an associate professor of political science at the University at Albany, SUNY, and a founding member of the Our Data Bodies project.

    Forty years ago, nearly all the major decisions that shape our lives—whether or not we are offered employment, a mortgage, insurance, credit, or a government service—were made by human beings. They often used actuarial processes that functioned more like computers than people, but human discretion still prevailed.

    Today, we have ceded much of that decision-making power to machines. Automated eligibility systems, ranking algorithms, and predictive risk models control which neighborhoods get policed, which families attain needed resources, who is short-listed for employment, and who is investigated for fraud. Our world is crisscrossed by information sentinels, some obvious and visible: closed-circuit cameras, GPS on our cell phones, police drones. But much of our information is collected by inscrutable, invisible pieces of code embedded in social media interactions, applications for government services, and every product we buy. They are so deeply woven into the fabric of social life that, most of the time, we don’t even notice that we are being watched and analyzed.

    Even when we do notice, we rarely understand how these processes are taking place. There is no sunshine law to compel the government or private companies to release details on the inner workings of their digital decision-making systems. With the notable exception of credit reporting, we have remarkably limited access to the equations, algorithms, and models that shape our life chances.

    We all live under this new regime of data analytics, but we don’t all experience it in the same way. Most people are targeted for digital scrutiny as members of social groups, not as individuals. People of color, migrants, stigmatized religious groups, sexual minorities, the poor, and other oppressed and exploited populations bear a much heavier burden of monitoring, tracking, and social sorting than advantaged groups.

    The most marginalized in our society face higher levels of data collection when they access public benefits, walk through heavily policed neighborhoods, enter the health care system, or cross national borders. That data reinforces their marginality when it is used to target them for extra scrutiny. Groups seen as undeserving of social support and political inclusion are singled out for punitive public policy and more intense surveillance, and the cycle begins again. It is a feedback loop of injustice.

    Take the case of Maine. In 2014, under Republican governor Paul LePage, the state attacked families who were receiving cash benefi­ts through a federal program called Temporary Assistance for Needy Families. TANF bene­fits are loaded onto EBT cards, which leave a digital record of when and where cash is withdrawn. LePage’s administration mined data collected by federal and state agencies to compile a list of 3,650 transactions in which TANF recipients withdrew cash from ATMs in smoke shops, liquor stores, and out-of-state locations. The data was then released to the public.

    The transactions that were flagged as suspicious represented only 0.3 percent of the 1.1million cash withdrawals completed during that time period, and the data showed only where cash was withdrawn, not how it was spent. But the administration disclosed the data to suggest that TANF families were defrauding taxpayers by buying liquor, cigarettes, and lottery tickets. Lawmakers and the professional middle-class public eagerly embraced the misleading tale they spun.

    The Maine legislature introduced a bill that would require TANF families to retain all cash receipts for twelve months, in order to facilitate state audits of their spending. Democratic legislators urged the state’s attorney general to use LePage’s list to investigate and prosecute fraud. The governor introduced a bill to ban TANF recipients from using their benefit cards at out-of-state ATMs. These proposed laws were patently unconstitutional and unenforceable, and would have been impossible to obey—but that was not the point. Such legislation is part of the performative politics governing poverty. It is not intended to work; it is intended to heap stigma on social programs and reinforce the misleading narrative that those who access public assistance are criminal, lazy, spendthrift addicts.

    This has not been limited to Maine. Across the country, poor and working-class people are being targeted by new tools of digital poverty management, and face life-threatening consequences as a result. Vast networks of social services, law enforcement, and neighborhood-surveillance technology make their every move visible and offer up their behavior for scrutiny by the government, corporations, and the public.

    Automated eligibility systems in Medicaid, TANF, and the Supplemental Nutrition Assistance Program discourage families from claiming benefits that they are entitled to and deserve. Predictive models in child welfare deem struggling parents to be risky and problematic. Coordinated entry systems, which match the most vulnerable unhoused people to available resources, collect personal information without adequate safeguards in place for privacy or data security.

    These systems are being integrated into human and social services at a breathtaking pace, with little or no discussion about their impacts. Technology boosters rationalize the automation of decision-making in public services—they say we will be able to do more with less and get help to those who really need it. But programs that serve the poor are as unpopular as they have ever been. This is not a coincidence: technologies of poverty management are not neutral. They are shaped by our nation’s fear of economic insecurity and hatred of the poor.

    The new tools of poverty management hide economic inequality from the professional middle-class public and give the nation the ethical distance it needs to make inhuman choices about who gets food and who starves, who has housing and who remains homeless, whose family stays together and whose is broken up by the state. This is part of a long American tradition. We manage the poor so that we do not have to eradicate poverty.

    America’s poor and working-class people have long been subject to invasive surveillance, midnight raids, and punitive policies that increase the stigma and hardship of poverty. During the nineteenth century, they were quarantined in county poorhouses. In the twentieth century, they were investigated by caseworkers who treated them like criminals on trial. Today, we have forged a digital poorhouse. It promises to eclipse the reach of everything that came before.

    The differences between the brick-and-mortar poorhouse of yesterday and the digital one of today are significant. Containment in a physical institution had the unintended result of creating class solidarity across the lines of race, gender, and national origin. If we sit at a common table to eat the same gruel, we might see similarities in our experiences. But now surveillance and digital social sorting are driving us apart, targeting smaller and smaller microgroups for different kinds of aggression and control. In an invisible poorhouse, we become ever more cut off from the people around us, even if they share our suffering.

    In the 1820s, those who supported institutionalizing the indigent argued that there should be a poorhouse in every county in the United States. But it was expensive and time-consuming to build so many prisons for the poor—county poorhouses were difficult to scale (though we still ended up with more than a thousand of them). In the early twentieth century, the eugenicist Harry Laughlin proposed ending poverty by forcibly sterilizing the “lowest one tenth” of the nation’s population, approximately 15 million people. But Laughlin’s science fell out of favor after its use in Nazi Germany.

    The digital poorhouse has a much lower barrier to expansion. Automated decision-making systems, matching algorithms, and predictive risk models have the potential to spread quickly. The state of Indiana denied more than a million public assistance applications in less than three years after switching to private call centers and automated document processing. In Los Angeles, a sorting survey to allocate housing for the homeless that started in a single neighborhood expanded to a countywide program in less than four years.

    Models that identify children at risk of abuse and neglect are proliferating rapidly from New York City to Los Angeles and from Oklahoma to Oregon. Once they scale up, these digital systems will be remarkably hard to decommission. Oscar Gandy, a communications scholar at the University of Pennsylvania, developed a concept called rational discrimination that is key to understanding how the digital poorhouse automates inequality. Rational discrimination does not require class or racial hatred, or even unconscious bias, to operate. It requires only ignoring bias that already exists. When automated decision-making tools are not built to explicitly dismantle structural inequalities, their increased speed and vast scale intensify them dramatically.

    Removing human discretion from public services may seem like a compelling solution to discrimination. After all, a computer treats each case consistently and without prejudice. But this actually has the potential to compound racial injustice. In the Eighties and Nineties, a series of laws establishing mandatory minimum sentences took away discretion from individual judges. Thirty years later, we have made little progress in rectifying racial disparity in the criminal justice system, and the incarcerated population has exploded. Though automated decision-making can streamline the governing process, and tracking program data can help identify patterns of biased decision-making, justice sometimes requires an ability to bend the rules. By transferring discretion from frontline social servants and moving it instead to engineers and data analysts, the digital poorhouse may, in fact, supercharge discrimination.

    Think of the digital poorhouse as an invisible web woven of fiber-optic threads. Each strand functions as a microphone, a camera, a fingerprint scanner, a GPS tracker, a trip wire, and a crystal ball. Some of the strands are sticky. Along the threads travel petabytes of data. Our activities vibrate the web, disclosing our location and direction. Each of these filaments can be switched on or off. They reach back into history and forward into the future. They connect us in networks of association to those we know and love. As you go down the socioeconomic scale, the strands are woven more densely and more of them are switched on.

    When my family was erroneously red-flagged for a health care fraud investigation in 2015, we had to wrestle only one strand. We weren’t also tangled in threads emerging from the criminal justice system, Medicaid, and child protective services. We weren’t knotted up in the histories of our parents or the patterns of our neighbors. We challenged a single strand of the digital poorhouse and we prevailed.

    Eventually, however, those of us in the professional middle class may very well end up in the stickier, denser part of the web. As the working class hollows out and the economic ladder gets more crowded at the top and the bottom, the middle class becomes more likely to fall into poverty. Even without crossing the official poverty line, two thirds of Americans between the ages of twenty and sixty-five will at some point rely on a means-tested program for support.

    The programs we encounter will be shaped by the contempt we held for their initial targets: the chronically poor. We will endure invasive and complicated procedures meant to divert us from public resources. Our worthiness, behavior, and social relations will be investigated, our missteps criminalized.

    Because the digital poorhouse is networked, whole areas of middle-class life might suddenly be subject to scrutiny. Because the digital poorhouse serves as a continuous record, a behavior that is perfectly legal today but becomes criminal in the future could be targeted for retroactive prosecution. It would stand us all in good stead to remember that an infatuation with high-tech social sorting emerges most aggressively in countries plagued by severe inequality and governed by totalitarians, and here, a national catastrophe or a political regime change might justify the deployment of the digital poorhouse’s full surveillance capability across the class spectrum.

    We have always lived in the world we built for the poor. We created a society that has no use for the disabled or the elderly, and therefore are cast aside when we are hurt or grow old. We measure human worth by the ability to earn a wage, then suffer in a world that undervalues care, community, and mutual aid. We base our economy on exploiting the labor of racial and ethnic minorities and watch lasting inequalities snuff out human potential. We see the world as inevitably riven by bloody competition and are left unable to recognize the many ways in which we cooperate and lift one another up.

    When a very efficient technology is deployed against a scorned out-group in the absence of strong human rights protections, there is enormous potential for atrocity. Currently, the digital poorhouse concentrates administrative power in the hands of a small elite. Its integrated data systems and digital surveillance infrastructure offer a degree of control unrivaled in history. Automated tools for classifying the poor, left on their own, will produce towering inequalities unless we make an explicit commitment to forge another path. And yet we act as if justice will take care of itself.

    ———-

    “The Digital Poorhouse” by Virginia Eubanks; Harpers; January 2018 issue

    Today, we have ceded much of that decision-making power to machines. Automated eligibility systems, ranking algorithms, and predictive risk models control which neighborhoods get policed, which families attain needed resources, who is short-listed for employment, and who is investigated for fraud. Our world is crisscrossed by information sentinels, some obvious and visible: closed-circuit cameras, GPS on our cell phones, police drones. But much of our information is collected by inscrutable, invisible pieces of code embedded in social media interactions, applications for government services, and every product we buy. They are so deeply woven into the fabric of social life that, most of the time, we don’t even notice that we are being watched and analyzed

    Who is eligible for public services and who is deemed an unworthy soul? Those decisions that used to be done by biased humans are increasingly being done by automated systems. Automated systems that still carry human biases, but now confer a degree of ethical distance allowing society to more casually make decisions about things like who gets food and who is allowed to starve:


    These systems are being integrated into human and social services at a breathtaking pace, with little or no discussion about their impacts. Technology boosters rationalize the automation of decision-making in public services—they say we will be able to do more with less and get help to those who really need it. But programs that serve the poor are as unpopular as they have ever been. This is not a coincidence: technologies of poverty management are not neutral. They are shaped by our nation’s fear of economic insecurity and hatred of the poor.

    The new tools of poverty management hide economic inequality from the professional middle-class public and give the nation the ethical distance it needs to make inhuman choices about who gets food and who starves, who has housing and who remains homeless, whose family stays together and whose is broken up by the state. This is part of a long American tradition. We manage the poor so that we do not have to eradicate poverty.

    And, sure, it’s possible that this Big Data surveillance state for the poor system will be more likely to find people in need and eventually self-correct if it makes a mistake, like discovering someone is undernourished after denying them food stamps. But that could only happen if such needs are actually being measured, which is a big ‘if’. Don’t forget that it’s inherently a lot easier for a surveillance system to identify an infraction that could be used to deny service – like buying cigarettes or alcohol with public assistance funds – than it is for a Big Data surveillance system to identify something like general need. In other words, Big Brother is inherently a lot better at discovering who’s been naughty than who’s been nice. It’s like a deeply cynical AI Santa Claus that only delivers coal. And that AI Santa Claus is going to be designed by people that carry all the prejudices against the poor and various minority groups that has been going on throughout history. So while the automation of this poverty-based surveillance state is probably going to be sold as being more ‘objective’, it’s going to be important to keep in mind that these automated Big Data surveillance systems set up ostensibly to ‘combat waste, fraud, and abuse’ of public programs can easily be turned into systemic amplifiers of existing systemic biases:


    Removing human discretion from public services may seem like a compelling solution to discrimination. After all, a computer treats each case consistently and without prejudice. But this actually has the potential to compound racial injustice. In the Eighties and Nineties, a series of laws establishing mandatory minimum sentences took away discretion from individual judges. Thirty years later, we have made little progress in rectifying racial disparity in the criminal justice system, and the incarcerated population has exploded. Though automated decision-making can streamline the governing process, and tracking program data can help identify patterns of biased decision-making, justice sometimes requires an ability to bend the rules. By transferring discretion from frontline social servants and moving it instead to engineers and data analysts, the digital poorhouse may, in fact, supercharge discrimination.

    Think of the digital poorhouse as an invisible web woven of fiber-optic threads. Each strand functions as a microphone, a camera, a fingerprint scanner, a GPS tracker, a trip wire, and a crystal ball. Some of the strands are sticky. Along the threads travel petabytes of data. Our activities vibrate the web, disclosing our location and direction. Each of these filaments can be switched on or off. They reach back into history and forward into the future. They connect us in networks of association to those we know and love. As you go down the socioeconomic scale, the strands are woven more densely and more of them are switched on.

    When my family was erroneously red-flagged for a health care fraud investigation in 2015, we had to wrestle only one strand. We weren’t also tangled in threads emerging from the criminal justice system, Medicaid, and child protective services. We weren’t knotted up in the histories of our parents or the patterns of our neighbors. We challenged a single strand of the digital poorhouse and we prevailed.

    “When my family was erroneously red-flagged for a health care fraud investigation in 2015, we had to wrestle only one strand. We weren’t also tangled in threads emerging from the criminal justice system, Medicaid, and child protective services. We weren’t knotted up in the histories of our parents or the patterns of our neighbors. We challenged a single strand of the digital poorhouse and we prevailed.”

    That’s another critical feature of the growing “digital poorhouse”: It’s not like only the poor live in it. EVERY lives in it to some extent. It’s just the poor who are tracked more closely and actually punished by it because the digital poorhouse only ends up mattering for people trying to qualify for public services like food stamps.

    But as the article notes, two-thirds of people between the age of 20 and 65 will at some point rely on a means-test program, so the digital poorhouse is something the vast majority Americans are likely going to have to deal with at some point. Especially after the GOP gets done with its ‘welfare reform’ schemes and government assistance programs are heavily means-tested to deal with steadily shrinking budgets. Those are the kinds of trends that make the explosion of the digital poorhouse and the use of Big Data to punish the poor the kind of trend that’s inevitably going to creep more and more into the middle-class American lives. Especially as those middle-class lives slip into poverty. So that punitive welfare system Americans built to ‘kick the poor’ is going to be the system more and more Americans find themselves living in:


    Eventually, however, those of us in the professional middle class may very well end up in the stickier, denser part of the web. As the working class hollows out and the economic ladder gets more crowded at the top and the bottom, the middle class becomes more likely to fall into poverty. Even without crossing the official poverty line, two thirds of Americans between the ages of twenty and sixty-five will at some point rely on a means-tested program for support.

    The programs we encounter will be shaped by the contempt we held for their initial targets: the chronically poor. We will endure invasive and complicated procedures meant to divert us from public resources. Our worthiness, behavior, and social relations will be investigated, our missteps criminalized.

    Because the digital poorhouse is networked, whole areas of middle-class life might suddenly be subject to scrutiny. Because the digital poorhouse serves as a continuous record, a behavior that is perfectly legal today but becomes criminal in the future could be targeted for retroactive prosecution. It would stand us all in good stead to remember that an infatuation with high-tech social sorting emerges most aggressively in countries plagued by severe inequality and governed by totalitarians, and here, a national catastrophe or a political regime change might justify the deployment of the digital poorhouse’s full surveillance capability across the class spectrum.

    We have always lived in the world we built for the poor. We created a society that has no use for the disabled or the elderly, and therefore are cast aside when we are hurt or grow old. We measure human worth by the ability to earn a wage, then suffer in a world that undervalues care, community, and mutual aid. We base our economy on exploiting the labor of racial and ethnic minorities and watch lasting inequalities snuff out human potential. We see the world as inevitably riven by bloody competition and are left unable to recognize the many ways in which we cooperate and lift one another up.

    The programs we encounter will be shaped by the contempt we held for their initial targets: the chronically poor. We will endure invasive and complicated procedures meant to divert us from public resources. Our worthiness, behavior, and social relations will be investigated, our missteps criminalized.”

    That’s what’s going to be automated using the Big Data collected in the ‘digital poorhouse’: a system that investigates our worthiness, behavior, and social relations to assess our worthiness as human beings and operates from the assumptions of contempt for people in need that society feels towards the chronically poor. That’s what’s going to be automated.

    It’s one of the more disturbing aspects of the Republican party’s overarching agenda, an agenda to unravel almost all government support for the poor and middle-class and create a giant pool of working poor who are too stressed out to effect resist the oligarchs. And it’s all something that’s going to be critical to keep in mind as the GOP refocuses on ‘welfare reform’ in 2018. Because Americans are literally going to be building their own future digital poorhouse. The poorhouse that more and more Americans will find themselves living in as the Republican agenda – an agenda of austerity for the poor and weakening labor combined with tax cuts for the super-rich and big corporations – extends the decades-long trend of a shrinking middle-class. A trend that’s only going to gain momentum with this new GOP tax law.

    Also recall that creepy story about the experiment “smart city” run by Google that’s going to be set up outside of Toronto and is seen as a model for delivering public services with “behavioral health coaches” and Big Data. That’s the future of the digital poorhouse. ‘Smart’ cities wired up for pervasive data collection. And the corporate sector is going to make a fortune building those cities and gorging on the data.

    Will Americans stand for this? Well, as the article notes, one very unfortunate difference between the brick-and-mortal poverty-management paradigms of the past (like poor houses) and the digital Big Data poverty-management approach today is that the brick-and-mortal approach at least had the benefit for encourage solidarity among the poor that could transcend racial and sectarian differences. People of very different backgrounds all ended up in the poorhouse together. That’s not the case with the digital poorhouse, which can have the effect of exacerbating existing divides because new surveillance methods can be targeted at particular ‘most hated’ groups of people with ever growing precision. And that means, as more and more Americans fall into poverty and the systems designed to address that poverty get weaker and more cash strapped, it’s entirely possible America will become increasingly self-loathing and self-punishing. A nation of mostly poor people pissed off at all the other poor people and calling for more and more systems design to make sure ‘those people’ aren’t ‘mooching’ the system. Could that scenario play out? Well, it’s been playing out for decades so, yes, that scenario seems very possible in the ‘smart city’ future.

    Also keep in mind that, as more and more data points gets collected and fed into the algorithms used to assess our worthiness, eventually that’s probably going to involve some sort of super-AI to do the assessing. Like a human worthiness-judging super-AI. A super-AI designed to assess the general goodness of people and then make judgements on whether or not someone qualifies for a public service. As absurd as that sounds, a system incorporating a super-AI is the logical end-point of current trends. Trends that include growing automation of services using Big Data coupled with widespread anti-poor attitudes and a widespread misunderstanding of economics and social science and history that feed those anti-poor attitudes. Hating the poor is popular, along with junk economic theories blind to systemic biases and view economics as a morality play. That’s why we can’t rule out future government super-AIs designed to incorporate the full spectrum of data collected in the digital poorhouse to assess people’s ‘worthiness’ and is biased to assume people in financial need are probably unworthy.

    And note that this super-AI scenario presents a new avenue for the emergence of Skynet. A super-AI built to read in the Big Data on all of us and then assess our worthiness and built with our anti-poor biases seems like a bad idea. And as programs becoming more underfunded and more people need to be cut off from services, the super-AI would have to get better and better at assessing the ‘worthiness’ of people by finding more and more reasons to be critical of someone using the giant pool of Big Data at its disposal. That’s the kind of super-AI that’s probably not going to have a high opinion of humanity. So that’s another reason not to support the GOP’s welfare ‘reform’ agenda. The GOP agenda is bad for humanity for all sorts of reasons. Including Skynet-related reasons.

    Posted by Pterrafractyl | December 24, 2017, 1:09 am
  16. Here’s a reminder that all those threats the Koch network of GOP mega-donors were making last year about cutting off funds to the GOP unless the they passed the giant tax cuts for the super-rich came with the implicit promise of showering the GOP with cash if the party did indeed pass that tax bill. Because, heads up, that promised cash shower is about to commence: The Kochs just announced plans to shower the GOP with $400 million this year for the mid-terms, including $20 million to be spent on ads convincing the American public that the tax bill wasn’t a giant scam designed by and for the Koch network of GOP mega-donors:

    CNBC

    Conservative Koch brothers’ network to spend up to $400 million for the midterm election cycle – including $20 million to sell the GOP tax law

    * Advocacy groups tied to conservative billionaires Charles and David Koch pledged to spend nearly $400 million this year on initiatives tied to the midterm election cycle.
    * That’s an increase of 60 percent from the network’s spending during the 2016 election cycle.
    * The Koch network will devote $20 million to pitch the GOP’s recently passed tax plan to skeptical voters.

    Ylan Mui
    Published 01/27/2018 Updated

    PALM SPRINGS, Calif.—One of the Republican Party’s biggest donor groups is dramatically ramping up its political spending – and putting the recently passed tax plan front and center – as the GOP fights to preserve its congressional majorities in this year’s hotly contested midterm elections.

    The network of advocacy groups tied to billionaire industrialists Charles and David Koch pledged to spend close to $400 million on campaign contributions and policy initiatives in the lead-up to the vote in November, a 60 percent jump in spending from the 2016 election cycle, officials said. One of the hallmarks of that effort is a fresh influx of support for the Republican tax plan, with up to $20 million devoted to selling its benefits to voters this year.

    The tax pitch will begin in a few weeks, just as companies begin to implement the new law and workers see changes in their paychecks. The Trump administration estimated that 90 percent would enjoy an increase in wages, and Republicans have touted recent announcements of bonuses and pay raises from businesses across a wide swath of industries.

    “Part of our job is to make sure those benefits are burning through the clutter and the normal give-and-take of American politics,” Tim Phillips, president of Americans for Prosperity, said during a private meeting of donors and supporters Saturday in Palm Springs.

    The Koch network was instrumental in helping Republicans score their biggest legislative victory last year. The group spent $20 million last year to encourage passage of the tax bill, running TV and digital campaigns, holding 100 town halls across 36 states and attending high-profile meetings at the White House to shape the final legislation.

    Officials said the new sales campaign will adopt a similar approach, delivering a positive message that Republicans hope will resonate with an increasingly jaded constituency. Although polls generally show the bulk of Americans oppose the tax plan or do not believe they will benefit from it, recent surveys also indicate support is increasing.

    “There is a healthy skepticism among a majority of Americans about politics in this country,” Phillips said. “We do think the bar is a bit higher.”

    Setting the agenda

    Republicans in the House and the Senate will hold a joint retreat next week in West Virginia amid looming deadlines to find a solution for those immigrants and keep the government opening beyond Feb. 8. More broadly, there is disagreement over what the legislative focus should be ahead of the midterm elections.

    House Speaker Paul Ryan has signaled desire to tackle entitlement reform, but Senate Majority Leader Mitch McConnell shot down the idea. Meanwhile, the White House is expected to release a plan for infrastructure investment, an idea that many Republicans are lukewarm about.

    In California, Phillips said he is urging lawmakers not to let momentum from last year’s victory on taxes slip away.

    “We’re urging them to continue going big,” he said. “Go bold.”

    ———-

    “Conservative Koch brothers’ network to spend up to $400 million for the midterm election cycle – including $20 million to sell the GOP tax law” by Ylan Mui; CNBC; 01/27/2018

    “There is a healthy skepticism among a majority of Americans about politics in this country,” Phillips said. “We do think the bar is a bit higher.”

    LOL, yes, there is indeed “a healthy skepticism among a majority of Americans about politics in this country,” as Tim Phillips of the Koch-financed Americans for Prosperity poignantly notes. And what Phillips no doubt realizes, even if he won’t admit in public, is that the public’s “healthy skepticism” is heavily driven by a sense that billionaires like the Koch brothers are effectively running the government for their own private benefit by buying off most of the politicians. And it’s hard to find something more emblematic of this reality than the announcement of the Koch brothers that they will shower the GOP with $400 million for the mid-terms, including $20 million for ads convincing the public the giant tax cut wasn’t a giant Koch-demanded scam for big corporations and the super-rich:


    The network of advocacy groups tied to billionaire industrialists Charles and David Koch pledged to spend close to $400 million on campaign contributions and policy initiatives in the lead-up to the vote in November, a 60 percent jump in spending from the 2016 election cycle, officials said. One of the hallmarks of that effort is a fresh influx of support for the Republican tax plan, with up to $20 million devoted to selling its benefits to voters this year.

    So what type of overall message is this $400 million war chest going to try to shove down the public’s throat? Well, that appears to be somewhat of an open question given the various areas of disagreement withing the GOP about what to pursue next. But note agenda item House Speaker Paul Ryan appears to want the GOP to pursue next: entitlement reform e.g. gutting Social Security, Medicare, and Medicaid:


    Setting the agenda

    Republicans in the House and the Senate will hold a joint retreat next week in West Virginia amid looming deadlines to find a solution for those immigrants and keep the government opening beyond Feb. 8. More broadly, there is disagreement over what the legislative focus should be ahead of the midterm elections.

    House Speaker Paul Ryan has signaled desire to tackle entitlement reform, but Senate Majority Leader Mitch McConnell shot down the idea. Meanwhile, the White House is expected to release a plan for infrastructure investment, an idea that many Republicans are lukewarm about.

    In California, Phillips said he is urging lawmakers not to let momentum from last year’s victory on taxes slip away.

    “We’re urging them to continue going big,” he said. “Go bold.”

    Now, it seems unlikely that the GOP is seriously going to listen to Paul Ryan and try to push through ‘entitlement reform’ in 2018 given the impact that could have on the mid-terms. You almost couldn’t come up with worse political timing for something that politically poisonous.

    But from a ‘transparency in politics’ standpoint, a GOP ‘entitlement reform’ push coming on the heels of this giant tax scam would be perfect. Because let’s not forget what Bruce Bartlett warned us about the GOP’s decades-long strategy of employing the tactic of “time-inconsistency”, the observation that the electorate is unlikely to see cause and effect relationships between past policy decisions, like massive tax cuts, to future policy decisions, like gutting entitlements due to a lack of revenues, and therefore unlikely to blame the GOP when its tax cuts force future entitlement cuts. And future entitlement cuts forced by the future fiscal crises created by this tax cut is unambiguously one of the goals of the Koch network of GOP mega-donors. That’s why Paul Ryan is pushing it right now. So the ‘tax cut’ really was a ‘tax and entitlement cut’. They just haven’t worked out the exact cuts to entitlements yet.
    So while the Koch network is no doubt going to be showering the US airwaves with ads touting the temporary bump in take-home pay and one-time bonuses that Americans are going to see as a result of this tax bill, the reality is that this extra take-home pay is effectively be drawn from future entitlement spending. And that entitlement spending is a huge portion of America’s retirement savings and safety-net spending. It’s like the GOP just forced American public to raid their own retirement and ‘rainy day’ savings. So from a ‘truth in advertising’ perspective, ‘entitlement reform’ really would be the perfect major agenda item to follow the tax bill. Hence the $20 million in planned spending to convince the public that the tax bill is actually in their best interests and wasn’t a giant Koch network scam.

    Also keep in mind that the GOP’s internal division over what agenda item to pursue next doesn’t necessarily reveal any particular deep schism within the GOP or its mega-donor base. These disagreements are perfectly reasonable because the entire GOP policy agenda is a giant scam and there’s no major agenda item that’s isn’t politically poisonous on some level. Hence the rest of the $400 million in planned Koch network spending to convince the public that the rest of the GOP’s agenda is actually in their best interests and isn’t part of a giant Koch network scam.

    Posted by Pterrafractyl | January 28, 2018, 5:31 pm
  17. To shut down the government or not shut down the government? That is the question. Again. In a week. When the three-day federal government shutdown ended a week and a half ago with a stopgap compromise to fund the US government for another two and a half weeks and revisit the issue on February 8th, the question of what’s going to be different didn’t have an obvious answer. The Democrats would obviously try to rally public support in favor a deal that would protect the ‘Dreamers’ without allowing them to become ransom for a far-right anti-immigration overhaul. And the Republicans would obviously try to make the case that a far-right immigration overhaul must happen in exchange for protecting the ‘Dreamers’. And, who knows, the public sentiment might shift enough in one direction or another on the immigration issues that one side would feel forced to concede and just accept the terms the other party is demanding.

    But what if we don’t see that dramatic shift within the next week and neither side feels like they need to cave? What then? Well, the obvious answer is another short-term funding compromise (a “continuing resolution”) that pushes the issue of the fate of the ‘Dreamers’ and the final vote on the federal budget back a few more weeks. And, Surprise!, that’s exactly what Congressional appears to be trying to negotiate, with both sides acknowledging that a resolution to these issues is highly unlikely to be achieved within the next week.

    But there’s a problem with this scenario. And, Surprise!, it’s a far-right problem. Yep, the House ‘Freedom Caucus’ of far-right GOPers is threatening to oppose any more continuing resolutions. They want the budget resolved NOW and they are demanding that this includes a far-right immigration ‘reform’ package that includes massive cuts to legal immigration, an end to family-based immigration (so called “chain migration”), and a complete elimination of the diversity lottery that ensures that immigration to the US is truly global in nature.

    On top of these immigration demands, the Freedom Caucus is also demanding an end to the military spending caps the GOP forced on all federal spending back in 2011 (the “sequester). But they’re only demanding the military spending caps be lifted. The rest of the sequester will stay in place.

    So what are the Democrats saying about this? Well, the Democrats appear to largely have come to an agreement with the GOP for a significant increase in military spending. But, in return, House Democrats are demanding increasing in domestic spending, like dealing with the opioid crisis or more funding for veterans’ benefits, and promising that they too won’t support any new stopgap bill that doesn’t include a fix for the ‘Dreamers’ and an increase in federal spend for domestic programs. But, of course, being in the minority, the House Democrats’ threats to oppose a future stopgap bill are largely just inconsequential theatrics, unlike the Freedom Caucus’s threats which are very real.

    And, again, the Freedom Caucus is taking the position that they will not vote for any more stopgap continuing resolutions at all unless their demands are met. So it looks like the ‘Freedom Caucus’ could be leading the way to another government shutdown next week:

    Politico

    GOP faces new shutdown threat from within

    Rank-and-file Republicans are frustrated with the prospect of having to pass yet another short-term government funding bill.

    By SARAH FERRIS and SEUNG MIN KIM

    01/31/2018 07:11 PM EST

    Congress is a week away from another government shutdown. And if it happens this time, the blame may lie with Republicans, who are struggling to keep their lawmakers in line.

    Republicans have considered a stopgap funding bill that could run one month or possibly deeper into March, according to multiple sources. Discussions have been fluid, however, as House and Senate Republicans gather this week in West Virginia for their annual retreat. The House could vote as soon as Tuesday, two days before funding runs dry.

    But many rank-and-file GOP lawmakers who reluctantly backed the last temporary funding bill, including conservatives and defense hawks, are balking at yet another patch.

    With Congress now staring down its fifth short-term spending bill since September, frustration is spreading across the House Republican Conference, particularly as negotiations have stalled over raising stiff budget caps and providing relief to so-called Dreamers, undocumented immigrants brought to the U.S. as children.

    House Freedom Caucus Chairman Mark Meadows is threatening to withhold votes for another funding bill without more concessions on immigration. The North Carolina Republican told reporters this week that members of his hard-line caucus couldn’t vote for the bill until Speaker Paul Ryan makes good on his promise to push a more conservative immigration plan.

    “It’s not up to me to get out of it. It’s the speaker’s job to get out of it,” Meadows said Tuesday about the lack of support for the stopgap.

    Even if the funding bill clears the House, it would land in a Senate chamber that has made hardly any progress on a fix to the Deferred Action for Childhood Arrivals program, a conflict that fueled the government shutdown earlier this month.

    “It’s all about DACA,” said Senate Majority Whip John Cornyn (R-Texas).

    A group of the No. 2 leaders from each chamber — Cornyn, Senate Minority Whip Dick Durbin (D-Ill.), House Majority Leader Kevin McCarthy (R-Calif.) and House Minority Whip Steny Hoyer (D-Md.) — are getting nowhere in their immigration discussions.

    Meanwhile, a coalition of Senate dealmakers is trying to craft a bare-bones framework that can help launch a floor debate. But they’re downplaying their effort as a Plan B more than anything else.

    Immigration also remains a key sticking point in the House. Freedom Caucus leaders are accusing GOP leaders of backing away from their promise to help sell a controversial bill from Judiciary Committee Chairman Bob Goodlatte (R-Va.) — a bill that would struggle to pass the lower chamber, let alone the more moderate Senate.

    But the frustrations among lawmakers go beyond Dreamers and border security.

    Defense hawks are also refusing to commit to another stopgap without a long-term spending agreement. They complain that the Pentagon has now spent more than one-third of the fiscal year under temporary funding, risking harm to service members.

    Several Republicans on the House Armed Services Committee are pushing GOP leaders to attach a full year of defense spending to the next “continuing resolution.” After this month’s politically painful shutdown, they believe Democrats wouldn’t dare vote against it.

    “One of the arguments we heard from Senate Democratic leadership last week against the CR was: ‘It hurts the military.’ OK, it doesn’t if you do the defense appropriations bill,” Rep. Bradley Byrne (R-Ala.) said in an interview Tuesday.

    “I don’t think you want to hold up defense spending, particularly if you’re a red-state senator,” Byrne said, noting the pressure on his own senator, Alabama Democrat Doug Jones.

    Spending talks have also faltered in recent days.

    Negotiators have largely agreed to boost the Pentagon’s budget by about $80 billion each year, as part of a two-year deal. But an agreement on domestic spending levels has eluded them, sources say.

    House Democrats say they’ll remain unified in opposition to all stopgap bills until both sets of negotiations — spending caps and immigration — are resolved. That tactic has drawn fire from Republicans, who blame the spending deal holdup on immigration.

    “It is really not a good situation for the efficient operation of government programs and for our military in particular that we’re this far into the fiscal year and still lack funding,” said Sen. Susan Collins (R-Maine), a key appropriator. “So that is a major concern. But it seems like resolving the immigration issue is going to be necessary in order to resolve the budget issue.”

    House Minority Leader Nancy Pelosi on Wednesday dismissed complaints from Republicans that immigration is blocking a budget deal.

    “The Dreamers are part of the negotiation. But they’re not holding that up,” Pelosi said.

    Ryan and his deputies have largely avoided floor drama on recent government funding votes, but they’ve been forced into several rounds of last-minute negotiations with Freedom Caucus and Republican Study Committee leaders to win over key votes.

    And Republicans in both chambers say they’re out of patience for more stopgap spending bills to buy time for an ever-elusive spending deal.

    “We’ve been told that they were close for a month now,” Sen. Roy Blunt (R-Mo.) said Tuesday. “I think coming up with an amount of money is not very difficult, if they ever actually decide to separate this from the DACA issue.”

    Ryan repeated that message to GOP lawmakers at a closed-door meeting Tuesday, where he again said negotiators were closing in on a deal — only to be greeted with frustration by his members.

    “We’ve had enough background discussions with the Democrats, it shouldn’t be that hard to cut a caps deal,” Rep. Bill Flores (R-Texas) vented after that meeting.

    ———-

    “GOP faces new shutdown threat from within” by SARAH FERRIS and SEUNG MIN KIM; Politico; 01/31/2018

    House Freedom Caucus Chairman Mark Meadows is threatening to withhold votes for another funding bill without more concessions on immigration. The North Carolina Republican told reporters this week that members of his hard-line caucus couldn’t vote for the bill until Speaker Paul Ryan makes good on his promise to push a more conservative immigration plan.”

    No hard line immigration bill, no Freedom Caucus votes to fund the government. That’s the ‘line in the sand’ being laid down by the Freedom Caucus Chairman Mark Meadows. But even if the immigration issue is somehow resolved, there still the GOP demands to raise the spending caps on military spending. And while both parties appear to be ready to agree to that requested hefty increase in military spending, there’s no sign of an agreement for lifting the spending cap on anything else:


    But the frustrations among lawmakers go beyond Dreamers and border security.

    Defense hawks are also refusing to commit to another stopgap without a long-term spending agreement. They complain that the Pentagon has now spent more than one-third of the fiscal year under temporary funding, risking harm to service members.

    Spending talks have also faltered in recent days.

    Negotiators have largely agreed to boost the Pentagon’s budget by about $80 billion each year, as part of a two-year deal. But an agreement on domestic spending levels has eluded them, sources say.

    House Democrats say they’ll remain unified in opposition to all stopgap bills until both sets of negotiations — spending caps and immigration — are resolved. That tactic has drawn fire from Republicans, who blame the spending deal holdup on immigration.

    “House Democrats say they’ll remain unified in opposition to all stopgap bills until both sets of negotiations — spending caps and immigration — are resolved. That tactic has drawn fire from Republicans, who blame the spending deal holdup on immigration.”

    Don’t forget, House Democrats have almost no real power in this situation as the minority party so their “unified in opposition to all stopgap bills until both sets of negotiations — spending caps and immigration — are resolved” isn’t a real obstacle to resolving this impasse.

    So should we expect another shutdown when that February 8th deadline comes and goes? We’ll see. But as of now, the talk on both sides is that there is no realistic possibility that this budget/immigration showdown will be resolved in a week and House GOP leaders are eyeing a spending bill through March 22nd. Keep in mind that the deadline for coming up with a solution for the ‘Dreamers’ is March 5th, so pushing the next shutdown fight to March 22nd could shift the immigration debate dynamic quite a bit since we could see the Dreamers losing their jobs and getting deported by then.

    But as the following article notes, in addition to that March 5th Dreamer deadline, there’s another rather critical deadline between February 8th and March 22nd: Raising the debt ceiling. Yep! Thanks to the GOP’s giant tax cuts, the date when the government hits its debt-ceiling has been pushed up and is now expected to hit that debt-ceiling some time in mid-March.

    So, given that added element of risk added to the negotiations, is some sort of compromise going to happen? Well, as the following article also note, the GOP ion the Senate is offering a compromise of sorts, but, true to GOP-form, it’s more trolling than any sort of compromise: the GOP is offering to lift the cap on domestic spending in exchange for lifting the cap on military spending, but only if all of that extra domestic spending is spent on infrastructure. And while it’s unclear what the exact nature of the GOP’s infrastructure is going to be, recall that earlier descriptions of the GOP’s infrastructure plans appear to actually be hundreds of billions of dollars in tax incentives for private interests to buy up public infrastructure and run it as a for-profit enterprise (tolls everywhere). In other words, the Senate GOP’s big compromise on these spending caps appears to be an offer to fund the mass privatization of US infrastructure in exchange for more military spending. And there’s no reason the Freedom Caucus is going to be interested in that proposal even if the Democrats agreed to it. So the government isn’t just at risk of shutting down. It’s at risk of defaulting too:

    The Washington Post

    Congress barrels toward spending deadline with no deal in sight

    By Erica Werner and Mike DeBonis
    February 1, 2018 at 3:59 PM

    WHITE SULPHUR SPRINGS, W.Va. — With a shutdown deadline looming Feb. 8 and no long-term deal at hand, congressional Republican leaders said Thursday they will have to pass yet another short-term spending bill next week to keep the government open.

    House GOP leaders are eyeing a spending bill through March 22, aides said, though that date could change. It would have to pass early next week, as government funding is set to expire at the end of next Thursday. Without a new funding agreement, the government would shut down, as it did for three days in January.

    Yet attempts to reach a longer-term deal have faltered amid a larger dispute over immigration and disagreement between the two parties about spending levels, as well as reluctance among some conservatives to sign off on massive new government spending in an election year. The three-day partial shutdown late last month was precipitated by Senate Democrats’ demands for protections for undocumented immigrants brought to the United States as children, called “dreamers,” an issue that remains unresolved.

    As Republicans gathered at the Greenbrier resort in West Virginia for their annual retreat, Senate Majority Leader Mitch McConnell (Ky.) insisted the government would stay open.

    Even so, it seemed unlikely that House and Senate negotiators would be able to strike the bipartisan, two-year budget deal they are striving for ahead of Feb. 8. Even if they do, lawmakers would need weeks to turn agreed-upon figures into complete spending bills for all the agencies of government.

    Next week’s stopgap legislation would be the fifth short-term “continuing resolution” of this fiscal year, a situation that is causing frustration and finger-pointing on all sides. That includes within GOP ranks, which could jeopardize passage of the resolution as conservative lawmakers and defense hawks both threatened Thursday to withhold their votes.

    Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, said his group might not support another short-term spending bill without promises of action on higher military spending levels and other issues.

    “I don’t see the probability of the Freedom Caucus supporting a fifth CR without substantial changes by Feb. 8 unless we see dramatic changes,” Meadows told reporters. “We’ve had the land of promise for four times now on CRs. It’s time to put some real commitment to the effort before a fifth CR.”

    Defense hawks in the House have grown increasingly frustrated with the multiple short-term spending bills, contending that they threaten military readiness and cost lives, since the Pentagon is not getting the money it needs.

    Rep. Mac Thornberry (R-Tex.), chairman of the Armed Services Committee, told reporters after a closed-door session with Defense Secretary Jim Mattis and Secretary of State Rex Tillerson that both Cabinet members were insisting on an end to short-term spending bills.

    “The secretaries were very clear, I think, in encouraging Congress to resolve the budget issues and end the continuing resolutions so that they can manage their departments,” Thornberry said, “and more importantly, so the world knows that we are functioning and can do whatever needs to be done to protect the national security of the United States.”

    Thornberry refused to commit to voting for the continuing resolution expected on the floor next week.

    “We’re just going to have to see what the situation is when it arrives. Obviously there’s a lot of conversation among members at this retreat about the way forward,” he said. “Nobody wants a government shutdown, but we also cannot continue to inflict the damage that CRs inflict on the military. We can’t keep doing that.”

    Overall discretionary spending levels — funding for education, housing, defense and much more — are capped under a 2011 law, and exceeding those limits requires bipartisan agreement under Senate filibuster rules. Republicans are trying to negotiate an enormous increase in military spending in the pending budget deal, which Democrats hope to match with domestic spending.

    Budget deals passed under President Barack Obama in 2013 and 2015 proceeded along those lines. But now, with Republicans in the White House and in control of both houses of Congress, GOP lawmakers want to pursue a tougher posture.

    Meadows and Sen. John Thune (S.D.), the No. 3 Senate Republican, suggested they might be willing to live with an increase in nondefense spending as long as the extra funding is devoted to infrastructure, a major congressional agenda item for the Trump administration. There is no indication that Democrats, who are pushing for new investments to combat the opioid crisis and beef up veterans’ benefits, would agree to those terms.

    “Obviously we’re probably going to need a short-term CR,” said Thune, while acknowledging little progress has been made since last month’s shutdown.

    Senate Minority Leader Charles E. Schumer (D-N.Y.) pushed back at suggestions of an impasse, declaring in a terse statement Thursday that “discussion on the caps deal is going very well.”

    GOP senators have already acknowledged that the Senate isn’t likely to pass a budget either. In forgoing a budget Republicans give up procedural rules that allow them to pass legislation without risk of a Democratic filibuster, which all but ensures they will make no effort at major entitlement reforms or another attempt to repeal the Affordable Care Act.

    The need to raise the federal debt limit is further complicating the budget negotiations. The Congressional Budget Office said Wednesday that the limit will have to be raised above its current $20 trillion level by the first half of March — earlier than expected because of the GOP’s recent tax-cut legislation. The last increase was passed in September as part of a temporary spending agreement brokered between President Trump and congressional Democrats.

    Republicans have typically found it hard, if not impossible, to cobble together enough House votes from their own party to increase the debt limit. That gives Democrats further leverage to bargain for spending concessions.

    The CBO’s announcement put the issue back into the spotlight, and Meadows said there are “discussions going on right now about the debt ceiling that I’m not at liberty to talk about” on ways to win conservative support for a debt ceiling measure.

    Hard-liners have floated a number of proposals meant to rein in federal spending, though none has ever gotten broader buy-in from lawmakers.

    Meadows said he has spoken to White House budget director Mick Mulvaney and Treasury Secretary Steven Mnuchin “on how we can effectively make some real reforms in that area, and based on those initial conversations, a number of Freedom Caucus members could potentially support those efforts.”

    Thune said all the pending issues, from spending to immigration to the debt ceiling, could end up getting dealt with together.

    “There’s sort of a pileup of things happening, all of which I think at some point could end up being merged together,” he said.

    ———-

    “Congress barrels toward spending deadline with no deal in sight” by Erica Werner and Mike DeBonis; The Washington Post; 02/01/2018

    House GOP leaders are eyeing a spending bill through March 22, aides said, though that date could change. It would have to pass early next week, as government funding is set to expire at the end of next Thursday. Without a new funding agreement, the government would shut down, as it did for three days in January”

    Meet the new plan, same as the old plan: another continuing resolution to buy more time.

    But while the plan might be the same as before, the actual demands keep growing. The GOP demands a lift of the spending caps on the military, so the Democrats demand a lift on the spending caps for other federal programs. And the GOP counters with an offer to spend more, but only on an undefined infrastructure package:


    Overall discretionary spending levels — funding for education, housing, defense and much more — are capped under a 2011 law, and exceeding those limits requires bipartisan agreement under Senate filibuster rules. Republicans are trying to negotiate an enormous increase in military spending in the pending budget deal, which Democrats hope to match with domestic spending.

    Budget deals passed under President Barack Obama in 2013 and 2015 proceeded along those lines. But now, with Republicans in the White House and in control of both houses of Congress, GOP lawmakers want to pursue a tougher posture.

    Meadows and Sen. John Thune (S.D.), the No. 3 Senate Republican, suggested they might be willing to live with an increase in nondefense spending as long as the extra funding is devoted to infrastructure, a major congressional agenda item for the Trump administration. There is no indication that Democrats, who are pushing for new investments to combat the opioid crisis and beef up veterans’ benefits, would agree to those terms.

    And now, thanks to the tax cuts (for big corporations and the super-rich), the federal debt limit is set to be hit by mid-March. If that isn’t resolved, the US government defaults on its debt. And in the face of this budget crunch due to the tax cuts, the Freedom Caucus is talking about ‘reigning in spending’. It doesn’t bode well:


    The need to raise the federal debt limit is further complicating the budget negotiations. The Congressional Budget Office said Wednesday that the limit will have to be raised above its current $20 trillion level by the first half of March — earlier than expected because of the GOP’s recent tax-cut legislation. The last increase was passed in September as part of a temporary spending agreement brokered between President Trump and congressional Democrats.

    Republicans have typically found it hard, if not impossible, to cobble together enough House votes from their own party to increase the debt limit. That gives Democrats further leverage to bargain for spending concessions.

    The CBO’s announcement put the issue back into the spotlight, and Meadows said there are “discussions going on right now about the debt ceiling that I’m not at liberty to talk about” on ways to win conservative support for a debt ceiling measure.

    Hard-liners have floated a number of proposals meant to rein in federal spending, though none has ever gotten broader buy-in from lawmakers.

    Meadows said he has spoken to White House budget director Mick Mulvaney and Treasury Secretary Steven Mnuchin “on how we can effectively make some real reforms in that area, and based on those initial conversations, a number of Freedom Caucus members could potentially support those efforts.”

    Republicans have typically found it hard, if not impossible, to cobble together enough House votes from their own party to increase the debt limit. That gives Democrats further leverage to bargain for spending concessions.”

    And that’s where we are: If Congress manages to pass a short-term funding bill and avoid a government shutdown on February 8th, that’s probably going to create situation where this shutdown showdown overlaps with a debt-ceiling default showdown. And the closer we get to all these deadlines, the more extreme the Freedom Caucus’s demands get. What are those demands? We don’t get to know. But based on past experience, we know that the Freedom Caucus loves to make demands that even the rest of the GOP won’t agree to. So, given that this isn’t just a ‘normal’ debt ceiling showdown, but instead a showdown tied into a government shutdown and the fate of the ‘Dreamers’, will that make the Freedom Caucus even more extreme than usual? America will find out. Possibly via a government shutdown and default.

    Posted by Pterrafractyl | February 1, 2018, 11:32 pm
  18. While there is no shortage of significant questions about the future direction of the GOP these days, perhaps the most surprising question is whether or not Paul Ryan, the Speaker of the House, is going to retire. It’s surprising even in the context of the larger wave of announcements of GOP congressional retirements. You wouldn’t normally expect a relatively young Speaker of the House. True, Ryan did refute the rumors back in December. But it’s also true that Ryan declined to say whether or not he would run for another term when directly asked a couple of weeks ago and hasn’t since made that announcement.

    So we’ll see whether or not Paul Ryan finally announces a reelection bid or his retirement. Either way, it’s hard to imagine that the remarkably tin-eared tweet that he sent out, and quickly deleted, over the weekend isn’t going to factor in to his decision-making. It’s the tweet that’s almost surely going to be featured in one Democratic campaign ad after another. Because with the GOP planning on running in the mid-terms touting the benefits of the Trump tax cuts for middle-class voters by confusing people about the extremely skewed nature of the tax bill that gives almost all the benefits to the wealthy and big corporations, it’s hard to imagine a more politically damaging admission than what Paul Ryan just tweeted out: It was a tweet celebrating a secretary who would get an extra $1.50 per week from the tax cut:

    The New York Times
    Op-Ed

    Let Them Eat French Fries

    Paul Krugman
    FEB. 4, 2018

    In a now-deleted tweet, which has nonetheless already become notorious, Paul Ryan tried to hype the benefits of his massive corporate tax cut by celebrating the example of a worker who’s getting $1.50 more per week. That’s roughly the price of a small French fries at McDonalds.

    Should we keep giving Ryan grief over that tweet? Yes, we should – and not just because it shows how out of touch he is. By highlighting the tiny tax cut some workers will get as if that were the point and main result of a bill that blows up the deficit by more than $1 trillion, he helps illustrate the bait-and-switch at the core of the whole G.O.P. agenda.

    For tax cuts aren’t free. Sooner or later, the federal government has to pay its way. Even if you don’t think the budget deficit is currently a big problem, except under very special circumstances anything that reduces revenue will eventually have to be offset by later tax increases or spending cuts.

    And those special circumstances – basically a depressed economy that needs a fiscal boost – don’t apply now, with the U.S. close to full employment.

    So Ryan is patting himself on the back for giving a schoolteacher some French fries. What’s he planning to take away?

    Well, we know the answer: Republicans constantly use the alleged dangers of budget deficits to argue for sharp cuts in social programs. You might have thought they’d lay off that rhetoric for a while after passing an unfunded $1.5 trillion tax cut, but in fact they barely paused; even at the height of the tax “reform” debate people like Orrin Hatch declared that we can’t “spend billions and billions and trillions of trillions of dollars to help people who won’t help themselves.” Right now they’re dragging their feet on funding for community health centers, complaining about the cost.

    So here’s how the bait and switch goes: pass a huge tax cut that overwhelmingly benefits the rich, but gives ordinary workers a few crumbs — or actually a bag of fries now and then. Then point to the big deficits created by that tax cut as a reason social program essential to many ordinary families must be slashed. Lather, rinse, repeat.

    ———-

    “Let Them Eat French Fries” by Paul Krugman; The New York Times; 02/04/2018

    “Should we keep giving Ryan grief over that tweet? Yes, we should – and not just because it shows how out of touch he is. By highlighting the tiny tax cut some workers will get as if that were the point and main result of a bill that blows up the deficit by more than $1 trillion, he helps illustrate the bait-and-switch at the core of the whole G.O.P. agenda.”

    Bait-and-switch. Selling rotten lemons as delicious lemonaid and hoping the public doesn’t notice. It’s the meta-GOP tactic. The “time-inconsistency” tactic Bruce Bartlett warned us about that the GOP repeatedly used to force big cuts in federal spending – by first passing big tax cuts and then waiting a few years for the deficit to explode and demand spending cuts – is just one example of that bait-and-switch tactic in action. As Paul Ryan accidentally made clear in his now notorious tweet, the bait-and-switch tactic was also used to sell the public on the tax cut by selling it as a tax cut for middle-class Americans when almost all the benefits actually go to the wealthy and big corporations.

    And as Krugman points out, it’s not like there isn’t ever an appropriate time for a spike in deficits. But that appropriate time is during a depressed economy, like in 2009 when the GOP and the deficit scolds prevented Barack Obama from implementing a much larger stimulus. Instead, we have the GOP spiking the deficits when the US is near full employment, which means the benefits of all this deficit spending are going to be much more muted and the future spending cuts mandated by the deficits much more likely. It’s the kind of ass-backward economic policy we should expect from the GOP:


    For tax cuts aren’t free. Sooner or later, the federal government has to pay its way. Even if you don’t think the budget deficit is currently a big problem, except under very special circumstances anything that reduces revenue will eventually have to be offset by later tax increases or spending cuts.

    And those special circumstances – basically a depressed economy that needs a fiscal boost – don’t apply now, with the U.S. close to full employment.

    “And those special circumstances – basically a depressed economy that needs a fiscal boost – don’t apply now, with the U.S. close to full employment.”

    But it’s not even like the GOP is waiting for much larger deficits in the future to call for those spending cuts. The call for the cuts have already started and were even going on in the middle of the debate over the passage of the tax cut:


    So Ryan is patting himself on the back for giving a schoolteacher some French fries. What’s he planning to take away?

    Well, we know the answer: Republicans constantly use the alleged dangers of budget deficits to argue for sharp cuts in social programs. You might have thought they’d lay off that rhetoric for a while after passing an unfunded $1.5 trillion tax cut, but in fact they barely paused; even at the height of the tax “reform” debate people like Orrin Hatch declared that we can’t “spend billions and billions and trillions of trillions of dollars to help people who won’t help themselves.” Right now they’re dragging their feet on funding for community health centers, complaining about the cost.

    It’s really quite remarkable. The GOP isn’t simply serious about implementing the “time-inconsistency” bait-and-switch tactic of using deficits from tax cuts to demand spending cuts in the future. They are in a hurry to implement that tactic. In other words, it’s not a bait-and-wait-and-switch-later tactic. It’s a bait-and-switch-NOW tactic. A bait-and-switch-NOW strategy is also the strategy Paul Ryan reportedly advocated recently when he suggested the GOP should implement ‘entitlement reform’ (i.e. gutting Social Security, Medicare, and Medicaid) this year as part of the GOP’s main agenda.

    And as the following article points out, it’s not just GOPers like Paul Ryan calling for big cuts in federal spending right after the GOP’s giant tax cuts for the rich. The ‘usual suspects’ who are always calling for massive cuts in entitlements over debt and deficit concerns – like the Committee for a Responsible Federal Budget thank-tank which is part of the Peter. G. Peterson Foundation dedicated to cutting entitlements under the guise of deficit concerns – are also now calling for big cuts in federal spending. But unlike the GOP, these think-tanks are very clear about why they think those bug spending cuts need to happen soon: the massive new deficits caused by the GOP tax cuts that have already nearly doubled the deficit:

    The Washington Post

    The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year

    By Heather Long February 3, 2018

    It was another crazy news week, so it’s understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump’s first full year in charge of the budget.

    That’s almost double what the government borrowed in fiscal year 2017.

    Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It’s the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.

    Treasury mainly attributed the increase to the “fiscal outlook.” The Congressional Budget Office was more blunt. In a report this week, the CBO said tax receipts are going to be lower because of the new tax law.

    The uptick in borrowing is yet another complication in the heated debates in Congress over whether to spend more money on infrastructure, the military, disaster relief and other domestic programs. The deficit is already up significantly, even before Congress allots more money to any of these areas.

    “We’re addicted to debt,” says Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget. He blames both parties for the situation.

    What’s particularly jarring is this is the first time borrowing has jumped this much (as a share of GDP) in a non-recession time since Ronald Reagan was president, says Ernie Tedeschi, a former senior adviser to the U.S. Treasury who is now head of fiscal analysis at Evercore ISI. Under Reagan, borrowing spiked because of a buildup in the military, something Trump is advocating again.

    Trump didn’t mention the debt — or the ongoing budget deficits — in his State of the Union address. The absence of any mention of the national debt was frustrating for Goldwein and others who warn that America has a major economic problem looming.

    The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.

    The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.

    “Some of my Wall Street clients are starting to talk recession in 2019 because of these issues. Fiscal policy is just out of control,” says Peter Davis, a former tax economist in Congress who now runs Davis Capital Investment Ideas.

    The Federal Reserve was also buying a lot of U.S. Treasury debt since the crisis, helping to beef up demand. But the Fed recently decided to stop doing that now that the economy has improved. It’s another wrinkle as Treasury has to look for new buyers.

    Tedeschi, the former Treasury adviser to the Obama administration, calls it “concerning, but not a crisis.” Still, he says it’s a “big risk” to plan on borrowing so much in the coming years.

    Trump’s Treasury forecasts borrowing over $1 trillion in 2019 and over $1.1 trillion in 2020. Before taking office, Trump described himself as the “king of debt,” although he campaigned on reducing the national debt.

    The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure — $955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.

    Both parties claim they want to be “fiscally responsible,” but Goldwein says they both pass legislation that adds to the debt. Politicians argue this is the last time they’ll pass a bill that makes the deficit worse, but so far, they just keep going.

    The latest example of largesse is the GOP tax bill. It’s expected to add $1 trillion or more to the debt, according to nonpartisan analysis from the Joint Committee on Taxation (and yes, that’s after accounting for some increased economic growth).

    But even before that, Goldwein points to the 2015 extension of many tax cuts and the 2014 delays in Medicare reimbursement cuts.

    “Every time you feed your addiction, you grow your addiction,” says Goldwein.

    There doesn’t seem to be any appetite for budgetary restraint in Washington, but the market may force Congress’ hand.

    ———

    “The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year” by Heather Long; The Washington Post; 02/03/2018

    “Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It’s the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.”

    From $519 billion to $955 billion. That’s the one year jump in the deficit. Largely thanks to the tax cut that the GOP is pitching as beneficial to average Americans:


    Treasury mainly attributed the increase to the “fiscal outlook.” The Congressional Budget Office was more blunt. In a report this week, the CBO said tax receipts are going to be lower because of the new tax law.

    The uptick in borrowing is yet another complication in the heated debates in Congress over whether to spend more money on infrastructure, the military, disaster relief and other domestic programs. The deficit is already up significantly, even before Congress allots more money to any of these areas.

    But despite the fact that the GOP and its decades of bait-and-switch tactics designed to cut taxes on the rich and cut federal programs for everyone else, we have think-tanks like Committee for a Responsible Federal Budget claiming that this is really a ‘both sides’. And why does the Committee for a Responsible Federal Budget feel that the the Democrats are also at fault here? Because they aren’t in favor of the massive entitlement cuts that are now needed to control the deficit as a result of all these tax cuts. The tax cuts and the spending that becomes less affordable as a consequence of those cuts are both treated as the same “addiction”:


    “We’re addicted to debt,” says Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget. He blames both parties for the situation.

    The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure — $955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.

    Both parties claim they want to be “fiscally responsible,” but Goldwein says they both pass legislation that adds to the debt. Politicians argue this is the last time they’ll pass a bill that makes the deficit worse, but so far, they just keep going.

    The latest example of largesse is the GOP tax bill. It’s expected to add $1 trillion or more to the debt, according to nonpartisan analysis from the Joint Committee on Taxation (and yes, that’s after accounting for some increased economic growth).

    But even before that, Goldwein points to the 2015 extension of many tax cuts and the 2014 <a href="https://www.washingtonpost.com/news/post-politics/wp/2014/03/31/for-17th-time-in-11-years-congress-delays-medicare-reimbursement-cuts-as-senate-passes-doc-fix/?utm_term=.5013f12e4fdf”>delays in Medicare reimbursement cuts.

    “Every time you feed your addiction, you grow your addiction,” says Goldwein.

    ““Every time you feed your addiction, you grow your addiction,” says Goldwein.”

    Yes, for the deficit scolds at the Committee for a Responsible Federal Budget, delays in Medicare reimbursement cuts are viewed and tax cuts for the rich aren’t viewed as a cause and effect situation. Both are viewed as two sides of the same “addiction”.

    But those deficit scolds do have a point when it comes to the possibility that spiking deficits really can have real-world consequences that defy the GOP’s reality-denialism media-machine: if bond investors get spooked by these sudden sustained deficit spikes, that’s that kind of thing that can cause a sell-off in the bond markets. And when you factor in that the stimulative effects of the tax cut are happening when the US is near full-employment, that’s the kind of situation that might also lead to higher levels of inflation, meaning the deficit concerns from this tax cut could coincide with inflation concerns from this tax cut. Plus, the Federal Reserve has already started selling off its substantial QE-related bond portfolio, which is another reason this tax cut was ill-advised. This tax cut was just incredibly ill-timed:


    The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.

    The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.

    “Some of my Wall Street clients are starting to talk recession in 2019 because of these issues. Fiscal policy is just out of control,” says Peter Davis, a former tax economist in Congress who now runs Davis Capital Investment Ideas.

    The Federal Reserve was also buying a lot of U.S. Treasury debt since the crisis, helping to beef up demand. But the Fed recently decided to stop doing that now that the economy has improved. It’s another wrinkle as Treasury has to look for new buyers.

    Tedeschi, the former Treasury adviser to the Obama administration, calls it “concerning, but not a crisis.” Still, he says it’s a “big risk” to plan on borrowing so much in the coming years.

    Timing matters with tax cuts. Especially really bad timing for really irresponsible cuts

    But as Paul Krugman recently noted, there’s another consequence of the timing of the tax cut that contributed to last week’s treasury and stock market sell-offs that’s actually a very good reason: expectations that recent wage-growth signals that the US economy really is near full employment, meaning demand for workers really could lead to a period of broad-based wage growth. And that wage growth would be great news if it was within the context of an overall economic environment and policy framework that was moving the economy into a period of high productivity growth and sustained elevated economic growth. Like the 3 percent target of growth that Trump has repeatedly touted as a likely consequence of his tax bill. If the US economy was looking like it was actually heading towards sustained 3 percent growth and higher productivity growth, that would make the sustained wage gains something we could actually believe would be sustained. But if that elevated economic growth isn’t looking likely and something closer to 1.5 percent economic growth the US is closer to what we should expect, turbo-charging the economy right now creates the kind of situation where that wage growth is going to be followed by inflation, recession and a return to wage stagnation because the larger policy framework that created that wage growth is destabilizing.

    It’s all a reminder that relying solely on ‘the market’ for wage growth is actually kind of stupid because it requires very tight employment conditions to get the kind of broad based wage growth societies need in order to avoid an ever-widening wealth gap. The US’s war on unions left turbo-charged economies as the only real wage growth option. Which is a policy almost designed to hold back the human potential of a society. But that’s our dumb system, so now we have to be concerned about wage growth feeding into the current concerns over spiking deficits (due to a massive tax cut for the rich) and helping to tank the stock markets. Again, that shouldn’t be how society works, but that’s how society does actually work thanks to our current paradigm, hence market concerns over wage growth despite decades of stagnant US wages and an ever-widening wealth gap between the ‘haves’ and ‘have nots’ that threatens to destabilize US society.

    So we’re in a situation where the prospects of a tight labor market leading to wage growth as viewed as an economic drag and reason for a sell-off. But not the only reason. As Paul Krugman points out in the following recent piece from Friday, when the Dow Jones suffered an omionous 666 drop, the recent stock market sell off is probably due to a combination of market expectations of short-to-medium-term wage growth and sustained large future deficits from the tax cut and higher inflation and interest rates and low medium-to-long-term economic growth with low productivity growth. And it’s that expectation of low future productivity growth translating into low economic growth that, combined with the expections of higher wages, that could be a big driver for stocks stocks. And then the Dow Jones drops more than 1,100 points on Monday, the largest one day drop in history. So if Krugman’s suspicions are correct, it suggests ‘the market’ is expecting low productivity and economic growth at this point, which means ‘the market’ isn’t buying into the fraudulent ‘supply-side’ argument that massive tax cuts for the wealthy and big corporations and the GOP’s massive deregulation agenda will somehow create a super-efficient economy with high productivity. ‘The markets’ are instead assuming the tax cuts are actually going to make things worse for profits in the long-run because ‘the markets’ don’t buy into the GOP’s supply-side nonsense about tax cuts for the rich leading to a permanently wealthier society and recognize that they will make the situation worse by destabilizing it in a number of ways:

    The New York Times
    Op-ed

    The Bad News in the Good News

    Paul Krugman
    FEB. 2, 2018

    This morning’s job market report was definitely good. Job creation was surprisingly strong for this late in an economic expansion; wages are finally rising, although still far more slowly than they were before the Great Recession. You never want to make too much of one month’s report, but this was clearly positive.

    And stocks plunged. What?

    One answer is that stocks gonna do what they’re gonna do – as Paul Samuelson famously put it, the market predicted nine of the last five recessions. But there’s a bit of economic logic here too. One way of looking at recent economic data is that they’re actually telling us that future U.S. growth will be lower than one might have hoped.

    If we care about the medium term – say, 5 or 10 years – prospects for U.S. growth depend on two things. First, how much slack is there in the economy? How many people who aren’t working can still be drawn into employment without inflation taking off?

    Second, how fast will productivity – output per person-hour – rise?

    The first question has posed something of a puzzle. Standard indicators like the unemployment rate and the quit rate suggest an economy at more or less full employment. (Quits matter because they tell us how easily workers expect to find new jobs.) But low wage growth suggested that there might still be substantial room to run.

    Now, finally, we may be seeing some significant wage gains:

    Again, you don’t want to make too much of one month’s number. But the wage gain strengthens the case that we really are near full employment; interest rates rose because the odds of Fed rate hikes to limit inflation have risen. And that hit stocks.

    Meanwhile, productivity numbers have been pretty dismal:

    [see charge of US productivity gains]

    So what the data are suggesting, although not with a lot of confidence, is that America is about to settle into a low-growth rut, maybe 1.5% a year. And yes, that’s only half what Trump is promising.

    ———-

    “The Bad News in the Good News” by Paul Krugman; The New York Times; 02/02/2018

    “And stocks plunged. What?”

    What? That was natural question to ask when stocks plunged on Friday after the pretty good jobs report.

    But as Paul Krugman laid out, the drop in the markets may have made sense given the conflicting signals in recent economic numbers. Because stock and bond markets are making guesses about the prospect for future profits in our profit-oriented economic system and looking closely at two key economic metrics that: inflation (eats away at profits) and productivity growth (strengthens profits):


    One answer is that stocks gonna do what they’re gonna do – as Paul Samuelson famously put it, the market predicted nine of the last five recessions. But there’s a bit of economic logic here too. One way of looking at recent economic data is that they’re actually telling us that future U.S. growth will be lower than one might have hoped.

    If we care about the medium term – say, 5 or 10 years – prospects for U.S. growth depend on two things. First, how much slack is there in the economy? How many people who aren’t working can still be drawn into employment without inflation taking off?

    Second, how fast will productivity – output per person-hour – rise?

    And right now, those two economic signals are pointing towards higher inflation coupled with low productivity growth which points towards lower overall economic growth. And that higher inflation is being driven by higher wage growth stemming for the lack of slack in the job market:


    The first question has posed something of a puzzle. Standard indicators like the unemployment rate and the quit rate suggest an economy at more or less full employment. (Quits matter because they tell us how easily workers expect to find new jobs.) But low wage growth suggested that there might still be substantial room to run.

    Now, finally, we may be seeing some significant wage gains:

    Again, you don’t want to make too much of one month’s number. But the wage gain strengthens the case that we really are near full employment; interest rates rose because the odds of Fed rate hikes to limit inflation have risen. And that hit stocks.

    “Again, you don’t want to make too much of one month’s number. But the wage gain strengthens the case that we really are near full employment; interest rates rose because the odds of Fed rate hikes to limit inflation have risen. And that hit stocks.

    That’s the key point in Krugman’s piece regarding how the tax cuts are creating a self-sabotaging situation: good jobs numbers caused the stock markets to drop because they increase the expectations for a rate hike. And when rates are this historically low levels, the expectation of a string of future rate hikes can have significant repercussions in financial markets. So, to a large extent, the drop in the stock market following the positive jobs report is exactly what we should expect because falling stocks is generally expected whenever signs point towards higher inflation and higher Fed rates. But in the case of Donald Trump’s presidency, this normal market response to the expectations of rate hike creates a fascinating dynamic because Trump has made a higher stock market central to his list of ‘accomplishments’, and higher stocks just might be mutually incompatible with a policy of higher wages and higher inflation during a period of low productivity growth. And those productivity numbers are indeed looking low:


    Meanwhile, productivity numbers have been pretty dismal:

    [see charge of US productivity gains]

    So what the data are suggesting, although not with a lot of confidence, is that America is about to settle into a low-growth rut, maybe 1.5% a year. And yes, that’s only half what Trump is promising.

    “So what the data are suggesting, although not with a lot of confidence, is that America is about to settle into a low-growth rut, maybe 1.5% a year. And yes, that’s only half what Trump is promising.”

    So the productivity numbers are pointing towards the US settling into around a 1.5 percent growth rate, half the 3 percent Trump is promising. And that low productivity, combined with signs of future wage growth due to tight labor market is going to reduce expectations of future corporate profits adding downward pressure on stocks that are already relatively expensive. But these expectations of higher wages and lower profits is also happening in the context of a tax cut that is so irresponsible that is spikes the deficit and destabilizes the government’s fiscal situation and treasury markets. So while this may not be a ‘perfect storm’ of conditions for a big market drop, it’s still a ‘pretty good storm’.

    But concerns of higher rates, higher wages, low productivity, and spiking deficits aren’t the only storm cloud on the horizon that markets are going to be looking at. As Paul Krugman also recently pointed out, the current economic expansion is looking ‘unhealthy’ in another key aspect: It’s happening at the expense of personal savings:

    The New York Times
    Op-ed

    The Spendthrift Economy

    Paul Krugman
    JAN. 26, 2018

    I haven’t been paying a lot of attention to quarterly GDP numbers. For one thing, they do tend to bounce around a lot; for another, claims that a good number in a particular quarter somehow validates the Trumpian claim to be able to achieve high growth for a decade are almost too stupid to argue with.

    First, as Jason Furman notes, a good part of the 2.5% growth seems to be cyclical – the result of the economy moving closer to full employment, not a pickup in the underlying growth rate of potential output, which looks more like 1% than the 3% Trump et al need to make their numbers work.

    Second, as Jason also notes, that cyclical expansion doesn’t look too healthy when you look at it closely. It is not being driven mainly by rising business investment. Here’s biz investment as a share of GDP in recent years: it bounces around some, largely because of the rise, fall, and partial recovery of fracking, but is not especially high:

    [see chart of US business investment over past five years]

    What we see instead is a large decline in personal savings, which are now down to levels not seen since before the financial crisis:

    [see chart showing drop in US personal savings over past years, with a sharp drop in 2017]

    Why is saving down? Maybe it’s the stock market (which is starting to feel more like a bubble than it did even a few months ago), maybe it’s eat, drink, and be merry, for tomorrow we have a constitutional crisis/a nuclear war/Skynet kills us all. Whatever: saving can’t keep falling, and you wonder whether households are getting overstretched again.

    I’m not predicting a crisis; this doesn’t look nearly as bad as the U.S. economy in the housing bubble years. (And I’m trying extra hard, given my election night freakout, not to let my political dismay distort my economic judgment.) But as I said, this growth doesn’t look very healthy.

    ———-

    “The Spendthrift Economy” by Paul Krugman; The New York Times; 01/26/2018

    Second, as Jason also notes, that cyclical expansion doesn’t look too healthy when you look at it closely. It is not being driven mainly by rising business investment. Here’s biz investment as a share of GDP in recent years: it bounces around some, largely because of the rise, fall, and partial recovery of fracking, but is not especially high”

    An economic expansion not driven by business investment but instead driven by a draw down in consumer savings. That’s what the numbers are indicating is happening. And when that’s the source of your economic momentum, markets are going to notice and not in a good way:


    What we see instead is a large decline in personal savings, which are now down to levels not seen since before the financial crisis:

    [see chart showing drop in US personal savings over past years, with a sharp drop in 2017]

    Why is saving down? Maybe it’s the stock market (which is starting to feel more like a bubble than it did even a few months ago), maybe it’s eat, drink, and be merry, for tomorrow we have a constitutional crisis/a nuclear war/Skynet kills us all. Whatever: saving can’t keep falling, and you wonder whether households are getting overstretched again.

    I’m not predicting a crisis; this doesn’t look nearly as bad as the U.S. economy in the housing bubble years. (And I’m trying extra hard, given my election night freakout, not to let my political dismay distort my economic judgment.) But as I said, this growth doesn’t look very healthy.

    So let’s pull back and note the interrelatedness of the various factors contributing to this market decline:
    1. When wages are rising without a proportional rise in productivity, markets are going to view that as a threat to corporate profits.

    2. The current economic expansion is being driven by a drop in consumer savings, which is also a reason for markets to fear for the sustainability of the current economic expansion.

    3. The drop in consumer savings is clearly exacerbated by the decades of stagnant wages for the vast majority of Americans.

    So markets view have reason to view both rising wages and stagnant wages as a threat to corporate profits and a reason to sell stocks. That’s our crazy profit-oriented system. For all the talk about the US government being “addicted to debt” as the Committee for a Responsible Federal Budget might put it, it sure seems like a systemic addiction to profit is the real profit here. After all, profit is just an arbitrary accounting metric if you think about it. And it’s an accounting metric that doesn’t take into account the entire system from which that profit is being derived and issues like stagnant wages, a lack of government investment in people and capital, and growing inequality. Or take into account things like the collapse of the environment. It’s a very poor metric to focus on if you think about it. And we don’t have to build a society focused on profit-maximization. That was a choice. An increasingly disastrous choice.

    But that’s why wage growth in the context of low productivity growth can become a problem despite the fact that stock markets are near all-time highs, in keeping with the record profits corporate America has been enjoying in recent years, and despite the fact that US wages have been stagnant for decades as more and more of the national wealth got funneled up to the billionaires. And, once again, let’s not forget that the current wage growth the markets are fearing is largely a side effect of a tax bill that was primarily a giant new transfer of wealth up to the wealthiest Americans, with ‘$1.50 a week’ for that large swathe of American that’s been falling behind for decades and now have depleted savings.

    So, really, the big problem with the big falls in the stock market isn’t that stock markets are falling. The big problem is that fall stock markets are a big problem. It’s an inevitable side-effect of a mindlessly-profit-oriented society. Stock markets are set up to track future profits, and if profits are expected to fall you would want stocks to fall. That’s a feature of markets. It’s only a problem when the economic foundations of a society is based on keeping those stocks up and running massive profits regardless of circumstance. Especially if the circumstance is that corporate profits and stocks are at record levels in large part because corporate America and the GOP have been so wildly successful over the past few decades slashing employee compensation and directing an ever growing share of the national wealth to big corporations and the GOP donor class.

    If we had a system that assumes profit-maximization at a personal level, that makes unfortunate sense given the role human greed plays in day to day decision-making. But structuring an entire society (and global community) around profit-maximization is pretty much a recipe for a Thomas Piketty-style self-reinforcing oligarchy. The contemporary global system is just wildly skewed towards making the rich richer, so much so that long-overdue wage gains are harm the economy that eroding away at record profits. It’s a pretty insane system but it’s a the prevailing one.

    And in our insane contemporary American economy context, we now find President Trump facing a situation where his GOP tax scam was such a massive giveaway to the GOP billionaire donors that it’s freaking out ‘the market’. And now his his campaign promises of higher wages and an ever higher stock market are at risk because those two metrics are mutually opposed in a relatively low 1.5 percent growth future and markets are expecting that future and not the relatively high 3 percent growth future Trump was promising as a result of the GOP tax scam. And now the markets are tanking and it’s laying bare one of the fundamentals problems with a society where an ever growing stock market is considered important and necessarily for a necessary for the US population to realistically save for its retirement. That mandate for an ever-growing stock market as a foundation of American private savings rooted in profit-maximization is in systemic conflict with wages and personal savings. The American system is strongly biased to only care about profits. Not savings. It’s destabilizing and we’re getting a taste of that in the current stock market meltdown.

    So now Trump might have to watch his promises of higher markets and wages immolate each other as the broader damage to the economy done by the new tax law’s fiscal damage to the federal government reverberate through financial markets. It’s not just a disaster in the making. It’s a symbolic disaster in the making. Because it’s totally insane that everyone’s fate is tied to ever growing corporate profits no matter what.

    It’s also worth noting that this built-in socioeconomic systemic tension between profit-maximization, social equality, and wage growth is analogous to the impossible expectations inherent in the global trading system. Think about how global trade works in the modern worlds: with the exception of the US – which has the unusual circumstance of being the global reserve currency and an economic/military hegemon that can run large trade surpluses for years on end – virtually all other countries are focused on a strategy of obtaining a high per-capita trade-surplus to grow wealthier as a nation. On one level, that makes a lot of sense given how the world works. On another level, it’s insane and a systemic recipe for poverty and global economic instability. Germany is the most prominent example of this strategy of wealth-via-chronic-per-capita-trade-surpluses , but it’s far from alone. And that tension between what’s good for the individual (individual nation, in this case) and the larger system (the global trade system that can’t run a net trade surplus) is very analogous to the tension between the drive for ever higher corporate profits and the need to pay labor and taxes and reasonably finance the government for the public good. The world is run by destabilizing human systems that share a lot of the same underlying problems.

    And let’s not forget that the insanity of global economic paradigm is taking place in the context of the insanity of humanity laying waste to the ecosystem and causing the Sixth Great Extinction. And a central element of preventing global eco-catastrophe is getting to a stable global population ASAP while switching to a clean green economy. There’s no good reason societies around the world couldn’t reorient their economies away from the mandate of profit-maximization and towards mandates like ending global poverty, create an ecologically sustainable global economy, and build sustainable peace and prosperity with lots of sustainable broad-based wage gains. But that’s definitely not how the worlds works today and a growing population is seen as a driver for economic growth and economically incentivized. And large sustained trade surpluses are deemed as critical for aging economies like Germany and Japan to remain economically healthy and wealthy. So every economy needs to stabilize its population ASAP if we’re going to avoid calamity for life on Earth, and our system punishes economies with aging populations and mandates that they run giant trade surpluses to maintain their standards of living. And if countries can’t achieve that high net trade-surplus they’re incentivized to have a large and growing population to achieve economic growth that way instead. In other words, the global economic paradigm systematically discourages countries from stabilizing their populations in the midst of a giant global resource collapse. It’s like a riddle wrapped up in an enigma wrapped up in a tragically realistic horror movie wrapped up in the fate of life on Earth. Which is a horrible riddle.

    So that’s all one reason why House Speaker Paul Ryan might actually be thinking about retiring in 2018: on some level, Ryan has to realize that the mindless devotion to profit-maximization and ever-growing wealth accumulation for the wealthiest individuals at all costs that is at the core of the political movement he represents is an ideology that is designed to fail for most Americans when put into action. And he is putting that ideology into action in a big way and things are already starting to fail. Because that fabulous wealth accumulation that Paul Ryan’s political patrons (the Koch network and their style of post-Citizen’s United bought-and-paid-for fascism) have been accumulating over the last generation, thanks to things like the GOP tax bill and wage stagnation, can’t possibly work out well for average Americans. For starters, it’s a bad faith agenda built by and for billionaires and designed to take from the poor and give to the rich. But beyond that, it’s an agenda operating in a our profit-centric system where long-overdue wage gains are treated by markets as economic poison. A morally broken agenda operating in a systemically broken global economic paradigm. Making that system even more profit-oriented is the agenda Paul Ryan has to offer and the only way that agenda to succeed is if its hidden and masked as a ‘populist’ agenda that’s going to help average. And now that he made it clear that $1.50/week in tax cuts is seen as something to celebrate it’s a lot harder for Paul Ryan to hide his agenda which, again, is a very good reason for Paul Ryan to retire this year.

    Posted by Pterrafractyl | February 6, 2018, 12:06 am
  19. Is that a light at the end of the shutdown showdown tunnel or is the train still coming? That’s the meta-question now that the US Senate has arrived at a bipartisan agreement that House leadership appears to be open to in the big February 8th deadline for the shutdown showdown fight. If the House and Senate don’t somehow find a compromise budget that can pass both chambers by midnight Thursday, the government shuts down again. And sure enough, that compromise appears to be just around the corner. It’s a compromise with bipartisan support in the Senate that funds both military and domestic spending for the next year (so both parties get what they want, but it’s expensive) and the compromise raises the debt ceiling for a year. And what about DACA and the ‘Dreamers’ that the Democrats are demanding and the extremely right-wing immigration ‘reform’ demands the ‘Freedom Caucus’ is demanding? Well, the compromise does nothing about that front, which is actually quite significant because it disentangles those issues immigration and the Dreamers from both the budget showdown and upcoming debt ceiling showdown. It was a pretty remarkable compromise.

    Even more remarkable is that the House GOP leadership appears to be on board with it too. But, of course, the House ‘Freedom Caucus’ is freaking out due to all the new spending and over the debt ceiling extension. And that would all have to be put on hold for a year while the deficit skyrockets from the combination of tax cuts and big increases in military and domestic spending. And those concerns about the spiking deficits is why it’s looking like the ‘Freedom Caucus’ of ~40 far-right GOPers in the House are probably going to vote ‘no’ on this compromise. But as the following article notes, the opposition in the GOP goes far beyond the ‘Freedom Caucus’.

    So while it looks like this compromise is going to pass the Senate, it’s still an open question in the House because the House GOP is going to have to find enough Democrats to accept the deal and it’s unclear if that’s going to happen due to the unresolved status of DACA and the Dreamers in the compromise. House Minority Leader Nancy Pelosi just broke the House record for longest speech after holding the floor for eight and a half hours to talk about the urgency of fixing the DACA issue, so she’s presumably not going to be super enthusiastic about the compromise. Will enough House Democrats sign onto it in order to cover for all the lost ‘Freedom Caucus’ members? We’ll find out. Very soon.

    And what about President Trump? He was openly saying two days ago that he would “love” to see a government government shutdown over his immigration package deal (a path to citizenship for the Dreamers and a far-right immigration overhaul). What’s his response to a compromise that doesn’t deal with the Dreamers and his immigration plan at all? He’s all for it!

    So it’s up to the House to either resolve or extend the current shutdown showdown situation. If House does accept the deal, the budget and debt ceiling showdowns are dealt with for the next year which is something that should help GOP in the upcoming midterms. But the deficit is also going to spike and rapidly reveal the true costs of the tax cuts.

    What’s the House going to do? Given that this compromise has a real shot of getting significant support from both parties it seems like the odds are that it’s going to pass. But, again, as the following article notes, this deal has pissed off A LOT of GOPers beyond the predictable ‘Freedom Caucus’ members, so it’s still unclear if that the light at the end of the tunnel is train or not:

    Politico

    Conservatives slam budget deal

    But it’s unclear whether their opposition is enough to tank it.

    By RACHAEL BADE, BURGESS EVERETT and SARAH FERRIS

    02/07/2018 04:14 PM EST

    Fiscal hawks on Capitol Hill panned the budget deal reached by Republican leaders and Democrats on Wednesday as fiscally irresponsible and an abrogation of the GOP’s congressional majorities.

    Senators and House members on the right immediately came out against the agreement, while a large number of leadership-aligned Republicans were also noncommittal. It’s unclear whether the opposition to the deal, which calls for $300 billion in new spending, will put it in jeopardy. But it has certainly put the Republican Party’s reputation for fiscal discipline on the rocks, coming on the heels of a tax law projected to increase the deficit by $1.5 trillion.

    “This budget deal is a betrayal of everything limited government conservatism stands for and I will be voting no,” said Sen. Mike Lee (R-Utah).

    A slew of House conservatives stood up in a closed-door Republican Conference meeting Wednesday to chide Speaker Paul Ryan (R-Wis.) and his team on the package, which would increase spending on defense and domestic programs. One of those was House Financial Services Committee Chairman Jeb Hensarling (R-Texas), a longtime Ryan ally, who argued that the plan would balloon the nation’s more than $20 trillion debt.

    Hensarling was far from alone. As Republicans exited the meeting, many decried the proposal as a betrayal of the party’s commitment to fiscal responsibility. House Freedom Caucus member Dave Brat (R-Va.) called it “a Christmas tree on steroids.” And group leader Jim Jordan (R-Ohio) called the agreement a “monstrosity.”

    “I just never thought that Speaker Ryan — with his history and his background in budget issues, and his concern with the debt and deficit issue — I just never thought that this would be something that the Congress would put forward,” Jordan said.

    “Republicans control government and are going to allow a spending increase of a quarter of a trillion dollars, second only in the past decade to the Obama spending stimulus boondoggle? And run a $1 trillion deficit? It makes no sense. And it’s certainly not what we told the American people we would do when they elected us.”

    The conservative opposition could make passage difficult. While the budget deal is expected to easily clear the Senate, House GOP leaders know they’ll struggle to get votes and will have to rely on Minority Leader Nancy Pelosi (D-Calif.) and Democrats to pass the agreement. Pelosi, for her part, spent hours on the House floor Wednesday demanding legislative action on Dreamers, the undocumented immigrants who were brought to the United States as children. President Donald Trump has ended the program protecting them from potential deportation, and Democrats have demanded to address the problem for month.

    Some conservative senators were just as incensed as their House counterparts. A surprising number of Republican senators filing out of a briefing with Senate Majority Leader Mitch McConnell (R-Ky.) refused to commit to supporting the accord, which was announced a day before the federal government is set to run out of money.

    Sen. Rand Paul (R-Ky.) called it “a terrible, no good, rotten way to run your government.”

    Paul and Lee have been reliable foils to McConnell on spending bills for years. But a number of other senators expressed misgivings, after the GOP’s years-long campaign against increasing the deficit when Barack Obama was president.

    “The $300 billion, of course, is concerning,” said Sen. Bill Cassidy (R-La.). “Does it trouble me? Yes it does. Even though there’s a lot of good stuff in there that I support.”

    “I’ve got to get more details on it, but I’m concerned about the increase in deficits and debt this may create,” said Sen. Steve Daines (R-Mont.).

    Outside conservative groups also pilloried the plan, with FreedomWorks calling it “a fiscal abomination” and Heritage Action saying it’s “irresponsible and moves the country in the wrong direction.”

    Ryan and his top lieutenants will also need Trump to help them get the agreement through the House.

    “I am confident we will get a majority of the majority,” said a top House Republican. But “we’re definitely going to need Trump, and we’re going to need Democrats.”

    Rep. Rob Woodall (R-Ga.) called it a “day of reckoning” that fiscal hawks have long known was coming.

    “Some folks will be worried about the dollar values in this deal, that’s legitimate,” said Woodall, a member of the House Budget Committee who has railed against the nation’s swelling debt. Overall, though, the deal is “imperfect but positive,” he said.

    Facing protests on the right and the left, Ryan’s whip team will have to scramble. The government runs out of money at midnight on Thursday, leaving GOP leaders less than two days to whip votes for the accord, which will be attached to a spending bill by the Senate.

    The deal is a double-whammy of sorts for conservatives. For one, it increases the federal budget by more than $300 billion but is not entirely offset by other savings. Many conservatives have called for the new spending to be countered with cuts to other programs, but only about a third of the plan, $100 billion, actually is.

    And that amount is spread over 10 years, said Sen. Bob Corker (R-Tenn.), who said the military won’t even be able to spend the $80 billion infusion it’s about to get for this year.

    “I’m discouraged. The amount of military spending, defense spending is far above the president’s request,” Corker said. “It’s very difficult to have that big of an increase in one year and then be able to use it.”

    Further infuriating the right: The bipartisan budget plan would also include a one-year suspension of the debt limit, without spending cuts. To help win over fiscal hawks, the deal would create yet another committee charged with dealing with Congress’ fiscal dysfunction.

    The panel, chaired by House Budget Committee Chairman Steve Womack, would be required to submit a report by year’s end. Any recommendations it makes would need to be approved by a super-majority of Congress.

    Rep. Chris Collins (R-N.Y.) called the committee a “big sweetener” for conservatives as they’re forced to swallow a massive spending agreement that would also increase the nation’s debt limit.

    After the last short-term debt ceiling increase, Ryan had blessed a small group of unhappy Republicans to start a working group to hash out a debt ceiling plan they could support. The budget accord, however, throws any push for dollar-for-dollar cuts — or even a partial offset — out the window.

    “This spending proposal is disgusting and reckless — the biggest spending increase since 2009,” tweeted conservative Rep. Justin Amash (R-Mich.) “I urge every American to speak out against this fiscal insanity.”

    The House Freedom Caucus is expected to oppose the plan, Jordan said. But they will be far from alone. Members of the House Republican Study Committee, a group of more than 160 conservative members who typically work hand in hand with GOP leaders, are also unhappy. And some of their members stood up to oppose the proposal in the GOP Conference.

    The group’s former leader, Rep. Bill Flores (R-Texas), said about one-third of lawmakers who spoke were in opposition to the deal. At one point during the conference, Rep. Bradley Byrne (R-Ala.) asked questions about the debt limit part of the deal but GOP leaders, he said, couldn’t answer.

    “That number is just too big,” Brat said as he left the meeting, later adding: “You got trillion-dollar deficits as far as the eye can see.”

    ———-

    “Conservatives slam budget deal” by RACHAEL BADE, BURGESS EVERETT and SARAH FERRIS; Politico; 02/07/2018

    Senators and House members on the right immediately came out against the agreement, while a large number of leadership-aligned Republicans were also noncommittal. It’s unclear whether the opposition to the deal, which calls for $300 billion in new spending, will put it in jeopardy. But it has certainly put the Republican Party’s reputation for fiscal discipline on the rocks, coming on the heels of a tax law projected to increase the deficit by $1.5 trillion.”

    Even the leadership-aligned GOPers were expressing serious misgivings about the proposed deal during a close-door GOP meeting on Wednesday. And you can understand why they would be squeamish. But you can’t ignore how much worse it could be for the GOP, politically speaking, if this deal isn’t passed and the next year is filled with more showdowns over the budget and debt ceiling and it’s hard to imagine the GOP doesn’t realize this too. So the GOP knows it created a debt and deficit time-bomb with this giant tax cut and also knows that the only solution that fits into the GOP’s narrative is for massive spending cuts to offset to the deficits which would also be politically disastrous. It’s like a suicide time-bomb attack accidentally carried out against oneself.

    So what’s the GOP going do? Well, keep in mind that the political pain associated with accepting the deal isn’t really going to be directly felt for a year, when this fight begins anew and with higher levels of debt and deficit. And that would be much more consistent with the “time-inconsistency” tactic Bruce Bartlett wrote about of passing a giant tax cut, waiting a while, and only later demanding massive spending cuts. In other words, if the GOP accepts this compromise, lets the debt and deficit spike for a year, and only then demands massive spending cuts and tries to blame the deficits it all Democrats and overspending that would be exactly what we should expect from the GOP according to its long history of employing the “time-inconsistency” tactic. It’s like a time-bomb hot-potato attack.

    So that’s a big reason to expect this to pass the House: blowing up the deficit with tax cuts and big military spending increases is a time-honored GOP tradition. As is all the theatrics about how upset they are about these deficits:


    A slew of House conservatives stood up in a closed-door Republican Conference meeting Wednesday to chide Speaker Paul Ryan (R-Wis.) and his team on the package, which would increase spending on defense and domestic programs. One of those was House Financial Services Committee Chairman Jeb Hensarling (R-Texas), a longtime Ryan ally, who argued that the plan would balloon the nation’s more than $20 trillion debt.

    Hensarling was far from alone. As Republicans exited the meeting, many decried the proposal as a betrayal of the party’s commitment to fiscal responsibility. House Freedom Caucus member Dave Brat (R-Va.) called it “a Christmas tree on steroids.” And group leader Jim Jordan (R-Ohio) called the agreement a “monstrosity.”

    “I just never thought that Speaker Ryan — with his history and his background in budget issues, and his concern with the debt and deficit issue — I just never thought that this would be something that the Congress would put forward,” Jordan said.

    “Republicans control government and are going to allow a spending increase of a quarter of a trillion dollars, second only in the past decade to the Obama spending stimulus boondoggle? And run a $1 trillion deficit? It makes no sense. And it’s certainly not what we told the American people we would do when they elected us.”

    “I just never thought that Speaker Ryan — with his history and his background in budget issues, and his concern with the debt and deficit issue — I just never thought that this would be something that the Congress would put forward”

    Bwah! Yeah, who could imagine the GOP running up massive deficits. But those crocodile tears are an integral part of the GOP’s brand-saving theatrics so we should probably expect a lot more of that. The GOP may not actually care of deficits, but they surely care about the political cost of getting associated with deficits.

    The Koch network of GOP mega-donors are also getting in on the crocodile tear act via their think-tanks who came out against the deal:


    Outside conservative groups also pilloried the plan, with FreedomWorks calling it “a fiscal abomination” and Heritage Action saying it’s “irresponsible and moves the country in the wrong direction.”

    This is extra humorous set of crocodile tears given that the Kochs are the primary financial puppet-masters for the entire GOP and therefore all sides of this debate. And it’s harder to find a creature more beholden to the Kochs than House Speaker Paul Ryan. But according to the Kochs’ ‘FreedomWorks’, this plan is “a fiscal abomination” that it just can’t stomach (but it was super cool with the tax cut).

    And adding to the required level of crocodile tear theatrics is the one year extension of the debt ceiling:


    Further infuriating the right: The bipartisan budget plan would also include a one-year suspension of the debt limit, without spending cuts. To help win over fiscal hawks, the deal would create yet another committee charged with dealing with Congress’ fiscal dysfunction.

    Keep in mind that this debt ceiling fight was looking like it would be hit by mid-March, much earlier than previously expected, and that’s all thanks to the fiscal impact of the tax cuts. So dodging that fight really should be a GOP priority, politically speaking. But maintaining those ‘fiscal conservative’ theatrics is also critical for the GOP so, at a minimum, we should expect a flood of crocodile tears over the debt ceiling because this issue really is critical for maintaining the GOP’s fraudulent ‘fiscal conservative’ branding with the voters.

    So, all in all, it’s looking like we should probably expect this compromise deal to pass right at the last minute, but not without a serious GOP crocodile tear tantrum. Because if there’s one thing we should expect from the GOP, it’s blowing up the deficit with massive tax cuts, demanding massive spending cuts, and then either getting those spending cuts or just accepting higher deficits and complaining very loudly about it.

    Posted by Pterrafractyl | February 8, 2018, 12:32 am
  20. Isn’t this cute: Rebekah Mercer, daughter of billionaire investor Robert Mercer and major investor in Breitbart, just wrote an op-ed piece in the Wall Street Journal intended to respond to the “sensational fantasies” and “absurd smears” against her. It’s more or less what one might expect. There are laughable passages like the following that only leave out a professed love for puppies and rainbows:

    I believe in a kind and generous United States, where the hungry are fed, the sick are cared for, and the homeless are sheltered. All American citizens deserve equality and fairness before the law. All people should be treated with dignity and compassion. I support a United States that welcomes immigrants and refugees to apply for entry and ultimately citizenship. I reject as venomous and ignorant any discrimination based on race, gender, creed, ethnicity or sexual orientation.

    And much of the rest of piece talks goes into slightly more detail about the kinds of issues she advocates for, but only slightly more detail. It’s still all very generic slogans. Including generic slogans about “smaller government” and “federalism” and and Rebekah Mercer’s belief that “power should be decentralized, with those wielding it closely accountable to the people they serve,” etc…:

    As a federalist, I believe that power should be decentralized, with those wielding it closely accountable to the people they serve. There is obviously a role for the federal government. But I support a framework within which citizens from smaller political entities—states, counties, cities, towns and so on—can determine the majority of the laws that will govern them. Society’s problems will never be solved by expensive, ineffective and inflexible federal programs.

    Part of what makes the above passage so nauseating is laughable pretense that Mrs. Mercer cares at all about the quality of government policies and addressing “society’s problems.” But what is perhaps even more laughable is the notion that the Mercers feel power should be decentralized. After all, the overt goal of the Mercers and the rest of the GOP network of billionaire mega-donors is to concentrate as much wealth, and therefore power, as possible in the hands of these mega-donors. That’s been “the goal” of the GOP’s agenda for decades. Finding reasons to cut taxes on the super-rich. It’s the unacknowledged objective of virtually all the GOP’s “small government” policies: concentrating wealth and power.

    And thanks to the Mercer’s success in getting President Trump elected, that agenda has culminated in a massive push to shift federal spending onto the states for almost all non-military federal spending. Medicaid, Medicare, housing aid, food assistance, and just about any other federal safety-net program is in the process of getting pushed onto the states, with the direct consequence of shrinking those programs and pushing their financing away from federal income taxes (which more heavily impact billionaires) and onto state and local taxes (which barely hit billionaires at all). So while Rebekah Mercer’s column was nauseating for a number of reasons, the absurdist statement about want to decentralize power is perhaps the most nauseating. After all, what’s a more effective form of decentralized power than a functional democracy, something the Mercers and their party have been assaulting for years.

    And, of course, this op-ed piece was written just a couple months after the GOP’s giant tax cuts for the super-rich that are guaranteed to slash government programs and concentrate power to ever greater levels. Which is also pretty nauseating:

    Jezebel

    Rebekah Mercer Is Full of Shit

    Brendan O’Connor
    02/16/2018 5:00pm

    This Wednesday, in a Valentine’s Day gift to campaign finance nerds the world over, Rebekah Mercer, the mysterious daughter of mysterious billionaire Robert Mercer, wrote a short essay for the Wall Street Journal responding to unspecified “sensational fantasies” and “absurd smears.” It is, essentially, a press release from an inconceivably wealthy and powerful person who has almost entirely avoided direct scrutiny from the press, and as you would expect of a press release, it is bullshit where it isn’t nonsense, and nonsense where it isn’t bullshit.

    For example:

    I believe in a kind and generous United States, where the hungry are fed, the sick are cared for, and the homeless are sheltered. All American citizens deserve equality and fairness before the law. All people should be treated with dignity and compassion. I support a United States that welcomes immigrants and refugees to apply for entry and ultimately citizenship. I reject as venomous and ignorant any discrimination based on race, gender, creed, ethnicity or sexual orientation.

    It may be that Mercer wouldn’t describe herself as actively in favor of hunger or people dying in the streets; even so, no one who has spent millions of dollars supporting Steve Bannon, Ted Cruz, Donald Trump, and Milo Yiannopoulos can seriously claim to “reject” discrimination. (More on that shortly.)

    As a federalist, I believe that power should be decentralized, with those wielding it closely accountable to the people they serve. There is obviously a role for the federal government. But I support a framework within which citizens from smaller political entities—states, counties, cities, towns and so on—can determine the majority of the laws that will govern them. Society’s problems will never be solved by expensive, ineffective and inflexible federal programs.

    This is hardly even worth addressing. Mercer is simply describing the political structure of the United States, which she supports to the extent of not apparently wanting to mount an armed insurrection against it, as well as saying that ineffective federal programs don’t work—which is true enough, though effective ones have solved plenty of society’s problems. More generally, this sort of palavering about decentralized power should, when coming from the heiress to a multi-billion dollar fortune, be taken with a grain of salt. It is, at bottom, just a fancy way of invoking “states’ rights,” which is itself just a fancy way of saying that the profit motive and its attendant bigotries should be allowed to run rampant across humanity.

    I am deeply committed to research and the scientific method. I have degrees from Stanford in biology, mathematics, and operations research and engineering economic systems. I believe that genuine scientific discovery flourishes only in an atmosphere of dispassionate, open-minded inquiry, with research evaluated according to neutral, evidence-based criteria. I oppose politicized science, in which researchers cannot study certain subjects—or even ask certain questions—for fear of career-ending backlash and persecution.

    Since 2010, the Mercers have funded Art Robinson, founder of the climate science-denying Oregon Institute of Science and Medicine and a former candidate for Congress who once asked voters for urine samples, to the tune of $1.6 million. In December 2016, Robinson joined the board of directors of the Heartland Institute, a climate science-denying think tank that has received at least $2.8 million in Mercer money since 2012.

    Heartland is but one of a slew of Mercer-supported think tanks and foundations that oppose climate change legislation, largely by undermining climate science: Rebekah herself recently joined the board of the Heritage Foundation, to which her family has given at least $1.5 million since 2013, and which called the Paris agreement an “open door for egregious regulation, cronyism and government spending that would have been … disastrous for the American economy.” The science director of the Cato Institute, a libertarian think tank to which the Mercers have given at least $600,000 since 2014, said in a statement that the Paris Agreement was “climatically insignificant.”

    I support ideas and policies, not individual politicians as people.

    According to FEC filings, Robert and Rebekah Mercer gave just over $23 million in donations to Republican candidates and to political-action committees during the 2016 election cycle. They initially threw their ample support behind Ted Cruz, pouring $13.5 million into a network of super PACs supporting the senator, before switching their allegiance to Trump and dumping another $2.5 million into the campaign. It was reportedly at Rebekah’s behest that Steve Bannon and Kellyanne Conway joined the Trump campaign and later the Trump administration.

    I own a minority stake in Breitbart News (where I have no editorial authority) because I believe it adds an important journalistic voice to the American conversation. Stephen Bannon, its former chairman, took Breitbart in the wrong direction. Now that Mr. Bannon has resigned, Breitbart has the opportunity to refine its message and expand its influence.

    Right or wrong, the direction that Bannon took Breitbart in was one that Rebekah herself helped set; what is more, few individuals exemplify the direction that Bannon took Breitbart in better than Milo Yiannopoulos, whom Rebekah reportedly “loves.” From about 2011 until very recently, the Mercers served as Bannon’s and Yiannopoulous’s principal patrons. They funded, for example, not only Breitbart but other organizations from which Bannon took a salary, such as his production company, Glittering Steel, or the nonprofit Government Accountability Institute, to which the Mercers have donated at least $3.7 million since 2013. Rebekah is “is highly engaged with Breitbart’s content,” the New Yorker’s Jane Mayer reported last year, and “often points out areas of coverage that she thinks require more attention.” Her attention to editorial detail apparently extends to calling about typos, generally not something investors in media companies do.

    I have chosen to involve myself with important policy issues, and with some of the institutions that discuss them, because I am, first and foremost, a mother. I am raising my children to be humble, productive citizens who will treat all people with dignity, respect and empathy. I want them to accept personal responsibility and to be aware that they alone will have to answer for their choices and actions. I hope that my children will show stoicism and perseverance through adversity, as well as an ability to think for themselves and challenge conventional wisdom when necessary.

    I’m glad that Rebekah brought up her children, because this provides an opportunity to discuss one of my pet obsessions, which is the question of whether Rebekah Mercer is an evangelical Christian, and if she is not, why she spends so much money supporting political projects that evangelical Christians also support.

    According to Politico, Rebekah’s four children are homeschooled. This is, of course, not a practice exclusive to evangelicals, but it is nevertheless extremely dear to them. (So is the euphemistically phrased “school choice,” which provides opportunities to inculcate children into the ongoing culture wars, and also to beat them.) The Mercers’ old friend Art Robinson, for example, offers a homeschooling curriculum that denies the theory of evolution and impels parents to “Teach your children to teach themselves and to acquire superior knowledge as did many of America’s most outstanding citizens in the days before socialism in education.”

    In addition to Robinson, the Mercers have provided monetary support to more secular (or secular-seeming) proponents of homeschooling: The family foundation has given at least $1.3 million to charter schools like Success Academy and affiliated advocacy groups since 2014, and while the Heartland Institute may be better known for its climate denial, it is also a strong supporter of the “school choice” agenda. Meanwhile, since 2014, the Mercer Family Foundation has given at least $600,000 to King’s College in Manhattan. Previously located in the Empire State Building, King’s College has since moved downtown to the Financial District. “The college’s mandate,” the New York Times reported in 2008, “is to encourage students to engage people with differing viewpoints, and ideally to shape public discourse ‘in a way that is winsome, and not screechy from the Christian right.’” Rebekah sits on the college’s Council of Regents.

    I also hope that they will embrace debate as a vital part of human progress. I am devoted to protecting individual rights to ensure that my children will mature in a country where they cannot be persecuted or imprisoned or have their livelihoods destroyed because of their thoughts and beliefs.

    Rebekah installed David Barton, a prolific evangelical and homophobic propagandist, to run the family’s super PAC network in the fall of 2016. Last year, Barton claimed on his radio program that gay people are the reason that health care costs are so high. “The most expensive cost for healthcare in America per person is not seniors, it’s not those who live to be 100 years old,” he said. “The most expensive health care cost in America right now, by far, individually, is for homosexuals. They cost more in the system than any other, hands down.”

    Barton also thinks that white people don’t get enough credit for ending slavery. “You’ve also got the situation where that the 13th, 14th, and 15th Amendments, they’re voted for—they’re all civil rights amendments, but guess what? The only guys that could vote back then were white guys,” he added. “You’ve got two-thirds of the whites in Congress and the majority of the whites in three-fourths of the states that said, ‘You know what? We white guys want to tie our hands and make sure that blacks have the same rights that we do.’ It’s whites that were doing that. You never hear anything about that.”

    As my family and I know firsthand, America is now a society that threatens, pillories, and harms those who dare to question the status quo.

    ———-

    “Rebekah Mercer Is Full of Shit” by Brendan O’Connor; Jezebel; 02/16/2018

    “This Wednesday, in a Valentine’s Day gift to campaign finance nerds the world over, Rebekah Mercer, the mysterious daughter of mysterious billionaire Robert Mercer, wrote a short essay for the Wall Street Journal responding to unspecified “sensational fantasies” and “absurd smears.” It is, essentially, a press release from an inconceivably wealthy and powerful person who has almost entirely avoided direct scrutiny from the press, and as you would expect of a press release, it is bullshit where it isn’t nonsense, and nonsense where it isn’t bullshit.

    A press release that gives us an idea of how Rebekah Mercer would prefer to be seen. Not as the Machiavellian financier of the Alt-Right’s primary media mouthpiece, but instead as someone who believes in “a kind and generous United States, where the hungry are fed, the sick are cared for, and the homeless are sheltered.” It would just be a sick joke if the GOP wasn’t in the process of making America a much less kind and generous country where growing numbers of people will go hungry and without medical care. But that is actually happening, thanks to folks like the Mercers.

    And central to that goal of concentrating ever more wealth and power in the hands of the super-rich is the GOP’s war on federal spending. Under the banner of “decentralizing power”:

    As a federalist, I believe that power should be decentralized, with those wielding it closely accountable to the people they serve. There is obviously a role for the federal government. But I support a framework within which citizens from smaller political entities—states, counties, cities, towns and so on—can determine the majority of the laws that will govern them. Society’s problems will never be solved by expensive, ineffective and inflexible federal programs.

    This is hardly even worth addressing. Mercer is simply describing the political structure of the United States, which she supports to the extent of not apparently wanting to mount an armed insurrection against it, as well as saying that ineffective federal programs don’t work—which is true enough, though effective ones have solved plenty of society’s problems. More generally, this sort of palavering about decentralized power should, when coming from the heiress to a multi-billion dollar fortune, be taken with a grain of salt. It is, at bottom, just a fancy way of invoking “states’ rights,” which is itself just a fancy way of saying that the profit motive and its attendant bigotries should be allowed to run rampant across humanity.

    “It is, at bottom, just a fancy way of invoking “states’ rights,” which is itself just a fancy way of saying that the profit motive and its attendant bigotries should be allowed to run rampant across humanity.”

    The profit-motive above all. It’s a reminder of another key element of the faux drive to “decentralize power”: the endless push for the privatization of government services as a means of ‘tackling waste and ineffeciencies’. It’s a central of the Koch/Mercer political agenda and that agenda and is getting a big boost with the GOP in full control of the federal government.

    So given that it’s another “Infrastructure Week” – a week when the Trump administration unveils and promotes its new ‘infrastructure plan’ – just came and went, it’s worth noting just how much the proposed infrastructure plan achieves that Mercer agenda of concentrating wealth and power in the hands of billionaires under the guise of “decentralizing power” by putting the profit-motive first:

    The New York Times

    Trump’s Infrastructure Plan Puts Burden on State and Private Money

    By PATRICIA COHEN and ALAN RAPPEPORT
    FEB. 12, 2018

    President Trump’s $200 billion plan to rebuild America upends the criteria that have long been used to pick ambitious federal projects, putting little emphasis on how much an infrastructure proposal benefits the public and more on finding private investors and other outside sources of money.

    Unveiled on Monday, the infrastructure program that Mr. Trump has championed since the campaign is intended to attract a huge amount of additional money from states, localities and private investors. The goal is to generate a total pot of $1.5 trillion to upgrade the country’s highways, airports and railroads.

    Those financial priorities are crystallized in the new guidelines established by the White House. The ability to find sources of funding outside the federal government will be the most important yardstick, accounting for 70 percent of the formula for choosing infrastructure projects. How “the project will spur economic and social returns on investment” ranks at the bottom, at just 5 percent.

    In this new competition for federal funds, a plan to, say, build a better access road for a luxury development — a project with the potential to bring in more dollars from private investors — could have a strong chance of getting the green light. By comparison, a critical tunnel overhaul that has trouble getting new money might not be approved.

    “Instead of the public sector deciding on public needs and public priorities, the projects that are most attractive to private investors are the ones that will go to the head of the line,” said Elliott Sclar, professor of urban planning and international affairs at Columbia University. “Private investors will become the tail that will wag the dog, because they’ll want projects that will give returns.”

    Proposals intended to serve more impoverished communities that require more state and local money, including improving drinking water in a place like Flint, Mich., could be given short shrift. Financial investors may not see a big profit in such a project.

    “A private corporation has a fiduciary obligation to make a profit. The government is supposed to be providing a public service,” Mr. Sclar said.

    The president’s plan recasts the federal government as a minority stakeholder in the nation’s new infrastructure projects. Half of the $200 billion promised over 10 years will be used for incentives to spur even greater contributions from states, localities and the private sector. Mr. Trump also wants to speed up the approval process.

    The White House budget, separately released on Monday, also gives federal agencies the authority to sell assets that would be better managed by state, local or private entities in cases where a sale would “optimize taxpayer value.” The budget suggests that Ronald Reagan Washington National and Dulles International Airports could be among the assets ripe for new owners.

    Coming up with the $200 billion in federal funding will not be easy. Republicans have already ballooned the deficit in last week’s spending agreement and with their tax cuts. Democrats are unlikely to go along with cuts that would offset the cost of Mr. Trump’s plan.

    With his infrastructure framework, the president is rethinking Washington’s role.

    Economic development has been the justification for federal involvement going back to the country’s efforts in the early 1800s to improve harbors and rivers for navigation. It animated the 1902 Reclamation Act that funded irrigation projects that developed the western United States.

    “National economic development benefits were the cornerstone of federal support,” said Debra Knopman, a principal researcher at the RAND Corporation. “That was the point.”

    Public health, safety and national defense were added in the 20th century as core values, when the government developed the national highway system and passed the Clean Water Act.

    “Now, they’re putting out incentive programs that don’t have to generate national or regional economic developments,” said Ms. Knopman, the lead author of a new 110-page RAND report on transportation and water infrastructure in the United States. “It may happen, but that’s not what they’re interested in and that’s not the way they’re screening these projects.”

    Along with private investors, cities and states are being counted on to put up significant funds. They have a need. States have been struggling for years to rejuvenate creaky roads, bridges and ports. And even if the plan appears to put much of the onus on them to finance projects, any additional federal funding is welcome.

    “States won’t look down their nose at adding more money for infrastructure,” said John Hicks, executive director of the National Association of State Budget Officers. “It’s seen primarily as a positive, because it continues to shine light on a shared need of infrastructure improvement.”

    But cities and states are not necessarily flush with cash for new infrastructure projects.

    Congress has thrown their finances into upheaval, with local lawmakers still trying to come to grips with the effects of the $1.5 trillion tax overhaul that was passed last year. Many states have already expressed concern that it will be hard for them to increase state and local taxes, because deductions on them have been limited.

    Some are considering other ways, such as gasoline taxes, to raise funds, but it may not be enough to fund new infrastructure projects. A report released last month by Fitch, the ratings agency, found that many states could see their tax revenue fall from the changes to the individual and corporate taxation laws.

    David Damschen, Utah’s treasurer, said his state faces many infrastructure challenges as it works to accommodate a growing population, expand its stock of affordable housing and improve the transportation system. He said Utah was already looking for new sources of tax revenue to fund projects because sales tax and gas tax revenue had been declining.

    But Mr. Damschen also noted that public-private partnerships do not tend to work well in his state. “When things roll out, you’ll find what the market will do with these ideas,” he said. “Sometimes creative ideas don’t always have the level of acceptance in the marketplace as you hoped.”

    The amount of federal funds — $20 billion a year — will be spread very thin when stretched across the entire country. It is also unclear how much new money, as opposed to repurposed funds, the federal government is actually supplying.

    One analysis by the Penn-Wharton Budget Model at the University of Pennsylvania said that other pieces of the White House budget could end up reducing federal infrastructure spending by $55 billion over 10 years — despite the president’s new plan.

    Beyond the math, the revamped selection standards, too, are untested. The new criteria likely stemmed from the administration’s attempt to distinguish its program and try something new.

    Indeed, criteria announced just last year by the Trump administration for other transportation and infrastructure grants relied on more traditional standards. One lists safety, overall condition, economic competitiveness, environmental sustainability and quality of life as “primary selection criteria.” Another cites “support for national or regional economic vitality” as the No. 1 one objective, while coming up with new money was second.

    The new plan “doesn’t allocate money in terms of congestion, economic need or the public good,” said Martin Klepper, the former executive director of the Transportation Department’s Build America Bureau. “It does it mostly on the basis of the leverage issue.”

    Mr. Klepper, who spent decades in the private sector developing, financing and selling large infrastructure projects, was recruited to lead the bureau in the final weeks of the Obama administration. He said he decided to take the job even after the Democrats lost, because of the new administration’s commitment to public-private partnership and Mr. Trump’s promise of a major infrastructure plan.

    He resigned in November 2017.

    “I left because I was pretty frustrated and disappointed with where the program was going,” Mr. Klepper said. “No one has any idea to the extent with which states and localities will be able to come up with the money to match the federal government.”

    ———-

    “Trump’s Infrastructure Plan Puts Burden on State and Private Money” by PATRICIA COHEN and ALAN RAPPEPORT; The New York Times; 02/12/2018

    “With his infrastructure framework, the president is rethinking Washington’s role.”

    A “rethinking” of Washington’s role. That’s one way to frame the Trump infrastructure plan…a plan that is completely consistent with the GOP’s long-held agenda of slashing federal taxes (and raising state and local taxes in the process). And completely consistent with Rebekah Mercer’s expressed desire to “decentralize power” by moving more responsibilities from the federal government (which taxes folks like the Mercers to pay for national needs) to state governments (which basically act as tax shelters for folks like the Mercers). That’s the kind of “rethinking” at work here: the fulfillment of the GOP’s decades-long goal of gutting federal spending so billionaires can lower their taxes.

    And that rethinking is going to make the federal government a minority stakeholder in the US’s infrastructure. Of the $200 billion in federal spending, half of it will be used to incentivize state, local, and private infrastructure spending. So the federal spending Trump is proposing is spending designed to lower federal spending in infrastructure. And that includes selling off federal assets where a sale would “optimize taxpayer value”:


    The president’s plan recasts the federal government as a minority stakeholder in the nation’s new infrastructure projects. Half of the $200 billion promised over 10 years will be used for incentives to spur even greater contributions from states, localities and the private sector. Mr. Trump also wants to speed up the approval process.

    The White House budget, separately released on Monday, also gives federal agencies the authority to sell assets that would be better managed by state, local or private entities in cases where a sale would “optimize taxpayer value.” The budget suggests that Ronald Reagan Washington National and Dulles International Airports could be among the assets ripe for new owners.

    So what constitutes “optimizing taxpayer value”? On one level, it’s a pretty profound question because you need to answer the question of what society should actually value and that’s a core question at the heart of a functional democracy. But on another level, a GOPish-level money-oriented level, it’s the kind of question that will be answered by whether or not it maximizing profits. Financial profits. That’s it. And not just public profits. The maximization of private profits, even if that’s not to the benefit of the public, will be at the heart of this new “rethinking” of the American federal government:


    Those financial priorities are crystallized in the new guidelines established by the White House. The ability to find sources of funding outside the federal government will be the most important yardstick, accounting for 70 percent of the formula for choosing infrastructure projects. How “the project will spur economic and social returns on investment” ranks at the bottom, at just 5 percent.

    In this new competition for federal funds, a plan to, say, build a better access road for a luxury development — a project with the potential to bring in more dollars from private investors — could have a strong chance of getting the green light. By comparison, a critical tunnel overhaul that has trouble getting new money might not be approved.

    “Instead of the public sector deciding on public needs and public priorities, the projects that are most attractive to private investors are the ones that will go to the head of the line,” said Elliott Sclar, professor of urban planning and international affairs at Columbia University. “Private investors will become the tail that will wag the dog, because they’ll want projects that will give returns.”

    Proposals intended to serve more impoverished communities that require more state and local money, including improving drinking water in a place like Flint, Mich., could be given short shrift. Financial investors may not see a big profit in such a project.

    “A private corporation has a fiduciary obligation to make a profit. The government is supposed to be providing a public service,” Mr. Sclar said.

    “Proposals intended to serve more impoverished communities that require more state and local money, including improving drinking water in a place like Flint, Mich., could be given short shrift. Financial investors may not see a big profit in such a project.”

    Sorry places like Flint, MI, where infrastructure might be poisoning people. Upon rethinking, your health and well-being isn’t profitable enough. Dangerous infrastructure is no longer going to be a significant federal priority. Exactly like how the public safety-net is no longer a federal priority. Because more wealth and power needs to be concentrated in the hands of folks like the Kochs and the Mercers. It’s GOP ‘rethinking’ in action:


    Economic development has been the justification for federal involvement going back to the country’s efforts in the early 1800s to improve harbors and rivers for navigation. It animated the 1902 Reclamation Act that funded irrigation projects that developed the western United States.

    “National economic development benefits were the cornerstone of federal support,” said Debra Knopman, a principal researcher at the RAND Corporation. “That was the point.”

    Public health, safety and national defense were added in the 20th century as core values, when the government developed the national highway system and passed the Clean Water Act.

    “Now, they’re putting out incentive programs that don’t have to generate national or regional economic developments,” said Ms. Knopman, the lead author of a new 110-page RAND report on transportation and water infrastructure in the United States. “It may happen, but that’s not what they’re interested in and that’s not the way they’re screening these projects.”

    Note how the above the above criticisms of the infrastructure plan was from a RAND corporation report. In other words, even the military industrial complex thinks this is a stupid idea. Also keep in mind that the military industrial complex is pretty much going to be the only thing the federal government finances under the GOP mega-donors’ vision of government. Yes, much lower federal taxes on billionaires will shrink the military industrial complex somewhat in the long run. But the planned collapses of federal spending in all other areas will cushion the blow.

    But after the GOP’s new tax law went into effect there’s going to be very little to cushion the blow for states and localities who will now be responsible for much, much more infrastructure spending. Because don’t forget that the new tax law largely got rid of the federal deduction for state and local taxes (SALT), so all the planned state and local tax hikes under this infrastructure package will be extra expensive. Because keeping the SALT deductions would require higher federal taxes. And that means more taxes for billionaires like the Mercers. So those SALT deductions definitely had to go under the GOP’s vision of government:


    Congress has thrown their finances into upheaval, with local lawmakers still trying to come to grips with the effects of the $1.5 trillion tax overhaul that was passed last year. Many states have already expressed concern that it will be hard for them to increase state and local taxes, because deductions on them have been limited.

    On top of that, the tax bill doesn’t just starve the federal government of funding. Apparently many states are going to see a revenue hit too. That’s how irresponsible the GOP tax bill is and that’s how irresponsible the GOP’s massive drive to shift government responsibilities onto states:


    Some are considering other ways, such as gasoline taxes, to raise funds, but it may not be enough to fund new infrastructure projects. A report released last month by Fitch, the ratings agency, found that many states could see their tax revenue fall from the changes to the individual and corporate taxation laws.

    And the fact that substantial hike in state and local taxes that is going to be required for public infrastructure investments going forward means there’s going to be a lot of pressure for private infrastructure investments instead. Private for-profit infrastructure investments. So how’s that going to work out? Well, such public-private partnerships aren’t new. And as Davis Damschen, Utah’s Republican treasurer, points out, those public private partnerships haven’t worked out so well for his state:


    David Damschen, Utah’s treasurer, said his state faces many infrastructure challenges as it works to accommodate a growing population, expand its stock of affordable housing and improve the transportation system. He said Utah was already looking for new sources of tax revenue to fund projects because sales tax and gas tax revenue had been declining.

    But Mr. Damschen also noted that public-private partnerships do not tend to work well in his state. “When things roll out, you’ll find what the market will do with these ideas,” he said. “Sometimes creative ideas don’t always have the level of acceptance in the marketplace as you hoped.”

    “But Mr. Damschen also noted that public-private partnerships do not tend to work well in his state.”

    For-profit government hasn’t worked out well for Utah. Imagine that.

    And as the following article grimly illustrates, Utah is far from alone in its mixed experience with for-profit public services. And as the article also grimly illustrates, that problem is about to get much, much worse. For every state. Why? Because the Trump infrastructure plan instructs states to prefer private financing for projects. And that’s making projects a lot more expensive. How much more expensive? Well, as the following story about the proposed overhaul of a Rhode Island viaduct that carries Route 95 traffic over an area of highway that’s been declared dilapitated and one of the worst traffic chokepoints in New England amploy illustrates, the costs for the project under Obama’s rules jumped 59 percent under Trump’s rules. Due to the need for a 15-percent private investor return along with higher interest on private loans. And that cost jump is after they removed a proposed pedestrian bridge from the project:

    Providence Journal

    Cost of Route 95 viaduct project in Providence soars

    By Patrick Anderson
    Journal Staff Writer
    Posted Dec 27, 2017 at 8:00 PM Updated Dec 27, 2017 at 8:00 PM

    The estimated cost of the underlying project — replacing the decrepit Route 95 North bridges and interchange in the center of the city while adding new travel lanes — has grown from $226.1 million to $342.9 million.

    The price tag to repair and expand Route 95 through downtown Providence has ballooned as Rhode Island looks to take advantage of President Donald Trump’s preference for public-private infrastructure partnerships.

    The state last month applied for a $60-million grant from the U.S. Department of Transportation’s “INFRA” program for the reconstruction of the Route 95 Northbound Providence Viaduct, roughly the same project it sought a $59-million grant for a year ago under the Obama administration’s predecessor “FASTLANE” program.

    But the estimated cost of the underlying project — replacing the decrepit Route 95 North bridges and interchange in the center of the city while adding new travel lanes — has grown from $226.1 million to $342.9 million, according to the respective grant applications from the Rhode Island Department of Transportation.

    A big chunk of that cost increase is connected to financing and the private part of the project. This year’s grant application says the “estimated design-build cost” is $264 million. The new plan then adds interest on a $45-million private loan and a “15-percent return to the private partner.”

    Built in the 1960s, the northbound viaduct carries Route 95 over the Woonasquatucket River, Northeast Corridor rail line and multiple local streets. It’s in bad shape.

    The DOT says the bridges are in “poor structural condition,” carrying more vehicles than they were designed to handle and one section is “fracture critical, necessitating frequent and costly patchwork repairs just to keep it and the surrounding stretch of I-95 functional.”

    After four years of work, the state completed reconstruction of the southbound Viaduct in July at a cost of $105 million, 16 months behind schedule, according to DOT’s latest quarterly report.

    Replacing the northbound Viaduct and ramps in their current configuration is projected to cost between $120 million and $170 million, the grant application says.

    But DOT leaders consider this part of Route 95 North not only dilapidated, but one of the worst traffic choke points in New England, and they want to redesign the highway with separated local and express lanes to avoid the congestion-causing vehicle weave that happens now.

    “We stand on the cusp of a once-in-a-lifetime decision: to alleviate the current ills of [sic] third-most traveled segment of interstate in all of New England, or simply replace the Viaduct in-kind, which would lock in longstanding safety and congestion challenges that currently plague this stretch of I-95 for the next 70 years,” DOT Director Peter Alviti Jr. wrote in the grant application.

    Gone from last year’s Viaduct plan is a $15-million pedestrian bridge over Route 95 between the Providence Place Mall and Promenade Street, which Alviti said last week was removed to save money.

    Even with the pedestrian bridge taken out, the estimated cost of the viaduct project jumped 59 percent from a year ago when the new financing plan is taken into account.

    “The $226-million figure from the original FASTLANE grant application was a rough estimate for the cost of the project. It is important to remember that this project is still in the very early concept and scoping phase,” wrote DOT spokeswoman Lisbeth Pettengill on the reason for the spiraling costs.

    Why would the state seek a private partner and use private loans when its own borrowing costs are lower and it is about to see a new stream of bridge repair money from truck tolls?

    “When the [Trump] administration came in, they stopped the FASTLANE process and redefined the grant guidelines. The new guidelines encourage states to find private partners and to take more of a role in funding projects,” Pettengill wrote. “With these guidelines in mind, we redefined the project to fit those new grant requirements.”

    Trump has said he will unveil a federal infrastructure plan early in the new year. Based on his campaign proposals, the plan is expected to have a heavy emphasis on public-private partnerships.

    Beyond financing, Pettengill said private partners can bring additional assets as well as extra costs.

    “This delivery method created additional costs, particularly due to the costs associated with private sector equity funding the project,” she wrote. “We are seeking the new grant to offset those costs.”

    If the state doesn’t get a federal grant, Pettengill said the DOT will reevaluate “all options” for the project and its financing, keeping in mind that the viaduct must be replaced at some point.

    ———-

    “Cost of Route 95 viaduct project in Providence soars” by Patrick Anderson; Providence Journal; 12/27/2018

    A big chunk of that cost increase is connected to financing and the private part of the project. This year’s grant application says the “estimated design-build cost” is $264 million. The new plan then adds interest on a $45-million private loan and a “15-percent return to the private partner.”

    A 15-percent private return. That’s the GOP’s idea of government efficiency. And that 15-percent return appears to be separate from the interest paid on the $45-million private loan which is presumably seen as even more efficient. And that’s why this same project is 59 more expensive than it was under Obama-era rules, even when you remove the pedestrian bridge:


    The state last month applied for a $60-million grant from the U.S. Department of Transportation’s “INFRA” program for the reconstruction of the Route 95 Northbound Providence Viaduct, roughly the same project it sought a $59-million grant for a year ago under the Obama administration’s predecessor “FASTLANE” program.

    But the estimated cost of the underlying project — replacing the decrepit Route 95 North bridges and interchange in the center of the city while adding new travel lanes — has grown from $226.1 million to $342.9 million, according to the respective grant applications from the Rhode Island Department of Transportation.

    Gone from last year’s Viaduct plan is a $15-million pedestrian bridge over Route 95 between the Providence Place Mall and Promenade Street, which Alviti said last week was removed to save money.

    Even with the pedestrian bridge taken out, the estimated cost of the viaduct project jumped 59 percent from a year ago when the new financing plan is taken into account.

    And why is the state of Rhode Island suddenly choosing this for-profit model that costs 59 percent more? Because those are the new rules. Again, it’s the GOP’s idea of profit-driven government efficiency:


    Why would the state seek a private partner and use private loans when its own borrowing costs are lower and it is about to see a new stream of bridge repair money from truck tolls?

    “When the [Trump] administration came in, they stopped the FASTLANE process and redefined the grant guidelines. The new guidelines encourage states to find private partners and to take more of a role in funding projects,” Pettengill wrote. “With these guidelines in mind, we redefined the project to fit those new grant requirements.”

    Trump has said he will unveil a federal infrastructure plan early in the new year. Based on his campaign proposals, the plan is expected to have a heavy emphasis on public-private partnerships.

    Beyond financing, Pettengill said private partners can bring additional assets as well as extra costs.

    “This delivery method created additional costs, particularly due to the costs associated with private sector equity funding the project,” she wrote. “We are seeking the new grant to offset those costs.”

    “This delivery method created additional costs, particularly due to the costs associated with private sector equity funding the project…We are seeking the new grant to offset those costs.”

    It’s all a reminder that the GOP agenda isn’t just about cutting billionaire taxes. It’s also about turning the public sector into a billionaire profit-center. A billionaire profit-center with very low taxes. And very concentrated power. Nauseatingly concentrated.

    Posted by Pterrafractyl | February 18, 2018, 8:42 pm
  21. When President Trump tapped Mick Mulvaney, the former GOP congressman chosen by Trump to become the director of the Office of Management and Budget, to become the acting director of the Consumer Financial Protection Bureau (CFPB) it was immediately clear that Mulvaney’s goal was undermine the agency as much as possible. After all, Mulvaney previously said it should be abolished.

    So it’s worth noting that Mulvaney may have found an innovative new approach to accomplishing that goal of undermining the CFPB: giving a speech in front of a bunch of bankers where he explains to them that, as a congressman, he only listened to lobbyists who made donations, thus confirming the worst assumptions people have about politicians and making the head of the CFPB sound like a bankster puppet.

    Yep, he actually said that. In front of a room full of bankers at the American Bankers Association conference, which, from a political symbolism standpoint, is about as bad as it gets. And it certainly doesn’t help the image of the CFPB. It’s as if Mulvaney is trying a new approach to the GOP’s long-standing strategy of sabotaging government and then running against bad government: Just openly talk about how corrupt you are, thus ensuring people don’t trust ‘the government’ even more:

    Vox

    Mick Mulvaney says in Congress, he only talked to lobbyists who gave him money

    “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

    By Emily Stewart
    Apr 25, 2018, 10:40am EDT

    Want a favor from a member of Congress? Give him money. That was the advice Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau and head of the Office of Management and Budget, gave to a group of some 1,300 bankers and lending industry professionals at a conference in Washington, DC.

    Mulvaney, a former South Carolina representative, said he would only meet with lobbyists who had donated to his campaign while speaking at the American Bankers Association conference on Tuesday, the New York Times reported. “We had a hierarchy in my office in Congress,” Mulvaney said. “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

    He did emphasize that at the top of the whom-he’d-talk-to ladder were his constituents — regardless of financial contributions — but lobbyists had to pay up.

    John Czwartacki, a spokesperson for Mulvaney, tried to clean up on his boss’s eyebrow-raising remarks, telling the Times that Mulvaney was simply “making a point that hearing from people back home is vital to our democratic process and the most important thing our representatives can do.” He said that’s “more important than lobbyists and it’s more important than money.”

    A CFPB spokesperson did not respond to further request for comment or clarification from Vox.

    The payday lending industry donated more than $60,000 to Mulvaney’s past congressional campaigns.

    Since Mulvaney took over at the CFPB, the government’s consumer watchdog, the bureau dropped sanctions against the online payday lender NDG Financial Corp., which was accused of running a “cross-border online payday lending scheme.” It scrapped another lawsuit against four Kansas-based payday lenders that allegedly stole millions of dollars from consumers’ bank accounts to pay debts they didn’t owe. The agency shut down a probe into World Acceptance Corp, which donated at least $4,500 to Mulvaney’s congressional campaigns. And the CFPB is reconsidering a rule that would have imposed restrictions on payday and short-term lenders, such as making sure borrowers would be able to pay them back.

    Mulvaney also thought the government shutdown was “kind of cool” and wants to change the name of the CFPB

    This is not the first time Mulvaney, whose name has been floated as a potential chief of staff (in case he needs a third Trump administration job), has sort of said the quiet part out loud. When the federal government shut down in January after Republicans and Democrats failed to reach a deal on funding the government, Mulvaney said he thought it was pretty neat that as OMB director, he got to do the honors. “I found out for the first time last night that the person who technically shuts the government down is me, which is kind of cool,” he said in an interview with Sean Hannity.

    Mulvaney, who once described the CFPB as a “sick, sad” joke, has since taking over the agency sought to scale it back and undermine it. He has reportedly scaled back an investigation into the Equifax data breach, which left the information of more than 145 million Americans exposed, and stripped enforcement powers from the Office of Fair Lending and Equal Opportunity, the unit responsible for pursuing discrimination cases. Until last week’s $1 billion Wells Fargo fine, the CFPB hadn’t taken a single enforcement action since Mulvaney took over in November.

    At the same American Bankers Association conference where he made the lobbyist comments on Tuesday, Mulvaney also said he wants to end public access to the bureau’s consumer complaint portal. Financial companies say that letting the public see complaints against it damages its reputation — in other words, outing their alleged bad behavior makes them look bad. “I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,” Mulvaney said, holding up a copy of the Dodd-Frank financial reform law, according to the Wall Street Journal.

    ———-

    “Mick Mulvaney says in Congress, he only talked to lobbyists who gave him money” by Emily Stewart; Vox; 04/25/2018

    “Mulvaney, a former South Carolina representative, said he would only meet with lobbyists who had donated to his campaign while speaking at the American Bankers Association conference on Tuesday, the New York Times reported. “We had a hierarchy in my office in Congress,” Mulvaney said. “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

    Someone forgot to not be obviously corrupt in public. Unless being this obviously corrupt is intentional. Who knows with today’s GOP, maybe they can spin it as ‘owning the libs’.

    Still, if Mulvaney had to choose a group people he shouldn’t have given his ‘donate or else’ pep talk to, it’s the financial industry. Political donations from the industry whose business is money is an exceptionally bad look. Especially since Mulvaney received extensive donations from the industry and done plenty of favors. Including favors as acting director for the CFPB like favors for hyper-predatory payday lending industry:


    The payday lending industry donated more than $60,000 to Mulvaney’s past congressional campaigns.

    Since Mulvaney took over at the CFPB, the government’s consumer watchdog, the bureau dropped sanctions against the online payday lender NDG Financial Corp., which was accused of running a “cross-border online payday lending scheme.” It scrapped another lawsuit against four Kansas-based payday lenders that allegedly stole millions of dollars from consumers’ bank accounts to pay debts they didn’t owe. The agency shut down a probe into World Acceptance Corp, which donated at least $4,500 to Mulvaney’s congressional campaigns. And the CFPB is reconsidering a rule that would have imposed restrictions on payday and short-term lenders, such as making sure borrowers would be able to pay them back.

    And if this all seems like a sick joke, keep in mind that “sick joke” is exactly how Mulvaney described the CFPB before he became its acting director. And since becoming its director he’s more or less systematically worked to ensure consumer financial protection is the last thing the CFPB is going to be doing under his tenure. So, yeah, it’s a pretty sick joke:


    Mulvaney, who once described the CFPB as a “sick, sad” joke, has since taking over the agency sought to scale it back and undermine it. He has reportedly scaled back an investigation into the Equifax data breach, which left the information of more than 145 million Americans exposed, and stripped enforcement powers from the Office of Fair Lending and Equal Opportunity, the unit responsible for pursuing discrimination cases. Until last week’s $1 billion Wells Fargo fine, the CFPB hadn’t taken a single enforcement action since Mulvaney took over in November.

    At the same American Bankers Association conference where he made the lobbyist comments on Tuesday, Mulvaney also said he wants to end public access to the bureau’s consumer complaint portal. Financial companies say that letting the public see complaints against it damages its reputation — in other words, outing their alleged bad behavior makes them look bad. “I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,” Mulvaney said, holding up a copy of the Dodd-Frank financial reform law, according to the Wall Street Journal.

    But perhaps the sickest part of this joke is that it’s hard to think of a sector of the US economy that’s more familiar with the benefits of donating to politicians than the financial sector. Case in point:

    Associated Press

    Big banks saved $3.6B in taxes last quarter under new law

    By KEN SWEET
    Apr. 20, 2018

    NEW YORK (AP) — The nation’s six big Wall Street banks posted record, or near record, profits in the first quarter, and they can thank one person in particular: President Donald Trump.

    While higher interest rates allowed banks to earn more from lending in the first quarter, the main boost to bank came from the billions of dollars they saved in taxes under the tax law Trump signed in December. Combined, the six banks saved at least $3.59 billion last quarter, according to an Associated Press estimate, using the bank’s tax rates going back to 2015.

    Big publicly traded banks — such JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America — typically kick off the earnings season. The reports for the January-March quarter are giving investors and the public their first glimpse into how the new tax law is impacting Corporate America.

    Before the change in tax law, the maximum U.S. corporate income tax rate was 35 percent, not including what companies paid in state income taxes. Banks historically paid some of the highest taxes among the major industries, due to their U.S.-centric business models. Before the Trump tax cuts, these banks paid between 28 to 31 percent of their income each year in corporate taxes.

    The results released over the past week show how sharply those rates have dropped. JPMorgan Chase said it had a first-quarter tax rate of 18.3 percent, Goldman Sachs paid just 17.2 percent in taxes, and the highest-taxed bank of the six majors, Citigroup, had a tax rate of 23.7 percent. This is just one quarter’s results, however, and bank executives at the big six firms have estimated that their full-year tax rates will be something closer to 20 percent to 22 percent.

    In its calculation, the AP used an average of full-year tax rates paid by the banks in 2015 and 2016. Full-year tax rates for 2017 were excluded from the calculation since all the banks, with the exception of Wells Fargo, had to take significant one-time charges late last year to come into compliance with the new tax law.

    These charges were largely accounting adjustments but caused most of the banks to report a much higher tax rate in 2017 than they would have historically. Including them in the calculations would have distorted the amount of tax savings each bank would have hypothetically had.

    The AP’s calculations are roughly in line with what Wall Street analysts predicted earlier this year. A report by bank industry analyst Mike Mayo of Wells Fargo Securities estimated that that the big U.S. banks combined would save roughly $19 billion in taxes for the full year.

    “If there was one significant factor this quarter for the big banks that I follow, it was taxes,” said James Shanahan, an analyst with Edward Jones.

    One large financial company that was not included in the AP’s estimate was American Express. The credit card giant saw its effective tax rate drop from 33 percent in 2016 to 21.5 percent this past quarter. American Express paid $262 million less in taxes this past quarter than it would have under the old tax rate. American Express also reported near-record profits last quarter.

    ———-

    “Big banks saved $3.6B in taxes last quarter under new law” by KEN SWEET; Associated Press; 04/20/2018

    “The nation’s six big Wall Street banks posted record, or near record, profits in the first quarter, and they can thank one person in particular: President Donald Trump.”

    Oh look at that, record profits for the six biggest Wall Street banks. Thanks to Donald Trump’s giant tax cut. Although the banks can’t just thank Trump. The tax bill really was largely a GOP group effort. A group effort to slash corporate tax rates, resulting in a combined tax savings of $3.59 billion for the six biggest banks in just the last quarter:


    While higher interest rates allowed banks to earn more from lending in the first quarter, the main boost to bank came from the billions of dollars they saved in taxes under the tax law Trump signed in December. Combined, the six banks saved at least $3.59 billion last quarter, according to an Associated Press estimate, using the bank’s tax rates going back to 2015.

    Big publicly traded banks — such JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America — typically kick off the earnings season. The reports for the January-March quarter are giving investors and the public their first glimpse into how the new tax law is impacting Corporate America.

    Before the change in tax law, the maximum U.S. corporate income tax rate was 35 percent, not including what companies paid in state income taxes. Banks historically paid some of the highest taxes among the major industries, due to their U.S.-centric business models. Before the Trump tax cuts, these banks paid between 28 to 31 percent of their income each year in corporate taxes.

    The results released over the past week show how sharply those rates have dropped. JPMorgan Chase said it had a first-quarter tax rate of 18.3 percent, Goldman Sachs paid just 17.2 percent in taxes, and the highest-taxed bank of the six majors, Citigroup, had a tax rate of 23.7 percent. This is just one quarter’s results, however, and bank executives at the big six firms have estimated that their full-year tax rates will be something closer to 20 percent to 22 percent.

    So that’s all one reason why Mulvaney’s audience at the American Bankers Association conference probably didn’t learn very much from his little ‘pay to play’ speech.

    And there’s another, perhaps even more egregious, example of why Mulvaney said what everyone already knows: The chairman of the House Financial Services Committee, Jeb Hensarling, is openly asking the financial industry to lobby his Senate colleagues and push for a slew of additional deregulations that Hensarling wants to see added to the big new bank bill working its way through Congress.

    Yep. The Senate recently passed its version of the bank bill congress is working on. It’s largely a deregulation push, of course. The key planks in the bill is as follows: 1. Banks with less than $10 billion in assets would be exempted from the Volcker rule, which put the brakes on certain kinds of risky trading in the wake of the 2008 financial crisis.

    2. The list of banks deemed “too big to fail,” and thus faced with tighter restrictions, would be thinned by raising the threshold from $50 billion in assets to $250 billion.

    3. One size fits all regulations, even for the mega-banks would be vulnerable to new pressures, with the Federal Reserve now required to work alongside those institutions to customize certain rules. This is described as a move to create a regulatory race to the bottom.

    And this bill passed the Senate with full support of the GOP. Plus 17 Democratic Senators, mostly from states with large financial sectors or from Red States where they’re facing reelection this year. And that Democratic support that was required to get a filibuster-proof bill through the Senate is what’s causing Jeb Hensarling so much consternation in House. Because Hensarling want to add quite a few more financial sector deregulations to the House version of the bill and he’s going to need the support of those Senate Democrats if those additions are going to make it into the final version of the bill. That’s why he’s openly asking the financial lobby to lobby Senate Democrats.

    Specifically, there’s 30 new deregulatory items that Hensarling demanded be added back in March, and that means he needs the support of some Senate Democrats. And to get that Democratic support he’s calling in reinforcements: financial lobbyists:

    Politico

    Hensarling calls on lobbyists to break bank bill stalemate

    By ZACHARY WARMBRODT

    04/03/2018 12:21 PM EDT

    House Financial Services Chairman Jeb Hensarling, who has been waging an uphill battle on bank deregulation, is calling for reinforcements.

    The Texas Republican is trying to rally an army of lobbyists in his long-shot attempt to expand a bipartisan bank bill the Senate passed last month, posing a potential new threat to the landmark legislation.

    Rebuffed by moderate Senate Democrats who refuse to negotiate, Hensarling is pressing hard for talks with the upper chamber and mounting a campaign to make his case. He’s calling on fellow Republican lawmakers to recruit industry groups to join the effort and to weigh in with House leaders.

    Hensarling, who is retiring at the end of this session, is trying to put his stamp on the last major financial services legislation of his career. And he has turned to lobbyists to help answer the question at the heart of the impasse: What do Senate Democrats find so objectionable about the bipartisan amendments he has put on the table?

    The Democrats’ support is essential, and they’re threatening to walk away from the bill that they helped draft if the House tries to make changes. They’re concerned that any revisions might jeopardize the fragile alliance underpinning the legislation.

    “This bill that the Senate came forward with — which I’m very happy they came forward with anything — it’s a bucket of bipartisan bills,” Hensarling said on CNBC. “Well, guess what? We have a bucket of bipartisan bills in the House as well.”

    Yet finance industry lobbyists themselves are split.

    In response to his refusal to bless the bill, lobbyists who secured much of their wish list in the legislation are preparing to fight back to defend it. They’re pressing House Republicans to quickly send the bill to President Donald Trump, who has made it clear he wants to sign it as soon as possible.

    “Anyone who’s trying to add something to this, the question is, where have you been the last four years?” Independent Community Bankers of America executive vice president Paul Merski said. “You’re really late to the game if you’re trying to add something at this point.”

    Some of the same lobbyists and House Republicans who are working to expand the bill are privately expressing doubts that Hensarling will succeed. But he’s making a last stand to secure his legacy and score wins for House members who have assembled a long list of rollbacks they want Trump to sign.

    A key constituency that Hensarling has stirred up is focused on cutting red tape in securities laws that affect entrepreneurs and their investors. Several proposals that would accomplish that goal are included in a list of roughly 30 bills he has floated as potential additions to the Senate package.

    One of the bills would allow mergers and acquisitions brokers to escape a mandate that they register with securities regulators when they arrange deals with more complexity than all-cash offers.

    The brokers argue that the requirement is costly and unnecessary, especially for transactions involving small, privately held businesses, and that it opens them up to legal liability if they don’t comply.

    They’ve won broad bipartisan support and sympathy from regulators. The House passed their bill, introduced by Rep. Bill Huizenga (R-Mich.), in a 426-0 vote in December.

    Mike Ertel, managing director of Transworld M&A Advisors, said the gridlock over the banking legislation “frustrates me to no end.”

    House Republicans have encouraged the brokers to reach out to Senate Democrats to ensure that “if this is included in the bill when it comes back to the Senate, that there’s not going to be any heartburn on the Senate side,” he said.

    “To see Congress continually being stalemated and unwilling to negotiate and unwilling to talk things through is just not the way my high school civics teacher taught me how the system is supposed to work,” he said.

    Hensarling’s insistence on exercising his constitutional prerogative has also created an opening for a coalition of business interests that previously championed the 2012 JOBS Act which eased rules for emerging companies seeking to raise capital.

    He is trying to advance proposals backed by the U.S. Chamber of Commerce, the Small Business & Entrepreneurship Council and the Biotechnology Innovation Organization that would build on the JOBS Act, which was signed into law by President Barack Obama.

    “None of these are poison pills,” said Small Business & Entrepreneurship Council President and CEO Karen Kerrigan. “They would enhance the quality of the Senate-passed bill.”

    In addition, large “super-regional” banks BB&T, Capital One and PNC are urging lawmakers to expand the legislation to help ease rules for lenders with more than $250 billion in assets — a new regulatory threshold set by the Senate bill. And asset managers represented by the Investment Company Institute are hoping that lawmakers will include legislation that would restrict how regulators identify “systemically important” financial firms for tougher oversight and impose stress tests on the industry.

    Even groups that scored victories in the Senate bill are coming back for more.

    Domestic insurers, which have lobbied Congress to help shield them from the creep of European regulations, secured language in the Senate bill that attempts to address their concerns. But they are pushing the House to give it more teeth.

    And while the bill has benefits for small lenders, the National Association of Federally-Insured Credit Unions wants to add a provision that would repeal a capital rule imposed by the National Credit Union Administration.

    In response, Hensarling and the lobbyists he’s enlisting will face pushback from banks that want the bill enacted as soon as possible.

    Those who plan to resist know they won’t have to deal with Hensarling after he leaves office in January and that many of his fellow Republicans will be eager to campaign on accomplishments this year as they fight to keep control of the House.

    Lenders have already begun conveying a sense of urgency to House members, and they’re taking advantage of Congress’ two-week recess to press lawmakers while they’re away from Washington. They say the Senate’s bill already includes many proposals that Hensarling and House Republicans have been driving for years.

    In a joint letter to Speaker Paul Ryan, the Wisconsin Credit Union League and the Wisconsin Bankers Association — representing competing sectors of the finance industry — asked that the House “immediately consider and pass” the Senate bill. Ryan is backing Hensarling in his fight to open negotiations with the Senate.

    “We understand Mr. Hensarling is representing the House and he wants to talk to the Senate about some of his ideas,” Ohio Bankers League general counsel Jeff Quayle said. “We’re just asking our [House] members to keep an eye on the goal line.”

    Senate Democrats who assembled the banking bill are showing no appetite for further negotiations. After years of negotiations and withering attacks by fellow Democrats who oppose the regulatory rollbacks, they’re refusing to entertain any additions.

    A spokeswoman for Sen. Mark Warner, part of the core group that assembled the legislation, said the Virginia Democrat had made clear that “if the House makes changes, he will encourage all 17 of the Democrats who previously voted for the bill to vote against it.”

    ———-

    “Hensarling calls on lobbyists to break bank bill stalemate” by ZACHARY WARMBRODT; Politico; 04/03/2018

    “The Texas Republican is trying to rally an army of lobbyists in his long-shot attempt to expand a bipartisan bank bill the Senate passed last month, posing a potential new threat to the landmark legislation.”

    Rallying an army of financial industry lobbyists. That’s what Jeb Hensarling, chairman of the House Financial Services Committee.

    And part of the motivation of Hensarling is he’s retiring and is trying to put his stamp on the last major financial services legislation of his career. The kind of stamp an army of financial industry groups will rally around:


    Rebuffed by moderate Senate Democrats who refuse to negotiate, Hensarling is pressing hard for talks with the upper chamber and mounting a campaign to make his case. He’s calling on fellow Republican lawmakers to recruit industry groups to join the effort and to weigh in with House leaders.

    Hensarling, who is retiring at the end of this session, is trying to put his stamp on the last major financial services legislation of his career. And he has turned to lobbyists to help answer the question at the heart of the impasse: What do Senate Democrats find so objectionable about the bipartisan amendments he has put on the table?

    But Senate Democrats are standing firm on not opening up the Pandora’s Box of amendments:


    The Democrats’ support is essential, and they’re threatening to walk away from the bill that they helped draft if the House tries to make changes. They’re concerned that any revisions might jeopardize the fragile alliance underpinning the legislation.

    “This bill that the Senate came forward with — which I’m very happy they came forward with anything — it’s a bucket of bipartisan bills,” Hensarling said on CNBC. “Well, guess what? We have a bucket of bipartisan bills in the House as well.”

    Senate Democrats who assembled the banking bill are showing no appetite for further negotiations. After years of negotiations and withering attacks by fellow Democrats who oppose the regulatory rollbacks, they’re refusing to entertain any additions.

    A spokeswoman for Sen. Mark Warner, part of the core group that assembled the legislation, said the Virginia Democrat had made clear that “if the House makes changes, he will encourage all 17 of the Democrats who previously voted for the bill to vote against it.”

    And that’s why a lot of the finance lobbyists, those who already got what they want in the Senate bill, are advocating just passing the Senate version now:


    Yet finance industry lobbyists themselves are split.

    In response to his refusal to bless the bill, lobbyists who secured much of their wish list in the legislation are preparing to fight back to defend it. They’re pressing House Republicans to quickly send the bill to President Donald Trump, who has made it clear he wants to sign it as soon as possible.

    “Anyone who’s trying to add something to this, the question is, where have you been the last four years?” Independent Community Bankers of America executive vice president Paul Merski said. “You’re really late to the game if you’re trying to add something at this point.”

    But even the lobbyists who are working with Hensarling to pressure the Senate Democrats appear to feel that this is really about Hensarling making a ‘last stand’ to secure his legacy. A legacy of leading the GOP’s fight to do the finance industry’s bidding:


    Some of the same lobbyists and House Republicans who are working to expand the bill are privately expressing doubts that Hensarling will succeed. But he’s making a last stand to secure his legacy and score wins for House members who have assembled a long list of rollbacks they want Trump to sign.

    But it’s important to keep in mind that Hensarling isn’t actually just doing a ‘last stand’ alone. He’s merely leading the collective GOP fight in the House for this amendments. House Speaker Paul Ryan joined Hensarling and froze passage of the bill through the House unless Senate Democrats agreed to negotiate Hensarling’s amendment wish list. But even industry insiders, who are supposed to man Hensarling’s army of lobbyists, reportedly view what Hensarling wants as unrealistic. In other words, whether or not Hensarling relents on his ‘last stand’ probably isn’t up to Hensarling alone because he’s just acting as the front man for the House GOP leadership.

    And those skeptical lobbyists would be correct, because Hensarling has only barely eased his demands several days ago and the bank bill is at risk of running out of time. The bill really could collapse if a a compromise isn’t reached.

    The fact that some of what Hensarling is demanding has received universal support in the House is also quite important to recognize because it means the House GOP has plenty of ‘bait’ to use in its bait and switch scenario: the House GOP and its lobbyist army sell the Hensarling package as merely a bunch of stuff with almost universal support (ignoring all the additional industry giveaways):


    A key constituency that Hensarling has stirred up is focused on cutting red tape in securities laws that affect entrepreneurs and their investors. Several proposals that would accomplish that goal are included in a list of roughly 30 bills he has floated as potential additions to the Senate package.

    One of the bills would allow mergers and acquisitions brokers to escape a mandate that they register with securities regulators when they arrange deals with more complexity than all-cash offers.

    The brokers argue that the requirement is costly and unnecessary, especially for transactions involving small, privately held businesses, and that it opens them up to legal liability if they don’t comply.

    They’ve won broad bipartisan support and sympathy from regulators. The House passed their bill, introduced by Rep. Bill Huizenga (R-Mich.), in a 426-0 vote in December.

    Mike Ertel, managing director of Transworld M&A Advisors, said the gridlock over the banking legislation “frustrates me to no end.”

    House Republicans have encouraged the brokers to reach out to Senate Democrats to ensure that “if this is included in the bill when it comes back to the Senate, that there’s not going to be any heartburn on the Senate side,” he said.

    “To see Congress continually being stalemated and unwilling to negotiate and unwilling to talk things through is just not the way my high school civics teacher taught me how the system is supposed to work,” he said.

    So as this congressional standoff continues, we’re probably going to hear a lot about all the stuff with near universal support and little about the rest of the amendments that are just more giveaways to the finance industry. Like a significant easing of regulations on “super-regional” banks with over $250 billion in assets:


    Hensarling’s insistence on exercising his constitutional prerogative has also created an opening for a coalition of business interests that previously championed the 2012 JOBS Act which eased rules for emerging companies seeking to raise capital.

    He is trying to advance proposals backed by the U.S. Chamber of Commerce, the Small Business & Entrepreneurship Council and the Biotechnology Innovation Organization that would build on the JOBS Act, which was signed into law by President Barack Obama.

    “None of these are poison pills,” said Small Business & Entrepreneurship Council President and CEO Karen Kerrigan. “They would enhance the quality of the Senate-passed bill.”

    In addition, large “super-regional” banks BB&T, Capital One and PNC are urging lawmakers to expand the legislation to help ease rules for lenders with more than $250 billion in assets — a new regulatory threshold set by the Senate bill. And asset managers represented by the Investment Company Institute are hoping that lawmakers will include legislation that would restrict how regulators identify “systemically important” financial firms for tougher oversight and impose stress tests on the industry.

    And some of the industry groups that already got what they were lobbying for in the Senate bill are waging new lobbying campaigns in the House:


    Even groups that scored victories in the Senate bill are coming back for more.

    Domestic insurers, which have lobbied Congress to help shield them from the creep of European regulations, secured language in the Senate bill that attempts to address their concerns. But they are pushing the House to give it more teeth.

    And while the bill has benefits for small lenders, the National Association of Federally-Insured Credit Unions wants to add a provision that would repeal a capital rule imposed by the National Credit Union Administration.

    But there’s still those lobbyists who are lobbying the House to just pass the Senate bill. And it sounds like the banks and credit unions are largely in the category:


    In response, Hensarling and the lobbyists he’s enlisting will face pushback from banks that want the bill enacted as soon as possible.

    Those who plan to resist know they won’t have to deal with Hensarling after he leaves office in January and that many of his fellow Republicans will be eager to campaign on accomplishments this year as they fight to keep control of the House.

    Lenders have already begun conveying a sense of urgency to House members, and they’re taking advantage of Congress’ two-week recess to press lawmakers while they’re away from Washington. They say the Senate’s bill already includes many proposals that Hensarling and House Republicans have been driving for years.

    In a joint letter to Speaker Paul Ryan, the Wisconsin Credit Union League and the Wisconsin Bankers Association — representing competing sectors of the finance industry — asked that the House “immediately consider and pass” the Senate bill. Ryan is backing Hensarling in his fight to open negotiations with the Senate.

    “We understand Mr. Hensarling is representing the House and he wants to talk to the Senate about some of his ideas,” Ohio Bankers League general counsel Jeff Quayle said. “We’re just asking our [House] members to keep an eye on the goal line.”

    So we have this rather remarkable standoff going on in Congress: a bipartisan bill that makes it out of the Senate and the House GOP complains that it doesn’t go far enough. Oh wait, that’s not remarkable at all.

    Still, the split in the finance lobby is somewhat remarkable, which is why Hensarling’s call for the “army” of lobbyists was probably a plea to those finance lobbyist to create a unified finance lobby.

    But with both sides show no signs of yielding it’s still unclear how it’s going to pan out. It’s not like the GOP wants to die on this particular hill during an election year. It would require a pretty impressive public relations lobbying campaign to generate public interest in a bank bill that mostly deregulates the banks more. But that doesn’t mean they won’t try.

    It’s also worth note that one of the main reason Jeb Hensarling is so interesting in making a ‘last stand’ for the finance sector is so he can leave congress and become a lobbyist.

    So is there any news on what’s next for Rep. Hensarling after he retires at the ends of this term? Well, this is indeed some talk of what’s likely next for Hensarling. And it’s not being a lobbyist. It’s taking over a financial regulatory agency, like the Federal Housing Finance Agency. Or Mick Mulvaney’s position as the head of the Consumer Financial Protection. That’s what’s probably what’s next for Jeb Hensarling:

    Think Advisor

    What’s Next for Departing Rep. Hensarling?
    He might end up heading the CFPB or the housing finance agency. Meanwhile, the House approved bills expanding the accredited investor definition and boosting IPOs.

    By Melanie Waddell
    November 03, 2017 at 12:21 PM

    House Financial Services Committee Chairman Jeb Hensarling, R-Texas, announced on Tuesday that he won’t seek re-election in 2018, but he stated that “much work remains” during his remaining 14 months on the job.

    With his term as chairman expiring next year, Hensarling said the time was right to head back home and spend some time with his two teenagers. “I want to be there for those years,” he said.

    What could be next? Don’t expect official word on Hensarling’s next move until next fall at the earliest, said Jaret Seiberg, financial services and housing policy analyst for Cowen Washington Research Group.

    But likely moves include replacing Federal Housing Finance Agency director Mel Watt, as his term expires in January 2019, or becoming the next director of the Consumer Financial Protection Bureau.

    “Hensarling has shown much greater interest in housing finance,” Seiberg said. “And running the CFPB is likely to be a giant headache for the first Republican director as Democrats have staffed up the agency and established its corporate culture.”

    Hensarling said in a note released by his personal office regarding his retirement that “much work remains at the House Financial Services Committee in the areas of housing finance reform, regulatory relief, cybersecurity and capital formation to name just a few. Furthermore, important work remains in the Congress as a whole — especially pro-growth tax reform.”

    ———–

    “What’s Next for Departing Rep. Hensarling?” by Melanie Waddell; Think Advisor; 11/03/2017

    “But likely moves include replacing Federal Housing Finance Agency director Mel Watt, as his term expires in January 2019, or becoming the next director of the Consumer Financial Protection Bureau.”

    Jeb Hensarling as director of the Consumer Financial Protection Bureau. That’s seen as one of the likely next moves for Hensarling. The guy who told a room full of bankers that he only listened to lobbyists who paid him is going to be replaced by the guy rallying an army of finance lobbyists.

    So if you were hoping Mick Mulvaney’s replacement would be a little less openly beholden to Wall Street, don’t get your hopes up.

    If you’re a financial lobbyist, on the other hand, you should probably keep your hopes up. And your checkbooks out. ‘Tis the season of record profits, after all.

    Posted by Pterrafractyl | April 29, 2018, 1:53 am
  22. There’s was no shortage of high expectations for the US 2nd quarter GDP report coming out Friday, with many economists expecting over 4 percent growth. And sure enough, the 2nd quarter GDP growth came in at reasonably robust 4.1 percent (somewhat below expectations). It was the kind of number we should have expected given the economic momentum President Trump inherited from Obama’s economy followed up with the GOP’s massive tax cut. Some sort of short-term stimulative effect was inevitable with a tax cut of that scale.

    Unfortunately, despite the assurances from the Trump administration and GOP, that +4 percent GDP growth is largely expected to be transitory. Even more unfortunately, there’s another important economic number that also grew in the 2nd quarter that is expected to remain historically high for years to come due to another important number hitting historic lows: the US deficit, which is already spiking and expected to remain historically high due to suddenly historically low government revenues from corporate taxes:

    The New York Times

    How the Trump Tax Cut Is Helping to Push the Federal Deficit to $1 Trillion

    By Jim Tankersley
    July 25, 2018

    The amount of corporate taxes collected by the federal government has plunged to historically low levels in the first six months of the year, pushing up the federal budget deficit much faster than economists had predicted.

    The reason is President Trump’s tax cuts. The law introduced a standard corporate rate of 21 percent, down from a high of 35 percent, and allowed companies to immediately deduct many new investments. As companies operate with lower taxes and a greater ability to reduce what they owe, the federal government is receiving far less than it would have before the overhaul.

    The Trump administration had said that the tax cuts would pay for themselves by generating increased revenue from faster economic growth, but the White House has acknowledged in recent weeks that the deficit is growing faster than it had expected. The Office of Management and Budget said this month that it had revised its forecasts from earlier this year to account for nearly $1 trillion of additional debt over the next decade — on average, almost $100 billion more a year in deficits.

    In the trough of the Great Recession in 2009, when companies were laying off hundreds of thousands of workers each month, corporate tax collections plunged by almost a third. It was the largest quarterly drop since the Commerce Department began compiling the data in the 1940s. No other period came close — until this year.

    From January to June this year, according to data from the Treasury Department, corporate tax payments fell by a third from the same period a year ago. The drop nearly reached a 75-year low as a share of the economy, according to federal data.

    “If we hadn’t changed our tax system,” said Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore., who studies business taxation, “you would be expecting rising revenues.”

    The corporate tax payments have been tumbling as Congress careens toward a fiscal showdown in September that will take still more money to resolve.

    The current spending bill that Mr. Trump signed earlier this year expires at the end of September, the end of the current fiscal year. Congress is unlikely to pass another comprehensive spending bill before then. Instead, Republican leaders will have to press for a stopgap spending bill if they want to prevent a government shutdown a month before the midterm elections.

    And then there is the possibility of more new spending. President Trump’s pledge of up to $12 billion in emergency relief for farmers hurt by the trade war is prompting new demands for relief for manufacturers, fishermen and others being hit by retaliatory tariffs from American trading partners — all of which would require more government spending.

    As the tax bill was debated last year, the Trump administration argued that losses from the cuts would be offset by increased economic growth. Companies would use money that had previously gone to taxes, the argument went, to invest in their businesses and workers, giving the government a smaller slice — but out of a bigger pie.

    But the drop in tax payments has come as the American economy is already the healthiest it has been since the crisis, raising questions about whether the deficit could balloon further if growth begins to slow. The Commerce Department on Friday will announce its first estimate of gross domestic product in the second quarter, and forecasters anticipate it could reach 5 percent, the highest rate since 2014. Analysts, however, expect growth to slow in the second half of the year, as interest rates continue to rise and trade tensions weigh on the economy.

    There was some encouraging news on the front Wednesday: After months of escalation, Europe and the United States agreed to find a way to reduce tariffs and other barriers, although how that could weigh on growth remains to be seen.

    “It is unwise to count on sustained revenues from growth that could easily prove to be a temporary sugar-high,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget in Washington, “particularly when it ignores the very real threat that the economy slows and we enter a downturn in a very vulnerable fiscal position.”

    But administration officials are dismissing such concerns, arguing that they still expect economic activity to remain strong.

    “We are very much looking forward to the second quarter G.D.P. numbers, which we anticipate will keep us on track to a four-quarter growth rate over 3 percent for the first time in 13 years,” said Kevin A. Hassett, the chairman of the White House Council of Economic Advisers. “That’s a growth rate nobody thought was possible and we are glad to see the naysayers will be proved wrong.”

    The new law has so far proven to be a boon for companies, with corporate profits after taxes at the highest level the United States has ever seen. (As a share of the economy, though, profits are still below their peak reached under President Barack Obama.)

    White House officials say the new law, which changed how the United States taxes multinational companies that operate here, is spurring a wave of so-called repatriation — businesses returning money to the United States that they had booked on their balance sheets abroad in order to defer American taxes.

    In the first quarter of this year, according to Commerce Department data, multinationals repatriated $306 billion, in the form of dividends. That was $270 billion above the average quarterly amount over the last five years. White House officials say that’s a sign that the tax law is working.

    It’s not yet clear that repatriation is generating additional economic activity, though conservative economists say the dividend payments will lead to more investment over time, which should generate greater tax revenue in the longer run.

    Companies, however, can spread out the tax bill for repatriation over the next eight years, which is why those payouts are not lifting corporate tax payments in the near term. The law forces multinational companies to pay a one-time tax on cash and assets held abroad, but the Internal Revenue Service allows firms to pay that bill in annual installments, even if they choose to pay out the money in dividends right away.

    Administration officials have said that timing has contributed to corporate collections running 20 percent below initial forecasts from the Congressional Budget Office and 10 percent below predictions from the Penn Wharton Budget Model, a nonpartisan research initiative that forecast large deficits as a result of the tax law.

    Other factors could also be holding corporate tax receipts down. Some analysts believe the so-called expensing provisions of the new tax law, which allow companies to write off new investments immediately, may prove more popular than some forecasters anticipated. Companies, for example, could write off investments in software or machinery or new buildings.

    If that’s true, “it means the government will lose more revenue than we all originally thought, especially in the short run,” said Kyle Pomerleau, an economist with the Tax Foundation in Washington, which forecast a large increase in economic growth from the tax cuts and the expensing provision. Such a scenario, Mr. Pomerleau said, would mean that growth should be even stronger than expected.

    Multinationals could also be shifting money — on paper, basically — into the United States solely to take advantage of the expensing provision and reduce their American tax bills.

    “This tax law is working, in the sense that now shareholders have access to their cash,” Ms. Clausing said, “but whether that translates to investment is a much different question.”

    ———-

    “How the Trump Tax Cut Is Helping to Push the Federal Deficit to $1 Trillion” by Jim Tankersley; The New York Times; 07/25/2018

    “The amount of corporate taxes collected by the federal government has plunged to historically low levels in the first six months of the year, pushing up the federal budget deficit much faster than economists had predicted.

    Yep, even the pessimistic federal deficit projections of the Joint Committee on Taxation about the impact of the GOP tax scam – which the GOP tried to argue was overly pessimistic – wasn’t pessimistic enough. So just this week the Office of Budget and Management had to increase its official pessimism, adding an additional $100 billion in projected deficits every year for the next decade. So we just had the first major revision of the cost of the GOP tax scam: $1 trillion:


    The reason is President Trump’s tax cuts. The law introduced a standard corporate rate of 21 percent, down from a high of 35 percent, and allowed companies to immediately deduct many new investments. As companies operate with lower taxes and a greater ability to reduce what they owe, the federal government is receiving far less than it would have before the overhaul.

    The Trump administration had said that the tax cuts would pay for themselves by generating increased revenue from faster economic growth, but the White House has acknowledged in recent weeks that the deficit is growing faster than it had expected. The Office of Management and Budget said this month that it had revised its forecasts from earlier this year to account for nearly $1 trillion of additional debt over the next decade — on average, almost $100 billion more a year in deficits.

    And to put this drop in corporate tax collections into perspective, it’s almost as large as the drop experienced right after the financial collapse of 2008, which at the time was the largest drop since such records started being kept in the 1940’s. So the GOP’s tax bill, which cut corporate tax receipts by a third, basically created a fiscal depression:


    In the trough of the Great Recession in 2009, when companies were laying off hundreds of thousands of workers each month, corporate tax collections plunged by almost a third. It was the largest quarterly drop since the Commerce Department began compiling the data in the 1940s. No other period came close — until this year.

    From January to June this year, according to data from the Treasury Department, corporate tax payments fell by a third from the same period a year ago. The drop nearly reached a 75-year low as a share of the economy, according to federal data.

    “If we hadn’t changed our tax system,” said Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore., who studies business taxation, “you would be expecting rising revenues.”

    And this unsurprising revelation of worse than expected tax receipts is coming just months before the annual congressional showdown over the budget that comes up in September. So just months before the mid-terms we’re going to see how Congress responds to this artificially created fiscal crisis the GOP lied the country into. That should be interesting:


    The corporate tax payments have been tumbling as Congress careens toward a fiscal showdown in September that will take still more money to resolve.

    The current spending bill that Mr. Trump signed earlier this year expires at the end of September, the end of the current fiscal year. Congress is unlikely to pass another comprehensive spending bill before then. Instead, Republican leaders will have to press for a stopgap spending bill if they want to prevent a government shutdown a month before the midterm elections.

    And then there is the possibility of more new spending. President Trump’s pledge of up to $12 billion in emergency relief for farmers hurt by the trade war is prompting new demands for relief for manufacturers, fishermen and others being hit by retaliatory tariffs from American trading partners — all of which would require more government spending.

    And note that, while a higher-than-average quarterly GDP report was expected on Friday – it came in at 4.1 percent, which is to be expected given the health of the economy Trump inherited and short-term stimulus impact of the tax cut – the quarterly GDP growth is also expected to drop in the second half of 2018. So if it turns out the official projections continue to be too unpessimistic, we could see the deficits continue to spike:


    As the tax bill was debated last year, the Trump administration argued that losses from the cuts would be offset by increased economic growth. Companies would use money that had previously gone to taxes, the argument went, to invest in their businesses and workers, giving the government a smaller slice — but out of a bigger pie.

    But the drop in tax payments has come as the American economy is already the healthiest it has been since the crisis, raising questions about whether the deficit could balloon further if growth begins to slow. The Commerce Department on Friday will announce its first estimate of gross domestic product in the second quarter, and forecasters anticipate it could reach 5 percent, the highest rate since 2014. Analysts, however, expect growth to slow in the second half of the year, as interest rates continue to rise and trade tensions weigh on the economy.

    There was some encouraging news on the front Wednesday: After months of escalation, Europe and the United States agreed to find a way to reduce tariffs and other barriers, although how that could weigh on growth remains to be seen.

    “It is unwise to count on sustained revenues from growth that could easily prove to be a temporary sugar-high,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget in Washington, “particularly when it ignores the very real threat that the economy slows and we enter a downturn in a very vulnerable fiscal position.”

    And, of course, the Trump administration and GOP continue to dismiss such concerns and assure everyone that historically high growth rates will continue. Keep in mind that one of the underlying assumptions that the GOP used to pass its tax cut without violating congressional rules requiring it to be budget neutral was to argue that historically high growth rates would continue for the next decade. Not just the rest of the year. It was always an appallingly dishonest argument and it remains the primary arguing the GOP is using to rely on:


    But administration officials are dismissing such concerns, arguing that they still expect economic activity to remain strong.

    “We are very much looking forward to the second quarter G.D.P. numbers, which we anticipate will keep us on track to a four-quarter growth rate over 3 percent for the first time in 13 years,” said Kevin A. Hassett, the chairman of the White House Council of Economic Advisers. “That’s a growth rate nobody thought was possible and we are glad to see the naysayers will be proved wrong.”

    To highlight how perilous the fiscal situation is, this historic drop in corporate tax revenues is happening during a period of record corporate profits. And yes, those record profits are due, in part, to the massive cut in corporate taxes that kicked in this year. But don’t forget that corporate profits were at record levels last year, before the tax cut was passed. So while the drop of corporate tax receipts parallels what we saw following the 2008 financial crisis, it’s happening during a period of unprecedented corporate profits. Highlighting how unprecedented the folly of this tax cut really is:


    The new law has so far proven to be a boon for companies, with corporate profits after taxes at the highest level the United States has ever seen. (As a share of the economy, though, profits are still below their peak reached under President Barack Obama.)

    And while the White House is pointing to the large amounts of repatriated overseas profits that corporations brought back to the US as an example of the tax bill ‘working’, the tax bill also taxes those repatriated profits at extra low rates: 8 percent for profits invested in real estate and other hard assets abroad (which is very nice for Trump’s investments), and 15.5 percent for profits in cash and stock and other liquid assets. So pointing to higher levels of repatriated profits also points out how the strategy of multinational corporations to refuse to bring back overseas profits unless they were given special extra-low tax rates totally worked. It’s not exactly something anyone other than the shareholders of those large multinational corporations should celebrate. Also, most of the repatriated profits have just gone to pay dividends and not get used for new investments:


    White House officials say the new law, which changed how the United States taxes multinational companies that operate here, is spurring a wave of so-called repatriation — businesses returning money to the United States that they had booked on their balance sheets abroad in order to defer American taxes.

    In the first quarter of this year, according to Commerce Department data, multinationals repatriated $306 billion, in the form of dividends. That was $270 billion above the average quarterly amount over the last five years. White House officials say that’s a sign that the tax law is working.

    It’s not yet clear that repatriation is generating additional economic activity, though conservative economists say the dividend payments will lead to more investment over time, which should generate greater tax revenue in the longer run.

    Companies, however, can spread out the tax bill for repatriation over the next eight years, which is why those payouts are not lifting corporate tax payments in the near term. The law forces multinational companies to pay a one-time tax on cash and assets held abroad, but the Internal Revenue Service allows firms to pay that bill in annual installments, even if they choose to pay out the money in dividends right away.

    Administration officials have said that timing has contributed to corporate collections running 20 percent below initial forecasts from the Congressional Budget Office and 10 percent below predictions from the Penn Wharton Budget Model, a nonpartisan research initiative that forecast large deficits as a result of the tax law.

    So that’s out first look at the real impact of the GOP tax scam: it’s worse than officially expected. Specifically, the federal deficit is $1 trillion worse than expected over the coming decade according to the Office of Management and Budget. And it was already expected to add an additional $1.5 trillion over the decade, so this is an additional $1 trillion on top of that $1.5 trillion. And it’s only July.

    But who knows, maybe the GOP and right-wing economists will be correct for the first time ever about the self-financing nature of supply-side tax cuts and maybe we really will see sustained higher-than-average economic growth for the next decade that helps cushion the blow of this fiscal debacle. Let’s hope that happens, because it really would be nice if supply-side economics magically worked and societies could finance themselves with tax cuts. Especially since the latest information on wages in the US indicate that wages are falling. Yep, despite some early positive signs this year for US wages, US companies cut wages on average for the first quarter in the face of this historic tax cut:

    Bloomberg
    Opinion

    Trump’s Tax Cut Hasn’t Done Anything for Workers

    Wages were supposed to rise. Instead, they’ve fallen.

    By Noah Smith
    July 18, 2018, 6:00 AM CDT

    A few months ago, I cautioned that Americans should be patient before deciding what effect President Donald Trump’s tax cuts have had on the economy. It takes a while for companies to make investment decisions, more time for those decisions to be implemented and even more time for the resulting changes in labor demand to bid up workers’ wages. It therefore takes months or even years before the full impact of the tax bill will be known.

    But it’s also important to evaluate policies like Trump’s tax reform as quickly as possible. Not only is this critical for deciding whether to change course, but as more time goes on, the effects of a policy can become harder to assess. Two years from now, plenty of other things will have had time to affect the economy, including Trump’s trade war and natural economic forces. And now that the tax cut has been in effect for a half-year, the results are starting to trickle in.

    First, the tax reform hasn’t yet resulted in appreciably higher wages for American workers. Real average hourly compensation actually fell in the first quarter after the tax reform was passed:

    Official data for the second quarter isn’t available yet, but private data isn’t looking encouraging. PayScale’s index of real wages shows a dramatic deterioration in the period:

    Not Very Convincing

    Real average hourly compensation*
    [see chart showing drop in wage changes from 2012-2018 relative to 2009 levels]
    Source: Federal Reserve Bank of St. Louis

    * Index 2009 = 100

    That’s Not Very Pretty

    Changes in real wages since 2006
    [see chart showing drop in wage changes from 2012-2018 relative to 2006 levels]

    Source: Payscale.com

    But perhaps two quarters is too early to expect results in this area. A better gauge might be business investment — if the tax reform is spurring businesses to increase capital expenditure, as it was supposed to do, then wage increases will probably follow in due course.

    Some have expressed dismay that stock buybacks seem to have taken precedence over boosting capital investment. Since the tax cuts passed, companies have been using buybacks to return record amounts of cash to shareholders — more than $700 billion in the first two quarters. That naturally raises the possibility that companies don’t have good projects to invest in. If companies pass their tax windfall on to shareholders, those investors can choose to react by increasing consumption — meaning more of society’s resources go to the wealthy. They can also choose to invest the money in other companies with better growth prospects — but if those companies are also reacting by returning the money to their shareholders, rather than making capital expenditures, not much is getting accomplished.

    So is any of the tax-cut windfall being used to finance the capital expenditure that the economy needs? Private nonresidential fixed investment did increase as a share of the economy in the first two quarters since the reform was passed:

    One Promising Sign

    Private nonresidential fixed investment as a share of gross domestic product
    [see chart showing private nonresidential fixed investment as a share of gross domestic product from 2000-2018]

    Source: Federal Reserve Bank of St. Louis

    But the level still remains below the high set back in 2015.

    Huge, immediate gains for wealthy shareholders combined with tepid increases in business investment and decreases in real wages don’t paint a flattering picture of the tax cut’s impact so far. There is, however, a possibility that the tax cut has acted as a Keynesian fiscal stimulus, helping to push down unemployment.

    But that’s not exactly the long-term structural improvement that the bill’s supporters advertised. And as a recent research note from the Federal Reserve Bank of San Francisco points out, fiscal stimulus in good economic times is less effective than in recessions. And growth hasn’t really sped up either — real per capita gross domestic product growth was only 1.34 percent in the first quarter, below 2017’s pace, and considerably less than in 2014 and 2015:

    Very Meh

    Real gross domestic product growth per capita
    [see chart showing real gross domestic product growth per capita from 2012-2018]

    This tepid rate of growth means that the tax cut is unlikely to pay for itself. By this point, almost all economists recognize that income tax cuts no longer stimulate the economy enough to reduce deficits, as supply-siders thought they would back in the 1980s. But economists still held out some hope that lowering the corporate tax, which is believed to be more harmful than the personal income tax, would have a more salutary effect on the budget. Unfortunately, that hope appears to be fading, as fiscal deficits increase rapidly.

    In the postwar period, with top marginal income tax rates at more than 90 percent, it made sense to cut taxes as a way of improving the economy’s long-term health. A series of big tax cuts, under presidents Lyndon Johnson and Ronald Reagan, might have boosted economic activity in their day. But the later tax cuts by George W. Bush were followed by years of underwhelming growth, implying that income taxes were no longer doing much damage to economic efficiency.

    Corporate taxes were really the last hope for the tax-cutting strategy. But if even that doesn’t provide more than a small momentary fiscal stimulus, then we’ve reached the end of that approach’s usefulness.

    ———–

    “Trump’s Tax Cut Hasn’t Done Anything for Workers” by Noah Smith; Bloomberg; 07/18/2018

    “First, the tax reform hasn’t yet resulted in appreciably higher wages for American workers. Real average hourly compensation actually fell in the first quarter after the tax reform was passed

    We have a situation where corporate taxes were cut by ~40 percent during a period of already record corporate profits, leading to even higher record corporate profits, along with a big surge in repatriated overseas profits, and the end result six months into this grand experiment on wages is lower wages. It’s kind of amazing, isn’t it?


    Official data for the second quarter isn’t available yet, but private data isn’t looking encouraging. PayScale’s index of real wages shows a dramatic deterioration in the period:

    Not Very Convincing

    Real average hourly compensation*
    [see chart showing drop in wage changes from 2012-2018 relative to 2009 levels]
    Source: Federal Reserve Bank of St. Louis

    * Index 2009 = 100

    That’s Not Very Pretty

    Changes in real wages since 2006
    [see chart showing drop in wage changes from 2012-2018 relative to 2006 levels]

    Source: Payscale.com

    One metric of US corporate investments, private nonresidential fixed investment (expenditures by firms on capital such as commercial real estate, tools, machinery, and factories), is indeed up for the first two quarters of 2018. But still not as high as it was in 2015. And that lack of wage gains and tepid increase in investments points towards a possibility that doubles as a reminder of how bad the timing was for a tax cut of this nature: maybe US corporations just don’t have great investment opportunities at this point in the business cycle:


    But perhaps two quarters is too early to expect results in this area. A better gauge might be business investment — if the tax reform is spurring businesses to increase capital expenditure, as it was supposed to do, then wage increases will probably follow in due course.

    Some have expressed dismay that stock buybacks seem to have taken precedence over boosting capital investment. Since the tax cuts passed, companies have been using buybacks to return record amounts of cash to shareholders — more than $700 billion in the first two quarters. That naturally raises the possibility that companies don’t have good projects to invest in. If companies pass their tax windfall on to shareholders, those investors can choose to react by increasing consumption — meaning more of society’s resources go to the wealthy. They can also choose to invest the money in other companies with better growth prospects — but if those companies are also reacting by returning the money to their shareholders, rather than making capital expenditures, not much is getting accomplished.

    So is any of the tax-cut windfall being used to finance the capital expenditure that the economy needs? Private nonresidential fixed investment did increase as a share of the economy in the first two quarters since the reform was passed:

    One Promising Sign

    Private nonresidential fixed investment as a share of gross domestic product
    [see chart showing private nonresidential fixed investment as a share of gross domestic product from 2000-2018]

    Source: Federal Reserve Bank of St. Louis

    But the level still remains below the high set back in 2015.

    Beyond that, real per capita GDP growth is actually down from 2017 and below 2014 and 2015 levels:


    Huge, immediate gains for wealthy shareholders combined with tepid increases in business investment and decreases in real wages don’t paint a flattering picture of the tax cut’s impact so far. There is, however, a possibility that the tax cut has acted as a Keynesian fiscal stimulus, helping to push down unemployment.

    But that’s not exactly the long-term structural improvement that the bill’s supporters advertised. And as a recent research note from the Federal Reserve Bank of San Francisco points out, fiscal stimulus in good economic times is less effective than in recessions. And growth hasn’t really sped up either — real per capita gross domestic product growth was only 1.34 percent in the first quarter, below 2017’s pace, and considerably less than in 2014 and 2015:

    Very Meh

    Real gross domestic product growth per capita
    [see chart showing real gross domestic product growth per capita from 2012-2018]

    This lackluster response to supply-side corporate tax policies doesn’t just point towards all points towards an early end to any stimulative effects from this current tax cut. It also suggests the US is literally at the point where supply-side tax policies can barely even generate short-term stimulative effects. Because, while it’s long been accepted by non-conservative economists that income tax cuts have a reduced capacity to stimulate the economy due to all the cutting to income taxes that’s already taken place, there was hope that corporate tax cuts might still have some sort of supply-side effect. And that doesn’t appear to be the case. And if income and corporate taxes are already low enough that there’s hardly even a stimulus when they get cut, that’s strong evidence that the potential utility of tax cuts in general in the US is more or less over:


    This tepid rate of growth means that the tax cut is unlikely to pay for itself. By this point, almost all economists recognize that income tax cuts no longer stimulate the economy enough to reduce deficits, as supply-siders thought they would back in the 1980s. But economists still held out some hope that lowering the corporate tax, which is believed to be more harmful than the personal income tax, would have a more salutary effect on the budget. Unfortunately, that hope appears to be fading, as fiscal deficits increase rapidly.

    In the postwar period, with top marginal income tax rates at more than 90 percent, it made sense to cut taxes as a way of improving the economy’s long-term health. A series of big tax cuts, under presidents Lyndon Johnson and Ronald Reagan, might have boosted economic activity in their day. But the later tax cuts by George W. Bush were followed by years of underwhelming growth, implying that income taxes were no longer doing much damage to economic efficiency.

    Corporate taxes were really the last hope for the tax-cutting strategy. But if even that doesn’t provide more than a small momentary fiscal stimulus, then we’ve reached the end of that approach’s usefulness.

    “In the postwar period, with top marginal income tax rates at more than 90 percent, it made sense to cut taxes as a way of improving the economy’s long-term health.”

    Another way to look at it is if US policy makers want to enact potentially stimulative tax cuts they’re going to have to raise taxes first. They’re too low now thanks to America’s decades of supply-side mania.

    And if American really has reached a natural end point for the potential utility of supply-side tax cuts after cutting taxes on the wealthy for decades, it’s worth noting that the end result of that is record corporate profits, decades of stagnant wages, record inequality and a fiscal situation growing more dangerous with each passing quarter. In other words, this grand supply-side experiment has been consistently worse than you expect. It’s one of the meta-themes of the GOP: it’s somehow consistently worse than expected.

    Posted by Pterrafractyl | July 28, 2018, 5:36 pm
  23. It was always obvious that the massive deficits triggered by the GOP tax cut scam would be used as a political cudgel to push through big spending cuts. It was merely a question of when the GOP would bust out the “we can’t afford all this spending” argument.

    More specifically, it was really a question of how shamelessly soon after the December 2017 passage of the GOP tax cut this bait-and-switch routine, which particular cuts they would call for to get this phased of the tax scam underway, and how absurd the justification would be. And it looks like we may have our answer: President Trump just announced a pay freeze for all federal workers citing…wait for it…rising deficits! Yep, and he’s using the cited his statutory authority to adjust pay because of “national emergency or serious economic conditions affecting the general welfare.” He’s literally canceling cost-of-living increases in federal workers by declaring that there’s a national fiscal emergency 8 months after his budget-busting tax cuts for the super-rich.

    So that gives us a sense of how the GOP is planning on transitioning to the “we have to cut [insert everything useful here] because we just can’t afford it” phase of their tax scam. They’re going to start off targeting with the federal workers, presumably hoping that their ‘ol “federal employees are all lazy and overpaid!” meme will deflect from the fact that Trump’s fiscal emergency is a direct result of his tax cuts. And by targeting the federal workers who are hated by so many Trump voters, Trump and the GOP can get the GOP base to enthusiastically accept the “we can’t afford this!” arguments that will soon by expanded to other programs like Social Security and Medicare. It’s like a karmic popular-program-cutting rhetorical appetizer in anticipation of the massive cuts yet to come:

    CNN

    Trump cancels pay raises for federal employees

    By Kevin Liptak, CNN
    Updated 11:05 PM ET, Thu August 30, 2018

    Washington (CNN)President Donald Trump told lawmakers on Thursday he wants to scrap a pay raise for civilian federal workers, saying the nation’s budget couldn’t support it.

    In a letter to House and Senate leaders, Trump described the pay increase as “inappropriate.”

    “We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases,” the President wrote.

    An across-the-board 2.1% pay increase for federal workers was slated to take effect in January. In addition, a yearly adjustment of paychecks based on the region of the country where a worker is posted — the “locality pay increase” — was due to take effect.

    Trump said both increases should no longer happen.

    “I have determined that for 2019, both across the board pay increases and locality pay increases will be set at zero,” he wrote.

    Congress has an opportunity to effectively overrule the President’s edict if lawmakers pass a spending bill that includes a federal pay raise. The Senate passed a bill this summer that included a 1.9% raise for federal workers. The House’s version did not address federal pay. Senate and House negotiators will negotiate a final measure in the coming weeks.

    Trump’s 2019 budget proposal, released earlier this year, included a pay freeze for civilian federal workers. It’s not clear if Trump would approve a budget that includes the pay increase; the White House has not issued a formal veto threat of the Senate’s bill.

    In his letter, Trump stressed a pay freeze would not affect the federal government’s ability to attract qualified workers, and wrote the government would focus on “recruiting, retaining and rewarding high-performing Federal employees and those with critical skill sets.”

    The implications of Trump’s decision on the locality pay increase were not immediately clear. Workers based in more expensive parts of the country are paid higher salaries to compensate for the higher cost of living.

    In his letter, Trump wrote the locality increase in 2019 would average 25.70% and cost the federal government $25 billion. But he did not say whether the locality adjustments already in place would remain in effect and the White House did not immediately clarify.

    Pay for military personnel will not be affected by Trump’s decree; instead, US troops are due a 2.6% pay increase next year. Trump frequently trumpets the military pay raise while listing his administration’s accomplishments. The raise came as part of a massive $716 billion defense spending bill that Trump signed earlier this month.

    That measure, along with a new two-year federal budget and tax cuts heralded by Republicans, have led to accusations Trump is ignoring the federal deficit, despite promising he would address it as president. The tax plan alone is expected to increase the deficit by $1.4 trillion over 10 years, according to a government estimate.

    In ordering the raises canceled, Trump cited his statutory authority to adjust pay because of “national emergency or serious economic conditions affecting the general welfare.” Yet the President frequently touts a growing US economy, including a strong growth rate for the gross domestic product and low unemployment

    “These numbers are very, very sustainable — this isn’t a one-time shot,” he said last month after figures showed the US economy grew at a 4.1% annual rate in the second quarter of the year.

    The pay raise matter was the latest in a string of moves that reflect an attempt to rein in spending on federal employees. Trump signed executive orders in May that made it easier to fire federal employees and placed limits on public-sector unions. A judge struck down most of those provisions last week.

    While the Washington area contains the largest concentration of federal workers, only 1-in-6 civilian employees of the government live in the region.

    The state with the largest number of federal workers is California, followed by Virginia, the District of Columbia and Texas. States Trump won in 2016 — including Florida, Pennsylvania and Ohio — also rank high on the list of states where federal employees work.

    ———-

    “Trump cancels pay raises for federal employees” by Kevin Liptak; CNN; 08/30/2018

    “We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases,” the President wrote.

    Few people can pull off deadpan irony like President Trump. For him, is so deadpan it’s actual policy.

    Note how this pay freeze was actually first proposed by Trump in February of this year as part of his budget proposal. So, true to form, this current “we can’t afford this!” declaration is merely an excuse to do something he’s was already planning on doing, much like how all the future programs (like Medicare) that will be cut under the auspices “we can’t afford this because of the deficits!” will be programs the GOP has wanted to cut anyway for years:


    Trump’s 2019 budget proposal, released earlier this year, included a pay freeze for civilian federal workers. It’s not clear if Trump would approve a budget that includes the pay increase; the White House has not issued a formal veto threat of the Senate’s bill.

    And in order to use his executive powers to cancel the pay raises Trump had to declared a “national emergency or serious economic conditions affecting the general welfare.” This is at the same time he’s been endlessly praising himself about the strength of the economy:


    Pay for military personnel will not be affected by Trump’s decree; instead, US troops are due a 2.6% pay increase next year. Trump frequently trumpets the military pay raise while listing his administration’s accomplishments. The raise came as part of a massive $716 billion defense spending bill that Trump signed earlier this month.

    That measure, along with a new two-year federal budget and tax cuts heralded by Republicans, have led to accusations Trump is ignoring the federal deficit, despite promising he would address it as president. The tax plan alone is expected to increase the deficit by $1.4 trillion over 10 years, according to a government estimate.

    In ordering the raises canceled, Trump cited his statutory authority to adjust pay because of “national emergency or serious economic conditions affecting the general welfare.” Yet the President frequently touts a growing US economy, including a strong growth rate for the gross domestic product and low unemployment

    “These numbers are very, very sustainable — this isn’t a one-time shot,” he said last month after figures showed the US economy grew at a 4.1% annual rate in the second quarter of the year.

    Intriguingly, by canceling these pay raises, Trump appears to have created a political issue for Congress to deal with in the weeks leading up to the midterms. Because Congress can overrule Trump’s edict in the upcoming spending bill. And the final version of that bill is getting negotiated a coming weeks. So pretty much every Democrat in the country can now run ads connecting the GOP tax cut to Trump’s declared “national emergency or serious economic conditions affecting the general welfare”. From a political standpoint this was a remarkable move:


    Congress has an opportunity to effectively overrule the President’s edict if lawmakers pass a spending bill that includes a federal pay raise. The Senate passed a bill this summer that included a 1.9% raise for federal workers. The House’s version did not address federal pay. Senate and House negotiators will negotiate a final measure in the coming weeks.

    Also keep in mind that the budget proposed by the GOP leadership in House back in June included massive cuts to Medicare and Medicaid for the explicit purpose of reigning in the deficit. So Trump may have given Democrats a convenient way to remind voters of what it means to leave the GOP in control of congress too.

    It was always obvious that whatever gimmick the GOP used to start the “we can’t afford this!” phase of the tax scam was going to be a political gamble. The audacity of it all is inherently politically risky. Don’t forget that the GOP was long planning on passing the tax cuts and then running for reelection by touting them but that strategy has been largely abandoned because those cuts proved to be politically toxic. And now Trump just injected the issue back into the fray two months ahead of the midterms by declaring a tax-cut-induced national fiscal emergency. For an opening shot in the ‘switch’ phase of this ‘bait-and-switch’ tax scam this was quite a doozy.

    Posted by Pterrafractyl | August 30, 2018, 10:32 pm
  24. Paul Krugman has a recent column exploring the stunningly shameless timing of President Trump’s recent decision to freeze the scheduled pay raises for federal workers after citing a fiscal emergency months before the midterms and a mere eight months after passing a massive tax cut for the super-rich. Krugman’s conclusion? The timing of Trump’s wasn’t strategic. It was pique. Specifically, Krugman speculates that anger at the Mueller probe might have Trump viewing virtually all federal employees as members of the ‘deep state’ and enemies in need of punishment.

    Is Krugman’s suspicions correct? Who knows, but as we’re going to see, it raises a rather ominous question that needs to be kept in mind now that Trump has made it clear that he’s viewing federal workers with disdain: given that the GOP drive to cut federal employee compensation and shift to a ‘pay-for-performance’ model involves making it easier to fire ‘low performing’ employees, and given Trump’s obvious stance that employees who don’t politically support him are ‘disloyal’ enemies, should we expect a mass partisan purge of federal employees once Trump is given the green light to do so?

    Krugman’s piece also makes two more important points to keep in mind: first, during every census year there’s a surge in federal hiring and the last time this happened, in 2010, the GOP started disingenuously complaining about the growth in federal employment. A repeat of that is more or less guaranteed in 2020, except this time there will be a Republican president who can use that census hiring as an excuse to further attack the federal workforce.

    Second, Krugman notes that that widespread embrace of the ‘pay-for-performance’ model in the private sector has been a big part of what has led to the ever-growing wage gaps and the explosion of poverty wages across the American economy. So when Trump and the GOP talk about bringing the private sector efficiency of pay-for-performance and easy firings to the government, it’s actually a call to introduce McDonalds/Walmart-style wages for most federal jobs. And as Krugman points out, about two-thirds of the amount the federal government spends on employee compensation goes to the Department of Defense, the Department of Veterans Affairs, or the Department of Homeland Security. And the way federal compensation works now, less educated federal employees make more than their private sector counterparts while the most educated federal employees get substantially less than they could in the private sector. So any plan to make the federal workforce mimic the private sector is in reality a McHomeland Security plan designed to cut the pay of the least educated employees while likely transferring more money to the most educated, just like what’s happened across the US economy over the last several decades. Only after the federal government is as poor an employer as your standard retail giant and fast-food chain will it be deemed ‘competitive’ and ‘productive’ enough.

    So whether or not the timing of Trump’s attack on federal workers is driven by an impulse to punish the ‘Deep State’, beating the federal workforce into submission and turning it into McGovernment for all but the highest-paid employees is a permanent GOP goal and under Trump the achievement of that kind of goal could easily double as cover for the creation of a spoils system. Spoils is kind of his presidential strength at this point.

    But it’s that Trumpian declared war with the ‘deep state’ that makes the potential creation of a spoils system extra-ominous because Trump’s ‘deep state’ allegations effectively politicizes all federal employees and it’s hard to imagine any federal workers will be spared from that politicization. And that’s all why an overhaul of the federal workforce rules could be such a mega-disaster when it’s Trump’s doing the overhauling. If it suddenly becomes much easier to hire and fire federal workers it’s hard to imagine that won’t result in a mass ‘Alt Right’ federal hiring spree following a purge of the Democrats. So it’s important to keep in that Trump’s decision to freeze the scheduled federal pay hikes wasn’t necessarily just Trump lashing out at a federal work force he views as an enemy and wasn’t just part of the GOP’s long-standing efforts to make federal employees as powerless as their private sector counterparts. It may have also been a first big step in disempowering federal employees for the purpose of remaking the federal workforce in a Trumpian image where they are paid to ‘perform’ by showing loyalty to Trump. And it’s that larger context of the GOP’s long-standing plan to disempower federal workers under a ‘pay-for-performance’ scheme coupled with Trump’s general paranoia about the ‘deep state’ that suggests federal workers are in store for much more than just a pay freeze in coming years:

    The New York Times
    Op-Ed

    Giving Government Workers the Shaft

    It’s long-term G.O.P. policy, but Trump picked an odd moment to chisel the people who keep us safe

    By Paul Krugman
    Opinion Columnist

    Aug. 31, 2018

    You sometimes hear the claim that Republicans hate public spending. In practice, however, their hatred is selective. They tend to be OK with spending that flows into the pockets of private-sector friends, whether it’s mercenaries or for-profit colleges. No, what they really hate are two kinds of spending: outlays that help Americans afford life’s essentials, like food and health care, and paying wages to government employees.

    So there’s a sense in which Donald Trump’s decision to use executive authority to deny all federal workers a cost-of-living adjustment is squarely in the Republican mainstream. But the timing is odd.

    After all, the jihad against government workers probably reached its high point in 2010-2011, along with the Tea Party movement. Denunciations of big government were all the rage, bolstered in part by false claims that Barack Obama had presided over an explosion in federal employment. (What actually happened was a temporary spike associated with the 2010 census – something that happens every 10 years whoever is president.)

    Since then, however, the public has, I think, gradually become aware of the realities of the situation. The vast majority of government workers are employed by state and local governments – and more than half of these state and local workers are in education, with much of the remaining employment in public safety (police and firefighting.) So the typical government employee isn’t a bureaucrat doing nothing; he or (often) she is a schoolteacher.

    And schoolteachers are hardly living high off the hog. On the contrary, their pay has lagged ever farther behind that of comparably qualified people in the private sector, not to mention the fact that thanks to budget cuts many teachers end up buying school supplies out of their own pockets. The squeeze on teachers has led to a nationwide walkout movement – and the public seems broadly supportive.

    So this is, as I said, sort of an odd moment for Trump to put a squeeze on government workers. True, these are federal workers, so we’re not talking about schoolteachers. But we are talking about people who keep us safe, or care for those who previously helped keep us safe: about two-thirds of the amount the federal government spends on employee compensation goes to the Department of Defense, the Department of Veterans Affairs, or the Department of Homeland Security.

    How well are these workers paid? Federal workers with low levels of education are paid more than their counterparts in the private sector – but do you really want our government to emulate the always-low-wages policies of, say, fast food chains? More educated workers, on the other hand, are paid substantially less than private-sector equivalents, and CBO finds that overall the federal government pays only about 3 percent more than it would if it matched private pay schedules.

    What is Trump’s justification for denying these workers a cost of living adjustment? He says that it’s about putting us on a “fiscally sustainable course,” which is extremely rich for someone who just rammed through a huge tax cut for corporations and the wealthy. What makes it even richer is that on the same day that he announced that he was cancelling the pay rise, Trump floated the idea of using executive action to index capital gains to inflation, a de facto tax cut that would increase the deficit, and deliver 63 percent of its benefits to the wealthiest 0.1 percent of the population, 86 percent to the top 1 percent.

    So what’s really going on? Giving government workers the shaft is long-term G.O.P. policy, but even so I suspect that Congressional Republicans would have preferred that Trump not make this announcement two months before the midterm elections. The timing, as opposed to the general hostility to public servants, is probably personal to Trump.

    Two things in particular seem relevant here. First, Trump has always chiseled and cheated those who work for him: his business career is littered with tales of unpaid workers and contractors. Since he makes no distinction between personal business and being president, squeezing a few bucks out of the federal workforce just comes naturally.

    Beyond that, Trump is feeling under siege from the “deep state,” which to him means any part of the government that answers to rule of law as opposed to being personally loyal to him. His wage chiseling may in part represent a way of lashing out at everyone in government: these days they all look like Robert Mueller to him.

    ———-

    “Giving Government Workers the Shaft” by Paul Krugman; The New York Times; 08/31/2018

    “So there’s a sense in which Donald Trump’s decision to use executive authority to deny all federal workers a cost-of-living adjustment is squarely in the Republican mainstream. But the timing is odd.”

    The timing is indeed odd. Granted, there’s never a great time to declare a fiscal emergency months after your big tax cut, but the timing does seem exceptionally bad. Especially given that Trump floated the idea of also using his executive powers to implement a new tax cut on the same:


    What is Trump’s justification for denying these workers a cost of living adjustment? He says that it’s about putting us on a “fiscally sustainable course,” which is extremely rich for someone who just rammed through a huge tax cut for corporations and the wealthy. What makes it even richer is that on the same day that he announced that he was cancelling the pay rise, Trump floated the idea of using executive action to index capital gains to inflation, a de facto tax cut that would increase the deficit, and deliver 63 percent of its benefits to the wealthiest 0.1 percent of the population, 86 percent to the top 1 percent.

    So perhaps the timing of it it really was driven primarily by anger as the ‘deep state’ and growing sense by Trump that all federal workers are enemies who need to be dealt with. It would be insane if that’s actually what was driving Trump, but it’s a plausible form of insanity:


    So what’s really going on? Giving government workers the shaft is long-term G.O.P. policy, but even so I suspect that Congressional Republicans would have preferred that Trump not make this announcement two months before the midterm elections. The timing, as opposed to the general hostility to public servants, is probably personal to Trump.

    Two things in particular seem relevant here. First, Trump has always chiseled and cheated those who work for him: his business career is littered with tales of unpaid workers and contractors. Since he makes no distinction between personal business and being president, squeezing a few bucks out of the federal workforce just comes naturally.

    Beyond that, Trump is feeling under siege from the “deep state,” which to him means any part of the government that answers to rule of law as opposed to being personally loyal to him. His wage chiseling may in part represent a way of lashing out at everyone in government: these days they all look like Robert Mueller to him.

    Regardless, it’s pretty clear that an attack on federal workers is very much on Trump’s agenda at this point. So it’s going to be important to keep in mind that the 2020 census, and the temporary surge in hiring of federal workers, is going to give Trump an excuse to keep waging this attack as the census period gets closer:


    After all, the jihad against government workers probably reached its high point in 2010-2011, along with the Tea Party movement. Denunciations of big government were all the rage, bolstered in part by false claims that Barack Obama had presided over an explosion in federal employment. (What actually happened was a temporary spike associated with the 2010 census – something that happens every 10 years whoever is president.)

    And as Krugman points out, that attack on federal workers is mostly going to be an attack on the lowest paid workers at the the Departments of Defense, Veterans Affairs, and Homeland Security since that’s where two thirds of employment federal compensation goes. And as the private sector has amply demonstrated over the past few decades, when you impose the ‘pay for performance’ model on a workforce, the lowest paid workers inevitably get paid less and the highest paid get paid more. It’s just what happens, and that’s going to translate into people running public services on fast-food wages:


    Since then, however, the public has, I think, gradually become aware of the realities of the situation. The vast majority of government workers are employed by state and local governments – and more than half of these state and local workers are in education, with much of the remaining employment in public safety (police and firefighting.) So the typical government employee isn’t a bureaucrat doing nothing; he or (often) she is a schoolteacher.

    And schoolteachers are hardly living high off the hog. On the contrary, their pay has lagged ever farther behind that of comparably qualified people in the private sector, not to mention the fact that thanks to budget cuts many teachers end up buying school supplies out of their own pockets. The squeeze on teachers has led to a nationwide walkout movement – and the public seems broadly supportive.

    So this is, as I said, sort of an odd moment for Trump to put a squeeze on government workers. True, these are federal workers, so we’re not talking about schoolteachers. But we are talking about people who keep us safe, or care for those who previously helped keep us safe: about two-thirds of the amount the federal government spends on employee compensation goes to the Department of Defense, the Department of Veterans Affairs, or the Department of Homeland Security.

    How well are these workers paid? Federal workers with low levels of education are paid more than their counterparts in the private sector – but do you really want our government to emulate the always-low-wages policies of, say, fast food chains? More educated workers, on the other hand, are paid substantially less than private-sector equivalents, and CBO finds that overall the federal government pays only about 3 percent more than it would if it matched private pay schedules.

    So how far should we expect wages to fall for the lowest paid federal employees after Trump’s pay-for-performance system gets put in pace? Well, as the following article from back in February – when the White House released its initial plans to overhaul the federal work force and implement a pay-for-performance system that makes firing easier – the average pay for federal workers without a college degree if 53 percent higher than their private-sector counterparts, 21 percent higher for federal workers with college degrees, but 18 percent lower for federal employees with advanced degrees than their private sector counterparts. That’s the situation Trump’s pay-for-performance proposal is trying to reverse, with lower pay for the lowest paid and more for those with the most, exactly like the rest of the US economy.

    The article also notes that the Trump administration’s proposal also include moving federal workers away from pensions and into 401k-style defined-contribution plans for their retirements, which is also just like what happened to private-sector pension across the rest of the US economy. So that trend that’s currently ensuring mass old-age poverty for coming generations will be extended to federal employees too.

    No pensions and lower pay: that’s what Trump and GOP have planned for the federal workforce and and the way Trump and the GOP spin it, this would be a good thing:

    Associated Press

    White House wants to change pay for federal workers

    By JOSH BOAK
    Feb. 09, 2018

    WASHINGTON (AP) — The White House wants to change how more than 1.5 million federal workers are paid, emphasizing performance-based raises instead of the current system that generally increases pay based on tenure.

    The officials insisted on anonymity to discuss details that have yet to be made public. The proposal would slow tenure-based increases, generating $10 billion over 10 years for performance-based payments.

    The officials said much of the clerical work that has been the domain of the government can be automated, but there is a greater need for information technology workers and cyber security experts. Moving to performance-based pay means some federal workers with poor reviews could be fired, although the officials declined to say what that would mean for a government that employs 2.8 million workers.

    The administration is also studying whether it’s better to recruit workers with a defined-contribution retirement plan, rather than a pension plan that supports workers who have decades of service in the federal government.

    Some of these changes could require action by Congress, which last significantly updated civil service rules in 1978. The officials didn’t spell out the likelihood of Congress overhauling the civil service during an election year.

    The shift to performance-based pay could dramatically change structure and compensation in a federal workforce that has been something of a bulwark against the increase in economic inequality.

    Federal employees with a high school diploma or less earn on average 53 percent more than peers with similar education levels in the private sector, according to a 2017 study by the Congressional Budget Office. College graduates earn about 21 percent more than their private-sector counterparts, while people with advanced degrees earn 18 percent less in the government.

    ———-

    “White House wants to change pay for federal workers” by JOSH BOAK; Associated Press; 02/09/2018

    “The shift to performance-based pay could dramatically change structure and compensation in a federal workforce that has been something of a bulwark against the increase in economic inequality.”

    Let’s make everyone economically insecure out of fairness. That’s the underlying sales pitch, even if that’s not how it’s always sold to voters. The GOP is betting that, like crabs in a bucket, general resentment against federal workers over the fact that they haven’t yet had their wages and retirement plans gutted will lead to public support for this drive. And who knows, they might be correct. But it’s worth marveling at just how far federal wages are going to have to fall to get in line with private-sector counterparts:


    Federal employees with a high school diploma or less earn on average 53 percent more than peers with similar education levels in the private sector, according to a 2017 study by the Congressional Budget Office. College graduates earn about 21 percent more than their private-sector counterparts, while people with advanced degrees earn 18 percent less in the government.

    Then there’s the talk of switching from pensions to defined-contribution retirement plans, one of the other major changes in the US economy over the last generation that’s been to the benefit of Wall Street and corporate boardrooms and pretty much no one else:


    The administration is also studying whether it’s better to recruit workers with a defined-contribution retirement plan, rather than a pension plan that supports workers who have decades of service in the federal government.

    And as part of that transition to a McGovernment-style employment regime there’s going to be an enhanced threat of firings. Employees with the poorest reviews with be much easier to fire under the Trump/GOP proposal:


    The officials said much of the clerical work that has been the domain of the government can be automated, but there is a greater need for information technology workers and cyber security experts. Moving to performance-based pay means some federal workers with poor reviews could be fired, although the officials declined to say what that would mean for a government that employs 2.8 million workers.

    And while firing the poorest performing employees might sound like something most voters should want support, there’s no getting around the fact that making it easier to firing federal employees simultaneously makes it easier to set up a spoils system where non-‘loyal’ employees get fired when new administration assume power.

    That’s the situation described in the following 2009 article which covers the collapse of the last time the federal workforce experimented with a tenure-based system with a ‘pay-for-performance’ system. That was the Defense Department’s National Security Personnel System (NSPS), a three-year-old project that would have put more than 700,000 federal employees under a pay-for-performance system. And as the DOD discovered, assessing employee performance is actually highly a subjective task for a lot of government jobs. And that highly subjective nature of rating employees made the system perfect for creating a good-ol’-boy network-style where favored employees got the best reviews (much like in the private sector).

    And as the article also reminds us, part of the whole reason the federal government put in place its current tenure-based pay system now instead of a ‘pay-for-performance’ system in the first place is to avoid a spoils system where new administrations have the latitude to mass-fire federal employees based on their politics. So when Trump and the GOP sell a vision of a highly efficient federal workforce comprised of only the best employees the labor market has to offer, in reality they are peddling a political patronage system that will ensure the highest paid federal employees are paid for their political loyalty and little else. In other words, the what Trump and the GOP are selling is most likely going to be the worst case scenario, of course:

    FCW

    Pay for performance haunted by NSPS failure

    The imminent demise of the National Security Personnel System leaves many wondering about the prospects for pay for performance in government

    By John Stein Monroe
    Oct 29, 2009

    From the day the Federal Civil Service was created in 1872, the government has made it a goal to get the federal workforce to operate more like a private enterprise, with pay and advancement based on merit rather than patronage or spoils.

    The General Schedule system, which formalized federal employee pay scales in 1949, was once the solution, but now it is the problem because it puts a premium on longevity rather than performance.

    The next logical step — linking pay directly to performance — has been the tantalizing goal for more than 30 years, and in recent years, numerous agencies have conducted experiments with so-called pay-for-performance systems.

    But that goal seems more elusive than ever now that Congress is about to jettison the Defense Department’s National Security Personnel System, a three-year-old project that would have put more than 700,000 employees under a pay-for-performance system.

    The demise of NSPS has left federal officials and reform advocates grappling with a fundamental question: Did NSPS fail because of poor planning and execution? Or, more worrisome, did it fail because the concept of linking pay to performance — however sensible it sounds — is simply not possible in the federal government?

    The answer to the latter question will shape future efforts to update or revamp the government’s antiquated system for managing its workforce and attracting and retaining a new generation of workers, particularly in the highly competitive fields of acquisition and technology.

    Conventional wisdom says a properly designed and managed pay-for-performance system will provide added motivation to talented, hard-working employees and, just as important, pressure dead-weight employees to step up or get out.

    By all accounts, such reform is needed. In its current form, the GS system is largely viewed as a hindrance to the government’s ability to manage its workforce because of its rigid approach to compensation and career development.

    “As much as the unions have been throwing rocks at NSPS, they are not advocates for the General Schedule system,” said Howard Risher, a consultant who specializes in pay and performance. “Everyone seems to understand the damn thing is broken.”

    But union officials do not discuss the issue in such black-and-white terms. They agree that the GS system has flaws, but they view it as a viable starting point for any initiative aimed at reforming the pay system.

    If anything, NSPS has hardened resistance to any wholesale change.

    Federal officials would be wise to steer clear of talking explicitly about pay for performance, said John Palguta, vice president of policy at the Partnership for Public Service, a not-for-profit organization focused on improving government performance.

    “That is a toxic term. People associate it with something bad,” he said. Instead, federal leaders should frame the discussion in terms of how to “update the federal approach to compensation so that it is more relevant to today’s environment.”

    Where NSPS went wrong

    Critics say NSPS failed because DOD leaders developed a system that was unfair and unmanageable, which alienated employees and managers alike.

    That perception is borne out by the comments that federal employees have posted on NSPS-related stories on FCW.com.

    One of the most common complaints from employees is that their job objectives are too broadly defined to be measured in a meaningful way, which gives managers a lot of subjective latitude when it comes to rating performance.

    In other cases, the objectives are too far-fetched, having been handed down from the top levels of the organization with little regard for the day-to-day responsibilities of frontline employees.

    The result is that many employees feel as though there is little connection between their performance on the job and the assessments they receive. In such an environment, a negative review can seem like a product of managerial caprice, while a co-worker’s positive review could be chalked up to favoritism.

    “The measurement criteria against objectives are like throwing a dart at a dartboard,” wrote a reader named Johnny. “You aim for the highest, hope to get there, but if you don’t hit your target, you don’t get any points [and] you fail.”

    The situation is exacerbated by assessments that are reviewed by members of a pay pool panel who might have little familiarity with the particulars of an employee’s job. In such situations, employees’ ratings and salaries ultimately hinge on the ability of supervisors to write a clear and compelling assessment.

    But even that might be a moot point. Many employees say they suspect that their pay pool panels use rating quotas to keep a lid on salary increases.

    “NSPS is constrained by funds available to award for performance, just like the demonstration projects of previous years,” one reader observed. “This forces supervisors to fit the actual performance and…grades of their employees into a ‘normal distribution model’ to not give ‘too many’ high marks. Once again, the system puts the supervisor and employee in an unresolvable conflict.”

    Any given organization has a fixed amount of money to hand out. In an ideal scenario, an organization should be able to heap rewards on its top performers using money saved by giving smaller increases — or none at all — to employees on the bottom rating rungs.

    But what happens if an organization is filled with overachievers? According to many employees, the pay pool panels resort to rating everyone on a curve in those situations, with only a small handful of employees receiving a top or bottom rating and everyone else falling in the middle.

    The problem, whether real or perceived, stems from the disconnect between employee assessments and their ratings, said Brenda Farrell, director of defense capabilities and management at the Government Accountability Office.

    “Unless NSPS is implemented in a manner that encourages meaningful distinctions in employee ratings in accordance with employees’ performance, there will be unspoken forced distribution of ratings, and employees’ confidence in the system may be undermined,” she wrote in a statement for a June hearing of the Defense Business Board’s NSPS task group.

    Fear, uncertainty and doubt

    Most observers agree that DOD mismanaged NSPS. But some also say many of NSPS’ weaknesses are likely to show up in any large-scale effort to implement a pay-for-performance system in the federal government. In their eyes, NSPS is not a bad example of pay for performance but a telling one.

    Such systems depend on having clear and measurable job objectives. The problem is that the nature of government work often defies simple metrics.

    That is especially true with large federal programs in which teamwork, rather than the individual’s contribution, is the principal measure of performance, said Laura Langbein, a professor in the Department of Public Administration and Policy at American University in Washington, D.C.

    “When I have an assembly-line job, the link between what I do and what is desired is very clear,” she said. But in a team-oriented environment, which involves endless meetings, “the contribution of my skill to the total output is not clear.”

    That reality makes it even more difficult to counter the distrust that comes from having an employee’s salary depend in part on a manager’s subjective judgment.

    As long as subjectivity is an element, some employees will find evidence of favoritism and the good ol’ boy network at work, said Darryl Perkinson, national president of the Federal Managers Association. “That is going to exist in whatever system we create.”

    ———-

    “Pay for performance haunted by NSPS failure” by John Stein Monroe; FCW; 10/29/2009

    “The demise of NSPS has left federal officials and reform advocates grappling with a fundamental question: Did NSPS fail because of poor planning and execution? Or, more worrisome, did it fail because the concept of linking pay to performance — however sensible it sounds — is simply not possible in the federal government?

    Can pay-for-performance even work for the kinds of jobs the federal government pays people to do? That was one of the big questions surrounding the Department of Defense’s experiment with such a system, but it’s been a meta-question for the government ever since the Federal Civil Service was created in 1872 with a goal of avoiding a spoils system. The current system for federal pay, the General Schedule, has avoided that spoils system, but it did it by paying pay on tenure (time employed by the government) and not based on some sort of ‘performance’ metric, leaving the neoliberal dream of a non-spoils-based pay-for-performance federal pay system unrealized:


    From the day the Federal Civil Service was created in 1872, the government has made it a goal to get the federal workforce to operate more like a private enterprise, with pay and advancement based on merit rather than patronage or spoils.

    The General Schedule system, which formalized federal employee pay scales in 1949, was once the solution, but now it is the problem because it puts a premium on longevity rather than performance.

    The next logical step — linking pay directly to performance — has been the tantalizing goal for more than 30 years, and in recent years, numerous agencies have conducted experiments with so-called pay-for-performance systems.

    But that goal seems more elusive than ever now that Congress is about to jettison the Defense Department’s National Security Personnel System, a three-year-old project that would have put more than 700,000 employees under a pay-for-performance system.

    And as the DoD’s experiment made clear, measuring ‘performance’ is actually really hard for a lot of jobs. So hard that the mandate for measuring performance basically becomes subjected and turns the pay system into the perfect environment for a good ol’ boy network or spoils systems. And that subjectivity results in unhappy employees, which is objectively bad, especially when they are government employees:


    Fear, uncertainty and doubt

    Most observers agree that DOD mismanaged NSPS. But some also say many of NSPS’ weaknesses are likely to show up in any large-scale effort to implement a pay-for-performance system in the federal government. In their eyes, NSPS is not a bad example of pay for performance but a telling one.

    Such systems depend on having clear and measurable job objectives. The problem is that the nature of government work often defies simple metrics.

    That is especially true with large federal programs in which teamwork, rather than the individual’s contribution, is the principal measure of performance, said Laura Langbein, a professor in the Department of Public Administration and Policy at American University in Washington, D.C.

    “When I have an assembly-line job, the link between what I do and what is desired is very clear,” she said. But in a team-oriented environment, which involves endless meetings, “the contribution of my skill to the total output is not clear.”

    That reality makes it even more difficult to counter the distrust that comes from having an employee’s salary depend in part on a manager’s subjective judgment.

    As long as subjectivity is an element, some employees will find evidence of favoritism and the good ol’ boy network at work, said Darryl Perkinson, national president of the Federal Managers Association. “That is going to exist in whatever system we create.”

    “Such systems depend on having clear and measurable job objectives. The problem is that the nature of government work often defies simple metrics.”

    That’s kind of meta-problem here: the ‘pay-for-performance’ dream requires clear and measurable job objectives. Which doesn’t exists for a large number of government jobs. Or non-government jobs, for that matter, which makes this a meta-problem for more than just government. It’s a problem with human civilization in general: our market-oriented socioeconomic systems are often rooted in the assumption that we can make virtually everyone’s life better by relying on a ‘market’ that is accurately measuring things we can’t actually realistically measure. Moral clarity from blind faith in bad science is a pretty big meta-problem, and that’s one of the big problems laid bare by the ‘free-market’ ideology that demands that performance-based metrics determine everyone’s employment and life in general. It’s just a bad fit in many cases.

    Let’s also not forget that pay-for-performance in the private-sector over the last few decades has generally involved paying executives big bonuses for their ‘performance’ of outsourcing workers, gutting worker pensions, and keeping wages stagnant. Paying the executive-class to gut the middle-class: That’s been one of the big areas of productivity growth in the US economy for the past generation. The yawning income gap has been justified by a pay-for-performance ideology that assumes life will improve for almost everyone if we simply let ‘the market’ perform its magic and allocate greater pay to those who ‘perform’ more. And yet one of the easiest way for an executive to ‘perform’ well was to create massive corporate profits by turning the US workforce into a contemporary peasant-class of virtually helpless workers trapped in a lifetime of poverty with almost no economic security. And those forces that make inevitably the rich richer and poor poorer are the same forces that Trump and the GOP want to unleash on the last employee safe havens in America. With obvious impacts on everyone because McGovernment probably isn’t going to be great government.

    Posted by Pterrafractyl | September 4, 2018, 7:40 pm
  25. Is Mitch McConnell drunk with power? Who knows, but something appears to have caused a significant lapse in political judgement. Because for some strange reason this week, McConnell decided to let the public know that, should the Democrats win control of the House in the upcoming mid term elections a few weeks from now, McConnell is hoping to use the resulting divided government as an opportunity for big bipartisan cut to entitlements. That’s how Mitch McConnell is hoping to ‘make lemonade out of lemons’ if the ‘Blue wave’ does indeed material and the Democrats win the House and he spelled it all out in an interview.

    In the same interview, McConnell asserted that the massive GOP tax cut scam – which was passed exclusively by the GOP with no Democratic support and is already leading to spiking deficits – is not in fact the cause of the spiking deficits. Too much entitlement spending is the cause according to McConnell. The tax cuts pay for themselves. That’s what he said in the same interview where he called for entitlement cuts due to rising deficits. Rising deficits that are rising rapidly less than a year after the massive tax cuts for the super-rich. Again, we have to ask if he’s so drunk on power and/or just assumes the electorate is idiotic.

    Granted, it’s a standard GOP talking point these days to assure the American people that the large reported rise in the deficit this year has nothing to do with the tax cuts. But it’s particularly brazen to make that absurd argument during the same interview where you charge that entitlement spending is leading to out of control deficit problems and need to be cut soon. That seems like a politically insane thing for the Senate Majority Leader to say weeks before an election given how wildly unpopular cuts to Social Security and Medicare are with the US electorate. But he did it.

    And don’t forget that it’s still possible the Democrats could take control of the Senate this year. That’s looking unlikely based on the polls in key Senate races, but a lot can change in the last few weeks of an election. For instance, the Senate Majority Leader could do something like call for entitlement cuts over deficit concerns in the same breath he defends the GOP tax cuts as being deficit-neutral. Because don’t forget that it’s not like Mitch McConnell’s desire to cut entitlements isn’t held by the entire GOP. They just don’t like to talk about it during elections. And that includes all those GOPers in tight Senate races.

    So Mitch McConnell may have handed Democrats an incredible political gift by turning the GOP’s barely-hidden desires to cut entitlements into a national issue in the closing weeks of the mid-terms. Because when the Senate Majority Leader demonstrates the kind crass political cynicism and deception on display in the following interview, that’s a national issue. And a national crisis of crass cynicism predicated on the assumption that the masses will believe anything:

    Bloomberg

    McConnell Blames Entitlements, Not GOP, for Rising Deficits

    By Steven T. Dennis
    October 16, 2018, 10:15 AM CDT Updated on October 16, 2018, 1:16 PM CDT

    * Leader sees little chance of tackling debt without Democrats
    * GOP passed tax cut bill adding more than $1 trillion in debt

    Senate Majority Leader Mitch McConnell blamed rising federal deficits and debt on a bipartisan unwillingness to contain spending on Medicare, Medicaid and Social Security, and said he sees little chance of a major deficit reduction deal while Republicans control Congress and the White House.

    “It’s disappointing, but it’s not a Republican problem,” McConnell said Tuesday in an interview with Bloomberg News when asked about the rising deficits and debt. “It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.”

    McConnell’s remarks came a day after the Treasury Department said the U.S. budget deficit grew to $779 billion in Donald Trump’s first full fiscal year as president, the result of the GOP’s tax cuts, bipartisan spending increases and rising interest payments on the national debt. That’s a 77 percent increase from the $439 billion deficit in fiscal 2015, when McConnell became majority leader.

    McConnell said it would be “very difficult to do entitlement reform, and we’re talking about Medicare, Social Security and Medicaid,” with one party in charge of Congress and the White House.

    “I think it’s pretty safe to say that entitlement changes, which is the real driver of the debt by any objective standard, may well be difficult if not impossible to achieve when you have unified government,” McConnell said.

    Politically Unpopular

    Shrinking those popular programs — either by reducing benefits or raising the retirement age — without a bipartisan deal would risk a political backlash in the next election. Trump promised during his campaign that he wouldn’t cut Social Security, Medicare or Medicaid, even though his budget proposals have included trims to all three programs.

    McConnell said he had many conversations on the issue with former President Barack Obama, a Democrat.

    “He was a very smart guy, understood exactly what the problem was, understood divided government was the time to do it, but didn’t want to, because it was not part of his agenda,” McConnell said.

    “I think it would be safe to say that the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue, and it’s a shame, because now the Democrats are promising ‘Medicare for all,”’ he said. “I mean, my gosh, we can’t sustain the Medicare we have at the rate we’re going and that’s the height of irresponsibility.”

    Divided Government

    McConnell said the last major deal to overhaul entitlements occurred in the Reagan administration, when a Social Security package including an increase in the retirement age passed under divided government.

    McConnell said he was the GOP Senate whip in 2005 when Republican President George W. Bush attempted a Social Security overhaul and couldn’t find any Democratic supporters.

    “Their view was, you want to fix Social Security, you’ve got the presidency, you’ve got the White House, you’ve got the Senate, you go right ahead,” McConnell said. The effort collapsed.

    The Office of Management and Budget has projected a deficit in the coming year of $1.085 trillion despite a healthy economy. And the Congressional Budget Office has forecast a return to trillion-dollar deficits by fiscal 2020.

    Tax Cut

    Republicans in December 2017 also passed a tax cut projected to add more than $1 trillion to the debt over a decade after leaders gave up on creating a plan that wouldn’t increase the debt under the Senate’s scoring rules.

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

    Senate Minority Leader Chuck Schumer of New York responded Tuesday by saying McConnell and other Republicans “blew a $2 trillion hole in the federal deficit to fund a tax cut for the rich. To now suggest cutting earned middle-class programs like Medicare, Social Security and Medicaid as the only fiscally responsible solution to solve the debt problem is nothing short of gaslighting.”

    House Minority Leader Nancy Pelosi of California said in a statement, “Under the GOP’s twisted agenda, we can afford tax cuts for billionaires, but not the benefits our seniors have earned.”

    ———-

    “McConnell Blames Entitlements, Not GOP, for Rising Deficits” by Steven T. Dennis; Bloomberg; 10/16/2018

    “Senate Majority Leader Mitch McConnell blamed rising federal deficits and debt on a bipartisan unwillingness to contain spending on Medicare, Medicaid and Social Security, and said he sees little chance of a major deficit reduction deal while Republicans control Congress and the White House.”

    Blame entitlements, not the giant tax cuts. That was Mitch’s message. And then he tried to frame it as a bipartisan problem, which ignores the fact that the tax cuts just passed last year and are the direct cause of US deficits were passed exclusively by Republicans. So the can unilaterally create a bipartisan deficit crisis according to Mitch:


    “It’s disappointing, but it’s not a Republican problem,” McConnell said Tuesday in an interview with Bloomberg News when asked about the rising deficits and debt. “It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.”

    McConnell said it would be “very difficult to do entitlement reform, and we’re talking about Medicare, Social Security and Medicaid,” with one party in charge of Congress and the White House.

    “I think it’s pretty safe to say that entitlement changes, which is the real driver of the debt by any objective standard, may well be difficult if not impossible to achieve when you have unified government,” McConnell said.

    ““It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.””

    It’s that kind of in-your-face cynicism that drives home one of the central lessons of American politics today: The real drivers of the US deficit is Republican tax cuts for the rich. The tax cuts don’t exclusively drive higher deficits. They also drive the yawning wealth gap and corporate power and drive the breakdown in things like public investments in infrastructure and education. But they are unambiguously major drivers of US deficits and Mitch McConnell is doing a wonderful job of making that ironically clear:


    Tax Cut

    Republicans in December 2017 also passed a tax cut projected to add more than $1 trillion to the debt over a decade after leaders gave up on creating a plan that wouldn’t increase the debt under the Senate’s scoring rules.

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

    And, again, we can’t forget that McConnell’s stance on this is identical to the rest of the GOP. Even Donald Trump, who notably campaigned promising to protect entitlements, included massive cuts to those programs in his budget proposals:


    Politically Unpopular

    Shrinking those popular programs — either by reducing benefits or raising the retirement age — without a bipartisan deal would risk a political backlash in the next election. Trump promised during his campaign that he wouldn’t cut Social Security, Medicare or Medicaid, even though his budget proposals have included trims to all three programs.

    So as we can see, Mitch McConnell decided to be shockingly dishonest in such a jarring manner that it almost qualifies as accidental honesty by being to blatant. Ironically honest dishonesty. It’s kind of refreshing.

    So what are the odds of Mitch McConnell’s last-minute shockingly honest dishonesty will actually impact his fellow Republican senators in tight races? That presumably depends on whether or not the Democrats can successfully translate McConnell’s comments into a greater public recognition that virtually all Republican candidates share his views. Along with the Trump White House, which made pretty much the same arguments McConnell made just last month:

    Reuters

    Trump adviser eyes entitlement cuts to plug U.S. budget gaps

    September 17, 2018 / 12:28 PM

    NEW YORK (Reuters) – A top economic adviser to President Donald Trump said on Monday he expects U.S. budget deficits of about 4 percent to 5 percent of the country’s economic output for the next one to two years, adding that there would likely be an effort in 2019 to cut spending on entitlement programs.

    “We have to be tougher on spending,” White House economic adviser Larry Kudlow said in remarks to the Economic Club of New York, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.

    Kudlow did not specify where future cuts would be made.

    “We’re going to run deficits of about 4 to 5 percent of GDP for the next year or two, OK. I’d rather they were lower but it’s not a catastrophe,” Kudlow said. “Going down the road, of course we’d like to slim that down as much as possible and we’ll work at it.”

    Kudlow also said he did not expect the Congress would be able to make the Trump administration’s recent individual tax cuts permanent before the Nov. 6 midterm congressional elections.

    “I don’t think it will get through the whole Congress” before the election, he said, but added that making the personal tax cuts permanent “is a good message” and disagreed with forecasts that they would further increase budget deficits.

    ———–

    “Trump adviser eyes entitlement cuts to plug U.S. budget gaps”; Reuters; 09/17/2018

    “A top economic adviser to President Donald Trump said on Monday he expects U.S. budget deficits of about 4 percent to 5 percent of the country’s economic output for the next one to two years, adding that there would likely be an effort in 2019 to cut spending on entitlement programs.”

    Those were the words of Trump’s economic adviser Larry Kudlow just last month: the drive to cut entitlements in order to curb rising deficits will probably happen in 2019.

    And then he went on to repeat the laughable claim that the giant tax cut that slashed federal revenues has nothing to do with the rising deficits:


    “We have to be tougher on spending,” White House economic adviser Larry Kudlow said in remarks to the Economic Club of New York, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.

    Kudlow did not specify where future cuts would be made.

    “We’re going to run deficits of about 4 to 5 percent of GDP for the next year or two, OK. I’d rather they were lower but it’s not a catastrophe,” Kudlow said. “Going down the road, of course we’d like to slim that down as much as possible and we’ll work at it.”

    Then Kudlow brought up the idea of making the temporary parts of the GOP tax cuts permanent. Recall how the corporate tax cuts were made permanent but all the individual tax cuts – the only part that sort of helped the middle-class – is set to expire in 2025. It was all part of holding the projected costs of the tax cut below the technical threshold needed for the GOP to pass the law without the threat of a Democratic filibuster in the Senate. Republicans have been pledging to make those individual cuts permanent ever since, which is what Kudlow was echo, along with the claim that doing so wouldn’t impact that deficit at all:


    Kudlow also said he did not expect the Congress would be able to make the Trump administration’s recent individual tax cuts permanent before the Nov. 6 midterm congressional elections.

    “I don’t think it will get through the whole Congress” before the election, he said, but added that making the personal tax cuts permanent “is a good message” and disagreed with forecasts that they would further increase budget deficits.

    So the Trump White House is planning on more ‘deficit-neutral’ tax cuts while it simultaneously plans on entitlement cuts next year to deal with rising deficits. And while the passage of new tax cuts before the mid-terms isn’t possible, the Trump White House is still looking at some sort of symbolic declared tax cut. That’s not just based on Larry Kudlow’s words. Trump himself just declared there’s going to be some sort of new tax cut proposal before the mid-terms. New tax cuts that will presumably have to be paid for with more entitlement cuts:

    The New York Times

    Another Tax Cut? Trump and Republicans Offer a Midterm Pitch, if Not a Plan

    By Alan Rappeport and Jim Tankersley
    Oct. 21, 2018

    JERUSALEM — The 2017 Republican tax cuts have been a dud on the campaign trail ahead of the November midterm elections, so President Trump has come up with a new plan: more tax cuts.

    In Nevada on Saturday, Mr. Trump said he and Republican lawmakers had been working on “a very major tax cut” for middle-income people that would be rolled out in the coming weeks.

    There is no chance of such a plan passing even the House before the midterms, let alone the Senate, because Congress is in recess through the election. So the move appears to be an effort to give Republican voters a jolt of enthusiasm as the polls are opening — and perhaps an acknowledgment of how small a boost Mr. Trump’s signature tax bill seems to be giving Republicans in the battle to control Congress.

    Steven Mnuchin, the Treasury secretary, said in an interview on Sunday that he had been working diligently with Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, to develop another tax plan that would be released “shortly.”

    “This is specifically focused on the middle class and not beyond that,” Mr. Mnuchin said in Jerusalem on the first stop of his six-country Middle East trip.

    Mr. Mnuchin said the president asked Treasury officials and Republican lawmakers to focus on developing a middle-class tax plan. But he could not offer details about which tax brackets might have lower rates or say if the package would include more generous deductions. Nor has anyone explained how — or whether — the plan would be financed or if it would again add to the nation’s ballooning deficit.

    Last year’s $1.5 trillion tax cut is expected to add $1 trillion to the nation’s deficit, though Republican lawmakers continue to insist the tax bill will pay for itself with stronger economic growth.

    The Treasury Department released figures last week showing that the federal budget deficit widened by 17 percent in the 2018 fiscal year, to $779 billion, despite a robust economy. Federal revenue fell considerably as a result of the tax cut, which slashed corporate and individual income tax rates.

    Mr. Mnuchin said the effect that the size and timing of the additional cuts would have on the nation’s finances was being taken into consideration. That could mean that the administration would seek to offset the tax cuts with spending cuts, or by raising taxes on other groups of taxpayers.

    However, Mr. Mnuchin reiterated his view that the tax cuts passed last year were not adding to the debt, explaining that they would pay for themselves as long as the current level of economic growth is sustained. There is no evidence thus far that the cuts are paying for themselves, even though growth has accelerated this year.

    Mr. Mnuchin said the real driver of the debt was government spending, echoing Mr. Trump’s complaint that Democrats insisted on an increase in funding of domestic programs in exchange for approving more money for the military.

    House Republicans have moved to extend last year’s individual tax cuts, which are set to expire in 2025, while the corporate tax cuts are permanent. The bill passed the House last month with little fanfare or effect on polling in key House races, and the legislation was dead on arrival in the Senate, where Republicans hold a razor-thin majority.

    “This would be different than what the House had already passed,” Mr. Mnuchin said. “It’s in addition, it’s not instead of.”

    The tax cuts Mr. Trump signed into law late last year include a sharp reduction in the corporate rate, to 21 percent from a high of 35 percent, along with cuts for other business owners and for individuals. Independent analyses show they are disproportionately helping high earners — particularly high-earning white Americans.

    The Joint Committee on Taxation, Congress’ independent scorekeeper for tax cuts, predicts that Americans earning $100,000 a year or more will reap 75 percent of the savings from the cuts next year. If Congress allows the individual income tax cuts to expire as planned, the committee predicts that middle-class and low-income Americans will face tax increases in 2025, while high earners as a group continue to enjoy a tax cut.

    ———-

    “Another Tax Cut? Trump and Republicans Offer a Midterm Pitch, if Not a Plan” by Alan Rappeport and Jim Tankersley; The New York Times; 10/21/2018

    “In Nevada on Saturday, Mr. Trump said he and Republican lawmakers had been working on “a very major tax cut” for middle-income people that would be rolled out in the coming weeks.”

    A “very major tax cut” for middle-income people. That appears to be a big part of Trump’s planned closing arguments in this election cycle. A promise of more tax cuts (without mentioning the corresponding entitlement cuts). And this time the tax cuts will actually help the middle-class apparently. Treasury Secretary Mnuchin then points out that administration is planning on paying for these additional tax cuts with more spending cuts:


    Mr. Mnuchin said the president asked Treasury officials and Republican lawmakers to focus on developing a middle-class tax plan. But he could not offer details about which tax brackets might have lower rates or say if the package would include more generous deductions. Nor has anyone explained how — or whether — the plan would be financed or if it would again add to the nation’s ballooning deficit.

    Last year’s $1.5 trillion tax cut is expected to add $1 trillion to the nation’s deficit, though Republican lawmakers continue to insist the tax bill will pay for itself with stronger economic growth.

    The Treasury Department released figures last week showing that the federal budget deficit widened by 17 percent in the 2018 fiscal year, to $779 billion, despite a robust economy. Federal revenue fell considerably as a result of the tax cut, which slashed corporate and individual income tax rates.

    Mr. Mnuchin said the effect that the size and timing of the additional cuts would have on the nation’s finances was being taken into consideration. That could mean that the administration would seek to offset the tax cuts with spending cuts, or by raising taxes on other groups of taxpayers.

    Then the Treasury Secretary reiterated his claim that the GOP tax cuts are actually paying for themselves and not in any way causing the sudden sharp deficit spike:


    However, Mr. Mnuchin reiterated his view that the tax cuts passed last year were not adding to the debt, explaining that they would pay for themselves as long as the current level of economic growth is sustained. There is no evidence thus far that the cuts are paying for themselves, even though growth has accelerated this year.

    Mr. Mnuchin said the real driver of the debt was government spending, echoing Mr. Trump’s complaint that Democrats insisted on an increase in funding of domestic programs in exchange for approving more money for the military.

    Then Mnuchin claims that the new tax cuts the White House is thinking about are different from the tax bill quietly passed by the House GOP in September that would have made the individual tax cuts permanent:


    House Republicans have moved to extend last year’s individual tax cuts, which are set to expire in 2025, while the corporate tax cuts are permanent. The bill passed the House last month with little fanfare or effect on polling in key House races, and the legislation was dead on arrival in the Senate, where Republicans hold a razor-thin majority.

    “This would be different than what the House had already passed,” Mr. Mnuchin said. “It’s in addition, it’s not instead of.”

    Think about that: the House GOP quietly passed a bill that would make permanent the individual tax cuts. It’s as clear evidence as you can find that the GOP tax cuts are a political liability. Perhaps that’s why Steve Mnuchin insists that he’s been working diligently with Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, on this new tax plan that would be “specifically focused on the middle class and not beyond that”:


    Steven Mnuchin, the Treasury secretary, said in an interview on Sunday that he had been working diligently with Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, to develop another tax plan that would be released “shortly.”

    “This is specifically focused on the middle class and not beyond that,” Mr. Mnuchin said in Jerusalem on the first stop of his six-country Middle East trip.

    So we know that the GOP is planning on two big new tax cut packages: making the individual tax cuts permanent (which helped the middle-class a little and the super-rich significantly) and then some vague additional new tax cuts targeting only the middle-class that Trump suddenly promised during a rally. And as Mitch McConnell dishonestly made clear in his recent interview, all those new tax cuts are going to inevitably result in more demanded entitlement cuts to pay for them. It’s an interesting pitch to voters, because it’s basically a pledge to do more of what the public generally doesn’t like about Republicans. The tax cuts aren’t actually popular with non-GOP voters as polls show, and the GOP passed a bill to make the individual rates permanent and didn’t tell anyone. It appears the American public may have figured out that even the individual tax cuts in the GOP’s tax bill, almost the only part that kind of helped the middle-class a bit, still net help the rich much more. Most Americans simply do not make enough money to pay much in federal income taxes so making them permanent isn’t exactly a high voter priority.

    And might the unpopularity of making the individual tax cuts permanent be the reason Trump is proposing some sort of new middle-class targeted tax cut? Perhaps, but it’s worth noting that the GOP leadership is acting like it has no idea what Trump and Steve Mnuchin are talking about with their new proposed middle-class tax cut. In other words, it looks like Trump completely pulled this new ‘middle-class tax cut’ idea out of his ass on the campaign trail:

    Bloomberg

    Trump’s Pre-Election Tax-Cut Promise Leaves GOP Leaders Baffled

    By Joshua Gallu, Justin Sink, and Sahil Kapur
    October 20, 2018, 3:48 PM CDT Updated on October 21, 2018, 2:25 PM CDT

    * President says House Republicans are working on possible bill
    * Landmark 2017 tax law has been criticized for helping wealthy

    President Donald Trump has promised a new middle-income tax cut plan to land days before the midterm election, a move aimed at boosting his party’s chances of holding its Congressional majorities — yet Republican tax policy-makers know nothing about it.

    Party leaders were caught off-guard by Trump’s comments, made Saturday after a rally in Nevada, that “we’re looking at a major tax cut for middle income people,” and that House Republicans, including Speaker Paul Ryan, are working on a possible bill.

    Trump’s surprise announcement came as the fight to control Congress intensifies in the final weeks before the mid-term election. Republicans had hoped the landmark tax overhaul last year would help carry them to victory in the midterms. But the policies — widely viewed as having mainly helped corporations and the wealthy — are turning out to be less popular than they thought. Many forecasters believe Democrats are likely to take the House in November.

    Treasury Secretary Steven Mnuchin, who played a key role in crafting Trump’s 2017 tax overhaul, could offer no further details on Sunday beyond echoing his boss in an interview.

    White-House Driven?

    A Republican tax lobbyist with ties to GOP leadership said he’s unaware of any effort in Congress to address tax policy before the midterm elections. The lobbyist, who asked not to be identified to discuss internal matters, said he met with White House officials recently, and came away believing that no additional effort at tax legislation was imminent.

    Trump on Saturday offered no details on the proposal. The White House did not respond to repeated requests to explain the details of the plan the president was referencing.

    Even if policy makers hastily pulled something together at the White House’s insistence, lawmakers are out until after the election. After that, in the lame-duck session, it would be tough to take up a bill when the House may have flipped to Democratic control for the new Congress. At the same time, the Senate has already been reluctant to address a tax bill already passed by the House in September.

    “We’re looking at a major tax cut for middle-income people,” the president told reporters on Saturday after a rally in Elko, Nevada — the final leg of a three-state swing through the West to bolster support for Republican House, Senate and gubernatorial candidates. “Not for business at all; for middle-income people.”

    Deficit Blowout

    The 2017 overhaul has been criticized for mainly benefiting the wealthy and corporations and also for increasing the federal budget deficit. It’s possible that a second round of tax cuts could face resistance from some Republicans concerned about increasing the deficit even further.

    No Democrats supported last year’s tax bill, and they’ve been critical of the prospect of a second round of tax cuts since they were first discussed by Republicans. Unless offset by spending reductions, any new tax cut would further add to the deficit, which reached $779 billion, a six-year high, in Trump’s first full year in office.

    Senator Thom Tillis, a North Carolina Republican, said Sunday that the government needs to make “tough choices so that we can balance our books.”

    Asked on NBC’s “Meet the Press” how Republicans would pay for the tax cut that Trump is apparently proposing, Tillis, reverting to a talking point used by many Republicans about the 2017 tax bill, said it has to pay for itself through faster growth.

    Pressed by NBC correspondent Chuck Todd that the current tax cut isn’t paying for itself,
    Tillis said “there is a way to rationalize that this tax cut will pay for itself through sustained economic growth.”

    The International Monetary Fund this month downgraded its forecast for U.S. growth in 2019 to 2.5 percent, down 0.2 percentage point from July and down from 2.9 percent this year, citing Trump’s tariff war with China and other countries.

    5-Percent Solution

    Faced with the rising deficit, Trump this week told his Cabinet that each federal agency needed to trim its budget by 5 percent.

    For many Republicans, though, the book-balancing choices skew more to cutting social programs than dialing back spending in general, or reconsidering tax rates.

    Senate Majority Leader Mitch McConnell has blamed rising budget deficits on a failure to constrain spending on Social Security, Medicare and Medicaid. Entitlement spending is “the real driver of the debt by any objective standard,” McConnell said in an interview with Bloomberg on Oct. 16.

    Brady and Ryan

    Trump said on Saturday that Ryan and Representative Kevin Brady, chairman of the House Ways and Means Committee, were working on the possible legislation.

    He added that the plan could be announced as soon as Nov. 1, days before the Nov. 6 elections that will decide the control of Congress. Mnuchin said, “We hope to have something soon.”

    “There is continued interest in building on the success of the Tax Cuts and Jobs Act and constantly improving the tax code for hardworking families and America’s small businesses,” said Rob Damschen, a spokesman for Brady. He referred any further questions on Trump’s remark to the White House.

    The Republican-led House passed legislation in September that would make permanent the 2017 tax cuts for individuals and pass-through businesses which otherwise would expire at the end of 2025. That measure is unlikely to be taken up in the Senate anytime soon, though, as party leaders are hesitant to push a bill they don’t expect could garner the 60 votes needed to pass.

    Trump’s pitch for middle-class tax relief comes as a survey commissioned by the Republican National Committee showed that voters overwhelmingly believe the 2017 overhaul helped the wealthy instead of average Americans.

    By 61 percent to 30 percent respondents said the law benefits “large corporations and rich Americans” over “middle-class families,” according to the survey, which was completed on Sept. 2 by the GOP firm Public Opinion Strategies and obtained by Bloomberg News.

    Trump isn’t the only politician thinking about taxes. Senator Kamala Harris, a California Democrat seen as a possible 2020 presidential candidate, has proposed repealing the 2017 tax law and replacing it with a tax credit or direct payment to middle-class and poor individuals and families.

    ———-

    “Trump’s Pre-Election Tax-Cut Promise Leaves GOP Leaders Baffled” by Joshua Gallu, Justin Sink, and Sahil Kapur; Bloomberg; 10/20/2018

    “President Donald Trump has promised a new middle-income tax cut plan to land days before the midterm election, a move aimed at boosting his party’s chances of holding its Congressional majorities — yet Republican tax policy-makers know nothing about it.”

    It sounds like the rest of the GOP didn’t get the memo about the new middle-class tax cut. Presumably because it was just a lie Trump made up on the spot. After all, what are the odds the GOP would pass a tax cut just for the middle-class. That’s almost as anti-GOP a policy as you can find:


    Party leaders were caught off-guard by Trump’s comments, made Saturday after a rally in Nevada, that “we’re looking at a major tax cut for middle income people,” and that House Republicans, including Speaker Paul Ryan, are working on a possible bill.

    Trump’s surprise announcement came as the fight to control Congress intensifies in the final weeks before the mid-term election. Republicans had hoped the landmark tax overhaul last year would help carry them to victory in the midterms. But the policies — widely viewed as having mainly helped corporations and the wealthy — are turning out to be less popular than they thought. Many forecasters believe Democrats are likely to take the House in November.

    Treasury Secretary Steven Mnuchin, who played a key role in crafting Trump’s 2017 tax overhaul, could offer no further details on Sunday beyond echoing his boss in an interview.

    Adding to the evidence suggesting that Trump just made it all up is the anonymous GOP tax lobbyist who apparently met with the White House recently and heard nothing about this:


    White-House Driven?

    A Republican tax lobbyist with ties to GOP leadership said he’s unaware of any effort in Congress to address tax policy before the midterm elections. The lobbyist, who asked not to be identified to discuss internal matters, said he met with White House officials recently, and came away believing that no additional effort at tax legislation was imminent.

    Trump on Saturday offered no details on the proposal. The White House did not respond to repeated requests to explain the details of the plan the president was referencing.

    “We’re looking at a major tax cut for middle-income people,” the president told reporters on Saturday after a rally in Elko, Nevada — the final leg of a three-state swing through the West to bolster support for Republican House, Senate and gubernatorial candidates. “Not for business at all; for middle-income people.”

    And yet Trump claimed that Paul Ryan and Kevin Brady are working away on this mystery plan for just the middle-class. Something Steve Mnuchin backed up the next day. Without providing any details at all about this mystery plan:


    Brady and Ryan

    Trump said on Saturday that Ryan and Representative Kevin Brady, chairman of the House Ways and Means Committee, were working on the possible legislation.

    He added that the plan could be announced as soon as Nov. 1, days before the Nov. 6 elections that will decide the control of Congress. Mnuchin said, “We hope to have something soon.”

    “There is continued interest in building on the success of the Tax Cuts and Jobs Act and constantly improving the tax code for hardworking families and America’s small businesses,” said Rob Damschen, a spokesman for Brady. He referred any further questions on Trump’s remark to the White House.

    The Republican-led House passed legislation in September that would make permanent the 2017 tax cuts for individuals and pass-through businesses which otherwise would expire at the end of 2025. That measure is unlikely to be taken up in the Senate anytime soon, though, as party leaders are hesitant to push a bill they don’t expect could garner the 60 votes needed to pass.

    All in all, it seems like kind of risky move on Trump’s part. Making up a fake middle-class tax cut is kind of bad politics after passing a tax cut that the public thinks mostly just helped the rich. But this is how Trump operates. And the way Trump operates sometimes helps the rest of the GOP and sometimes hurt them, so we’ll see how Trump’s mystery fake tax plan pans out. But as Senator Thom Tillis demonstrated during his own interviews on the Sunday talk shows, the rest of the GOP probably doesn’t want to talk about more tax cuts because it leads to conversations like the one Tillis just had, where he called for “tough choices so that we can balance our books,” at the same time he repeated the GOP lie that the tax cuts are paying for themselves and not contributing the deficit that’s forcing the “tough choices”:


    Deficit Blowout

    The 2017 overhaul has been criticized for mainly benefiting the wealthy and corporations and also for increasing the federal budget deficit. It’s possible that a second round of tax cuts could face resistance from some Republicans concerned about increasing the deficit even further.

    No Democrats supported last year’s tax bill, and they’ve been critical of the prospect of a second round of tax cuts since they were first discussed by Republicans. Unless offset by spending reductions, any new tax cut would further add to the deficit, which reached $779 billion, a six-year high, in Trump’s first full year in office.

    Senator Thom Tillis, a North Carolina Republican, said Sunday that the government needs to make “tough choices so that we can balance our books.”

    Asked on NBC’s “Meet the Press” how Republicans would pay for the tax cut that Trump is apparently proposing, Tillis, reverting to a talking point used by many Republicans about the 2017 tax bill, said it has to pay for itself through faster growth.

    Pressed by NBC correspondent Chuck Todd that the current tax cut isn’t paying for itself,
    Tillis said “there is a way to rationalize that this tax cut will pay for itself through sustained economic growth.”

    The International Monetary Fund this month downgraded its forecast for U.S. growth in 2019 to 2.5 percent, down 0.2 percentage point from July and down from 2.9 percent this year, citing Trump’s tariff war with China and other countries.

    Adding to bad tax cut politics for the GOP at this moment is the fact that Trump ordered his cabinet to cut each federal agency’s budget by 5 percent to deal with these rising deficits:


    5-Percent Solution

    Faced with the rising deficit, Trump this week told his Cabinet that each federal agency needed to trim its budget by 5 percent.

    For many Republicans, though, the book-balancing choices skew more to cutting social programs than dialing back spending in general, or reconsidering tax rates.

    Senate Majority Leader Mitch McConnell has blamed rising budget deficits on a failure to constrain spending on Social Security, Medicare and Medicaid. Entitlement spending is “the real driver of the debt by any objective standard,” McConnell said in an interview with Bloomberg on Oct. 16.

    And that’s all the kind of backdrop that inevitably going to lead to proposals like the one Democratic Senator Kamala Harris made, to repeal the GOP tax cuts and replace them with actual tax cuts targeting the middle-class and don’t blow up the deficit and threaten entitlements:


    Trump isn’t the only politician thinking about taxes. Senator Kamala Harris, a California Democrat seen as a possible 2020 presidential candidate, has proposed repealing the 2017 tax law and replacing it with a tax credit or direct payment to middle-class and poor individuals and families.

    In all, between Mitch McConnell’s mysteriously candid yet dishonest interview combined with Trump’s apparent middle-class-only tax cut lie, the GOP is managing to make a compelling argument for giving Democrats control of the House, Senate and White House as soon as possible. Because that’s what’s going to be required to fix this fiscal nightmare threatening entitlements.

    OF course, as Paul Krugman points out, at this point the GOP is lying about almost almost everything in terms of the parties goals and the impact of its policies. This latest tax scam is just one facet of the Republican Party’s long-standing Orwellian crisis:

    The New York Times
    Opinion

    The Trump Tax Scam, Phase II

    Deficits are up? Cut Medicare and Social Security!

    By Paul Krugman
    10/18/2018

    When the Trump tax cut was on the verge of being enacted, I called it “the biggest tax scam in history,” and made a prediction: deficits would soar, and when they did, Republicans would once again pretend to care about debt and demand cuts in Medicare, Medicaid and Social Security.

    Sure enough, the deficit is soaring. And this week Mitch McConnell, the Senate majority leader, after declaring the surge in red ink “very disturbing,” called for, you guessed it, cuts in “Medicare, Social Security and Medicaid.” He also suggested that Republicans might repeal the Affordable Care Act — taking away health care from tens of millions — if they do well in the midterm elections.

    Any political analyst who didn’t see this coming should find a different profession. After all, “starve the beast” — cut taxes on the rich, then use the resulting deficits as an excuse to hack away at the safety net — has been G.O.P. strategy for decades.

    Oh, and anyone asking why Republicans believed claims that the tax cut would pay for itself is being naïve. Whatever they may have said, they never actually believed that the tax cut would be deficit-neutral; they pushed for a tax cut because it was what wealthy donors wanted, and because their posturing as deficit hawks was always fraudulent. They didn’t really buy into economic nonsense; it would be more accurate to say that economic nonsense bought them.

    What are they lying about? For starters, about the causes of a sharply higher deficit, which they claim is the result of higher spending, not lost revenue. Mick Mulvaney, Trump’s budget director, even tried to claim that the deficit is up because of the costs of hurricane relief.

    The flimsy justification for such claims is that in dollar terms, federal revenue over the past year is slightly up from the previous year, while spending is about 3 percent higher.

    But that’s a junk argument, and everyone knows it. Both revenue and spending normally grow every year thanks to inflation, population growth and other factors. Revenue during Barack Obama’s second term grew more than 7 percent a year. The sources of the deficit surge are measured by how much we’ve deviated from that normal growth, and the answer is that it’s all about the tax cut.

    Dishonesty about the sources of the deficit is, however, more or less a standard Republican tactic. What’s new is the double talk that pervades G.O.P. positioning on the budget and, to be fair, just about every major policy issue.

    What do I mean by double talk? Well, consider the fact that even as McConnell blames “entitlements” (that is, Medicare and Social Security) for deficits, and declares (falsely) that Medicare in particular is “unsustainable,” Paul Ryan’s super PAC has been running ads accusing Democrats of wanting to cut Medicare. The cynicism is breathtaking.

    But then, it’s no more cynical than the behavior of Republicans like Dean Heller, Josh Hawley and even Ted Cruz who voted to repeal the Affordable Care Act, which protects Americans with pre-existing medical conditions, or supported a lawsuit trying to strip that protection out of the act, and are now running on the claim that they want to … protect people with pre-existing conditions.

    The point is that we’re now in a political campaign where one side’s claimed position on every major policy issue is the opposite of its true position. Republicans have concluded that they can’t win an argument on the issues, but rather than changing their policies, they’re squirting out clouds of ink and hoping voters won’t figure out where they really stand.

    Why do they think they can get away with this? The main answer is obviously contempt for their own supporters, many of whom get their news from Fox and other propaganda outlets that slavishly follow the party line. And even in appeals to those supporters who rely on other sources, Republicans believe that they can neutralize the deep unpopularity of their actual policies by misrepresenting their positions, and win by playing to racism and fear.

    But let’s be clear: G.O.P. cynicism also involves a lot of contempt for the mainstream news media. Historically, media organizations have been remarkably unwilling to call out lies; the urge to play it safe with he-said-she-said reporting has very much worked to Republicans’ advantage, given the reality that the modern G.O.P. lies a lot more than Democrats do. Even the most blatant falsehood tends to be reported with headlines about how “Democrats say” it’s false, not that it’s actually false.

    Anyway, at this point Republicans are proclaiming that war is peace, freedom is slavery, ignorance is strength and the party that keeps trying to kill Medicare is actually the program’s greatest defender.

    Can a campaign this dishonest actually win? We’ll find out in less than three weeks.

    ———-

    “The Trump Tax Scam, Phase II” by Paul Krugman; The New York Times; 10/18/2018

    “When the Trump tax cut was on the verge of being enacted, I called it “the biggest tax scam in history,” and made a prediction: deficits would soar, and when they did, Republicans would once again pretend to care about debt and demand cuts in Medicare, Medicaid and Social Security.”

    As Krugman points out, he predicted exactly what happened. Because was all highly predictable. Both the way the tax cuts would explode the deficit and how the GOP would respond with calls for entitlement cuts. It was all highly predictable in a highly Orwellian manner:


    Sure enough, the deficit is soaring. And this week Mitch McConnell, the Senate majority leader, after declaring the surge in red ink “very disturbing,” called for, you guessed it, cuts in “Medicare, Social Security and Medicaid.” He also suggested that Republicans might repeal the Affordable Care Act — taking away health care from tens of millions — if they do well in the midterm elections.

    Any political analyst who didn’t see this coming should find a different profession. After all, “starve the beast” — cut taxes on the rich, then use the resulting deficits as an excuse to hack away at the safety net — has been G.O.P. strategy for decades.

    As Krugman also points out, it’s not like the GOP actually believes its own arguments. We’re simply dealing with a party that has a strategy of knowingly lying about the fiscal impact of its tax cuts and using the resulting deficits to call for entitlement cuts. It’s that horribly simple:


    Oh, and anyone asking why Republicans believed claims that the tax cut would pay for itself is being naïve. Whatever they may have said, they never actually believed that the tax cut would be deficit-neutral; they pushed for a tax cut because it was what wealthy donors wanted, and because their posturing as deficit hawks was always fraudulent. They didn’t really buy into economic nonsense; it would be more accurate to say that economic nonsense bought them.

    What are they lying about? For starters, about the causes of a sharply higher deficit, which they claim is the result of higher spending, not lost revenue. Mick Mulvaney, Trump’s budget director, even tried to claim that the deficit is up because of the costs of hurricane relief.

    But as Krugman grimly observes, despite the GOP’s long embrace of up-is-down deception, it does indeed seem like GOP’s lying is somehow getting worse. Which hardly seems possible and yet it’s happening. Whether is a barrage of lies about tax cuts, entitlements, or health care, like the absurdist claims that the GOPers are making about health care and claims of trying to protect coverage for people with pre-existing conditions, the GOP is lying like it’s rarely lied before this election. It’s an amazing feat:


    Dishonesty about the sources of the deficit is, however, more or less a standard Republican tactic. What’s new is the double talk that pervades G.O.P. positioning on the budget and, to be fair, just about every major policy issue.

    What do I mean by double talk? Well, consider the fact that even as McConnell blames “entitlements” (that is, Medicare and Social Security) for deficits, and declares (falsely) that Medicare in particular is “unsustainable,” Paul Ryan’s super PAC has been running ads accusing Democrats of wanting to cut Medicare. The cynicism is breathtaking.

    But then, it’s no more cynical than the behavior of Republicans like Dean Heller, Josh Hawley and even Ted Cruz who voted to repeal the Affordable Care Act, which protects Americans with pre-existing medical conditions, or supported a lawsuit trying to strip that protection out of the act, and are now running on the claim that they want to … protect people with pre-existing conditions.

    The point is that we’re now in a political campaign where one side’s claimed position on every major policy issue is the opposite of its true position. Republicans have concluded that they can’t win an argument on the issues, but rather than changing their policies, they’re squirting out clouds of ink and hoping voters won’t figure out where they really stand.

    As Krugman also observes, the embrace of theses kinds of in-your-face up-is-down lies is presumably predicated on a genuine contempt for voters including the GOP’s own voters who are lied to the most aggressively by right-wing media. And this wall of lies is the real GOP final stretch campaign strategy. Just say anything:


    Why do they think they can get away with this? The main answer is obviously contempt for their own supporters, many of whom get their news from Fox and other propaganda outlets that slavishly follow the party line. And even in appeals to those supporters who rely on other sources, Republicans believe that they can neutralize the deep unpopularity of their actual policies by misrepresenting their positions, and win by playing to racism and fear.

    But let’s be clear: G.O.P. cynicism also involves a lot of contempt for the mainstream news media. Historically, media organizations have been remarkably unwilling to call out lies; the urge to play it safe with he-said-she-said reporting has very much worked to Republicans’ advantage, given the reality that the modern G.O.P. lies a lot more than Democrats do. Even the most blatant falsehood tends to be reported with headlines about how “Democrats say” it’s false, not that it’s actually false.

    Anyway, at this point Republicans are proclaiming that war is peace, freedom is slavery, ignorance is strength and the party that keeps trying to kill Medicare is actually the program’s greatest defender.

    Can a campaign this dishonest actually win? We’ll find out in less than three weeks.

    And it’s that ‘just say anything’ context that we have to place Trump’s mysterious made up middle-class tax plan. He’s just doing what the rest of the GOP is doing in this period of unparalleled lying by the entire party which has truly embraced Orwell. Trump is just often out of sync with the rest of the GOP because he an undisciplined liar who just makes things up on the fly.

    How will Trump making up a fake middle-class tax cut plan weeks before the election play out? We’ll see. But in Trump’s defense, this the most benign GOP tax lie ever. After all, he lied about the existence of a non-existent GOP tax bill. That’s arguably the most positive GOP tax lie ever. Although he lied about a middle-class-only tax cut, which would be the best GOP tax cut ever, so in that sense it was an extra nasty lie because he lied about the best GOP tax cut ever. It’s a complicated lie.

    And when it comes to Mitch McConnell’s warnings about the GOP’s plans on pushing for entitlement cuts next should the Democrats take control of the House, one nice thing about McConnell’s decision to tie together deficit and entitlements together in such a blatantly cynical way is it helps to make it clear that the best way to deal with the cost of entitlement spending is to raise taxes on the super-rich and big corporations. So that’s positive. Maybe fixing the US’s fiscal situation to protect entitlements involves repealing the GOP’s 2017 tax cuts, or maybe it involves just new targeted tax hikes on the wealthy on big corporations. But the farcical nature of the GOP’s stance on taxes and entitlement is making it abundantly clear that tax cuts for the wealth of corporations will blow up the deficit and that’s going to translate into entitlement cuts. It’s a given under the GOP’s plans. So reversing those tax cuts for the rich and big corporations is the obvious solution to saving entitlements, as Mitch McConnell ironically, cynically, and blatantly made clear weeks before the mid-terms. And that requires voting out the GOP. When the GOP ‘drops the mask’, it often comes in the form of lying very obviously. Which is what just happened and is kind of helpful.

    So both Trump and McConnell sort of helped out by being to blatantly dishonest and cynical in such strategically bad ways in the midst of unprecedented levels of overall GOP dishonesty during a campaign season. Days after Mitch McConnell talks about entitlement cuts to deal with rising deficits and deflects blame away from the GOP’s unpopular tax cuts, Trump appears to flagrantly just make up a middle-class-only tax cut plan. As Krugman asks, can a campaign this dishonest actually succeed? Perhaps even with the GOP picking up senate seats? Even after Trump and McConnell just ‘dropped the mask’ with blatant lies and calls for entitlement cuts? We’ll see. Don’t forget that the GOP’s Orwellian powers include Orwellian vote-counting abilities too. It’s a different kind of systemic GOP lying that blatantly imperils American democracy.

    Posted by Pterrafractyl | October 21, 2018, 10:41 pm
  26. By the time it became clear that the GOP wasn’t going to be touting its tax cut scam as a selling point in the 2018 mid-terms, the reason for that strategic decision was already pretty clear too: the tax cuts are simply unpopular and seen as largely a massive giveaway to the wealthy and corporation. It’s so obvious unpopular that President Trump even proclaimed a couple weeks ago that he was working on a special tax cut for the middle-class only that would be rolled out before election day. That turned out to be a complete lie, of course. But it was a lie that belied an unpleasant truth for the GOP. Those tax cuts were supposed to be the party’s reelection strategy and instead they became a liability. As a consequence, the GOP decided to make fearmongering about immigrants and ‘the caravan’ their central rallying cry.

    And as part of that anti-immigrant rallying, Trump himself has assumed a center stage role and explicitly framed the mid-terms as a referendum on his presidency. So given the fact that Trump is going out of his way to make sure these mid-terms are seen as a referendum on himself, and given the unpopularity of his tax cuts, it’s somewhat surprising that one of the biggest and most scandalous reports on the Trump family history was published just a month ago but hasn’t also played a more significant role in these mid-terms. It’s especially surprising because when you look at that story, it’s almost like the Trump family is the living personification of what it is that the public hates about the tax cuts. A family fortune built on scamming the public so the already rich can get much, much richer and build an enduring dynasty:

    Vanity Fair

    Trump’s One Weird Trick to Getting Rich, Revealed!: “Outright Fraud,” Deceptive Tax Schemes, and a Lifetime Allowance from Daddy
    An explosive new report alleges that Trump spent much of the 90s dodging taxes on money funneled to him by Fred Trump.
    by

    Bess Levin

    October 2, 2018 7:05 pm

    Seven lifetimes ago, during a presidential debate between Hillary Clinton and Donald Trump, the conversation turned to the then G.O.P. candidate’s wealth, which he believed qualified him to be president, despite the fact that he lacked any relevant experience whatsoever for the job. Angrily responding to Clinton’s claim that he’d started his business with $14 million from his father, Fred Trump, Donald huffily shot back that in fact it was a “very small loan” in the range of $1 million, which he parlayed “into a company that’s worth many, many billions of dollars.” Later, when Clinton asserted that her opponent “paid nothing in federal taxes,” he responded “that makes me smart.”

    As it turns out, both of Clinton’s jabs—that the so-called self-made billionaire received a tad bit more than $1 million from his father, and that he knows a thing or two about tax-dodging—turned out to be more or less correct. Only Clinton was unwittingly downplaying things. According to a bonkers, years-long investigation by The New York Times, published on Tuesday, not only did Donald Trump receive hundreds of millions of dollars from his father—a man who thought it was hugely unfair for the government to tax his fortune, despite building that fortune largely through the help of federal housing subsidies—but most of that money “came to Mr. Trump through dubious tax schemes he participated in during the 1990s, including instances of outright fraud.” (Emphasis added to note that “fraud” is an actual crime.) In total, Fred Trump and his wife, Mary, transferred more than $1 billion to their children, a gift that should have produced a tax bill of at least $550 million based on tax rates at the time. Instead, the Trumps ended up paying a mere $52.2 million, tax returns show.

    But let’s start at the beginning, circa 1949, which saw a baby Trump doing very well for himself:

    By age 3, he was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. In his 40s and 50s, he was receiving more than $5 million a year.

    There was a clear pattern to this largess: When his son began expensive new projects, Fred Trump increased his help. In the late 1970s, when Donald Trump crossed the river into the glittering precincts of Manhattan—converting the old Commodore Hotel near Grand Central Terminal into a Grand Hyatt—his father opened a spigot of loans. When he made his first forays into Atlantic City casinos a few years later, his father devised a plan to sharply increase the flow of aid.

    That turned out to be extremely necessary toward the end of the 1980s, when many of Mr. Art of the Deal’s deals began to blow up in his not-yet radioactive face. Although the Atlantic City casinos, Trump Shuttle, and the Plaza Hotel turned out to be financial disasters, Daddy Trump was always there with a helping hand, loaning his son what would be $8.3 million today between 1989 and 1992.

    Tax records also reveal that at the peak of Mr. Trump’s financial distress, in 1990, his father extracted an extraordinary sum—nearly $50 million—from his empire. While the Times could find no evidence that Fred Trump made any significant debt payments, charitable donations or personal expenditures, there are indications that he wanted plenty of cash on hand to bail out his son if need be.

    That was what happened at Trump’s Castle casino, where an $18.4 million bond payment was due in December 1990. Fred Trump dispatched a trusted bookkeeper to Atlantic City with checks to buy $3.5 million in casino chips without placing a bet. With this ruse—an illegal loan under New Jersey gaming laws, resulting in a $65,000 civil penalty—Donald Trump narrowly avoided defaulting on his bonds.

    According to the Times, despite Fred Trump’s desire to help his second son pass himself off as a self-made billionaire, December 1990 brought a bit of friction to the relationship when Donald sent Fred, then 83, a document that would have made a number of key changes to the octogenarian’s will—including “strengthening provisions that made Donald Trump sole executor of his estate”—and demanded his father sign it immediately. Perhaps knowing what a colossal f–k-up his son really was, Trump the Elder, who depositions show “feared . . . that his son might use the empire as collateral to save his own failing businesses,” refused. But there was still that pesky problem of all those taxes to avoid…

    The episode prompted a family reckoning: Fred Trump was aging and ailing. Without speedy intervention, he could die leaving a vast estate—not just his real estate empire, but also tens of millions of dollars in cash—vulnerable to the 55 percent inheritance tax.

    So with Donald Trump playing a central role, the family formulated a plan that included unorthodox tax strategies that experts told The Times were legally dubious and, in some cases, appeared to be fraudulent.

    Creating a company called All County Building Supply & Maintenance seemingly constituted a major piece of that fraud pie. In theory, the company was meant to act as Fred Trump’s purchasing agent, buying everything for his real-estate empire from cleaning supplies to boilers. But in reality, All County was “a company only on paper . . . a vehicle to siphon cash from Fred Trump’s empire by simply marking up purchases already made by his employees.” That cash—millions of dollars worth—all went to the company’s owners who were, you guessed it, Donald Trump, his siblings, and a cousin. But for cartoon villains, a scheme that tax expert Lee-Ford Tritt told the Times could constitute criminal tax fraud didn’t start and end with enriching Trump and co. It also screwed over poor people in the process!

    All County also had an insidious downside for Fred Trump’s tenants. He used the padded invoices to justify higher rent increases in rent-regulated buildings, records show.

    As the guy who is somehow now president began shifting ownership of his father’s business to himself and his siblings, another scam played a crucial role in minimizing how much money the family would have to pay the I.R.S.: wildly undervaluing Fred and Mary Trump’s assets. For instance, Fred Trump’s 1995 gift tax return stated that the 25 apartment complexes and various other properties held in trusts were worth a mere $41.4 million, a claim that is slightly hard to believe given a 2004 valuation of the same real estate came in at nearly $900 million. “They play around with valuations in extreme ways,” Tritt, the tax law expert, told the Times. “There are dramatic fluctuations depending on their purpose.” And, of course, the con jobs didn’t stop with Fred and Mary’s passings in 1999 and 2000, respectively.

    In 2003, once again in financial trouble, Donald Trump began engineering the sale of the empire Fred Trump had hoped would never leave the family. The sale, completed in 2004, brought him his biggest payday ever from his father: His cut was $177.3 million, or $236.2 million in today’s dollars. But as it turned out, banks at the time valued the empire at hundreds of millions more than the sale price. Donald Trump, master dealmaker, had sold low.

    In a statement, Charles Harder, a lawyer for Trump, told the Times: “There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate. President Trump had virtually no involvement whatsoever with these matters. The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.”

    In other words, there was no fraud or tax evasion, but if there was, Donald Trump is totally innocent and you should go after his employees first and siblings second if you have to. The president’s brother Robert Trump said in a statement, “All appropriate gift and estate tax returns were filed, and the required taxes were paid.”


    ———–

    “Trump’s One Weird Trick to Getting Rich, Revealed!: “Outright Fraud,” Deceptive Tax Schemes, and a Lifetime Allowance from Daddy” by Bess Levin; Vanity Fair; 10/02/2018

    “As it turns out, both of Clinton’s jabs—that the so-called self-made billionaire received a tad bit more than $1 million from his father, and that he knows a thing or two about tax-dodging—turned out to be more or less correct. Only Clinton was unwittingly downplaying things. According to a bonkers, years-long investigation by The New York Times, published on Tuesday, not only did Donald Trump receive hundreds of millions of dollars from his father—a man who thought it was hugely unfair for the government to tax his fortune, despite building that fortune largely through the help of federal housing subsidies—but most of that money “came to Mr. Trump through dubious tax schemes he participated in during the 1990s, including instances of outright fraud.” (Emphasis added to note that “fraud” is an actual crime.) In total, Fred Trump and his wife, Mary, transferred more than $1 billion to their children, a gift that should have produced a tax bill of at least $550 million based on tax rates at the time. Instead, the Trumps ended up paying a mere $52.2 million, tax returns show.

    Yep, Trump fortune wasn’t just started with hundreds of millions of dollars from his dad. Those hundreds of millions of dollars were funneled to Trump via outright fraudulent schemes designed to minimize Trump Sr.’s taxes, thus maximizing the Trump family’s overall fortune. Trump’s financial gifts started as a small child and by the time he was in his 40s and 50s he was receiving more than $5 million a year from his dad. That’s a pretty sweet allowance:


    But let’s start at the beginning, circa 1949, which saw a baby Trump doing very well for himself:

    By age 3, he was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. In his 40s and 50s, he was receiving more than $5 million a year.

    And this super-allowance didn’t simply enlarge Trump’s personal fortune. It saved Trump’s fortune over and over by effectively financial bailing him out:


    There was a clear pattern to this largess: When his son began expensive new projects, Fred Trump increased his help. In the late 1970s, when Donald Trump crossed the river into the glittering precincts of Manhattan—converting the old Commodore Hotel near Grand Central Terminal into a Grand Hyatt—his father opened a spigot of loans. When he made his first forays into Atlantic City casinos a few years later, his father devised a plan to sharply increase the flow of aid.

    That was what happened at Trump’s Castle casino, where an $18.4 million bond payment was due in December 1990. Fred Trump dispatched a trusted bookkeeper to Atlantic City with checks to buy $3.5 million in casino chips without placing a bet. With this ruse—an illegal loan under New Jersey gaming laws, resulting in a $65,000 civil penalty—Donald Trump narrowly avoided defaulting on his bonds.

    And when Trump Sr. was getting close to death, Donald Trump was at the center of the fraudulent tax avoidance schemes used to shield Fred Trump’s fortune from the inheritance tax:


    According to the Times, despite Fred Trump’s desire to help his second son pass himself off as a self-made billionaire, December 1990 brought a bit of friction to the relationship when Donald sent Fred, then 83, a document that would have made a number of key changes to the octogenarian’s will—including “strengthening provisions that made Donald Trump sole executor of his estate”—and demanded his father sign it immediately. Perhaps knowing what a colossal f–k-up his son really was, Trump the Elder, who depositions show “feared . . . that his son might use the empire as collateral to save his own failing businesses,” refused. But there was still that pesky problem of all those taxes to avoid…

    The episode prompted a family reckoning: Fred Trump was aging and ailing. Without speedy intervention, he could die leaving a vast estate—not just his real estate empire, but also tens of millions of dollars in cash—vulnerable to the 55 percent inheritance tax.

    So with Donald Trump playing a central role, the family formulated a plan that included unorthodox tax strategies that experts told The Times were legally dubious and, in some cases, appeared to be fraudulent.

    Creating a company called All County Building Supply & Maintenance seemingly constituted a major piece of that fraud pie. In theory, the company was meant to act as Fred Trump’s purchasing agent, buying everything for his real-estate empire from cleaning supplies to boilers. But in reality, All County was “a company only on paper . . . a vehicle to siphon cash from Fred Trump’s empire by simply marking up purchases already made by his employees.” That cash—millions of dollars worth—all went to the company’s owners who were, you guessed it, Donald Trump, his siblings, and a cousin. But for cartoon villains, a scheme that tax expert Lee-Ford Tritt told the Times could constitute criminal tax fraud didn’t start and end with enriching Trump and co. It also screwed over poor people in the process!

    All County also had an insidious downside for Fred Trump’s tenants. He used the padded invoices to justify higher rent increases in rent-regulated buildings, records show.

    As the guy who is somehow now president began shifting ownership of his father’s business to himself and his siblings, another scam played a crucial role in minimizing how much money the family would have to pay the I.R.S.: wildly undervaluing Fred and Mary Trump’s assets. For instance, Fred Trump’s 1995 gift tax return stated that the 25 apartment complexes and various other properties held in trusts were worth a mere $41.4 million, a claim that is slightly hard to believe given a 2004 valuation of the same real estate came in at nearly $900 million. “They play around with valuations in extreme ways,” Tritt, the tax law expert, told the Times. “There are dramatic fluctuations depending on their purpose.” And, of course, the con jobs didn’t stop with Fred and Mary’s passings in 1999 and 2000, respectively.

    And how did the president respond to this report? Well, his attorney assured us that there was no fraud, but if there was fraud it was fraud done by other Trump family members and/or employees:


    In a statement, Charles Harder, a lawyer for Trump, told the Times: “There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate. President Trump had virtually no involvement whatsoever with these matters. The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.”

    In other words, there was no fraud or tax evasion, but if there was, Donald Trump is totally innocent and you should go after his employees first and siblings second if you have to. The president’s brother Robert Trump said in a statement, “All appropriate gift and estate tax returns were filed, and the required taxes were paid.”

    And that highly topical Trump family scandal was just revealed a month ago. A highly scandalous Trump story that largely came and went from the public’s attention like almost all highly scandalous Trump-related stories. It’s one of the defining features of the age of Trump. The scandals all get buried in a flood of more scandals.

    So who knows if this scandal will end up haunting Trump in the future or if it’s already fallen down the American memory hole like most Trump scandals, but given that particular Trump scandal really gets to the heart of why the GOP tax scam was so unpopular, it seems like the kind of scandal that the American public is going to be reminded of over and over. Why? Because in addition to endless Trump scandals being a feature of contemporary America, stories like the following are also an unsettling new feature of contemporary America. Stories about the wealth gap continuing to explode and the consolidation of an American plutocracy thanks to the active efforts of Americans wealthiest families to make themselves wealthier at the expense of everyone else:

    The Guardian

    The wealth of America’s three richest families grew by 6,000% since 1982

    Three US families have a combined wealth of $348.7bn. As their generations expand, we are are drifting toward a society governed by the rich

    Chuck Collins
    Wed 31 Oct 2018 02.00 EDT
    Last modified on Wed 31 Oct 2018 10.02 EDT

    It hardly makes news any more that the US is becoming an extremely unequal country.

    Each year new eye-popping statistics juxtapose the reality of decades of stagnant wages for half the country’s workers with today’s extreme concentrations of wealth and power.

    The top three wealthiest billionaires in the US – Jeff Bezos, Bill Gates and Warren Buffett – now have as much wealth as the bottom half of the US population combined.

    This is possible because the bottom fifth of US households are underwater, with zero or negative net worth. And the next fifth has so few assets to fall back on that they live in fear of destitution.

    “We’re developing into a plutocracy,” said the former Federal Reserve.

    One troubling indicator that we are drifting toward a society governed by the wealthy is the expanding fortunes of multi-generational wealth dynasties.

    The three wealthiest US families are the Waltons of Walmart, the Mars candy family and the Koch brothers, heirs to the country’s second largest private company, the energy conglomerate Koch Industries. These are all enterprises built by the grandparents and parents of today’s wealthy heirs and heiresses.

    These three families own a combined fortune of $348.7bn, which is 4m times the median wealth of a US family.

    Since 1982, these three families have seen their wealth increase nearly 6,000%, factoring in inflation. Meanwhile, the median household wealth went down 3% over the same period.

    The dynastic wealth of the Walton family grew from $690m in 1982 (or $1.81bn in 2018 dollars) to $169.7bn in 2018, a mind-numbing increase of more than 9,000%.

    This isn’t the normal physics of wealth in the US, where we’ve traditionally abhorred the idea of hereditary wealth and power. Since 1900, most grand fortunes have been dispersed by the time the great-grandchildren come around – hence the old adage: “Shirtsleeves to shirtsleeves in three generations.”

    Usually wealth diminishes over multiple generations, as money is spent, passed down to heirs, given to charity and paid in taxes. Only when families aggressively intervene to arrest this cycle does wealth continue to expand over multiple generations, even as the number of heirs increases.

    Several dynastic families have used their considerable clout to stage just such an intervention, spending millions to save themselves billions.

    They’ve lobbied Congress to tip the rules in favor of dynastic wealth, including tax cuts and public policies that will further enrich their enterprises. In the early 2000s, the Mars, Walton and Gallo families actively lobbied to abolish the federal estate tax, a tax paid exclusively by multimillionaires and billionaires. The Koch brothers have since organized their famous donor network to lobby for tax cuts for the rich and to roll back regulations on the energy industry, the source of their wealth.

    Others aggressively use dynasty protection techniques to hide wealth and transfer it to heirs. They hire armies of tax accountants, wealth managers and trust lawyers to create trusts, shell corporations and offshore accounts to move money around and dodge taxation and accountability.

    For example, the casino magnate Sheldon Adelson, number 15 on the Forbes 400 list, has used complicated trust mechanisms to pass on $7.9bn to his children while avoiding $2.8bn in gift and estate taxation. Adelson recently broke spending records on midterm elections, with more than $100m in campaign donations.

    Not all the wealthy are focused on hoarding for the next generation. Warren Buffett, the third-wealthiest person on the Forbes list, decided not to give his children his immense wealth. Instead, he pledged his entire fortune to charity and contributing to the public good through paying taxes.

    Instead of lobbying for tax cuts, Buffett testified before Congress in favor of expanded estate taxation. “Dynastic wealth, the enemy of a meritocracy, is on the rise,” Buffett told lawmakers years ago. “Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy.”

    In the face of weakened tax laws and aggressive wealth hiding, we’re facing the emergence of widespread wealth dynasties. The French economist Thomas Piketty has warned that if we don’t intervene to reverse these dynamics, we’re moving toward a “patrimonial capitalism”, where the heirs of today’s billionaires will dominate our politics, culture, philanthropy and economy.

    That’s a world none of us will want to be part of.

    ———-

    “The wealth of America’s three richest families grew by 6,000% since 1982” by Chuck Collins; The Guardian; 10/31/2018

    “In the face of weakened tax laws and aggressive wealth hiding, we’re facing the emergence of widespread wealth dynasties. The French economist Thomas Piketty has warned that if we don’t intervene to reverse these dynamics, we’re moving toward a “patrimonial capitalism”, where the heirs of today’s billionaires will dominate our politics, culture, philanthropy and economy.”

    That’s right, the top three wealthiest individuals in America now have as much wealth as the bottom half of the US population combined:


    The top three wealthiest billionaires in the US – Jeff Bezos, Bill Gates and Warren Buffett – now have as much wealth as the bottom half of the US population combined.

    This is possible because the bottom fifth of US households are underwater, with zero or negative net worth. And the next fifth has so few assets to fall back on that they live in fear of destitution.

    “We’re developing into a plutocracy,” said the former Federal Reserve.

    ““We’re developing into a plutocracy,” said the former Federal Reserve.”

    When Ronald Reagan’s former head of the Federal Reserve warns about a rising plutocracy that’s a warning worth heeding.

    And it’s not just a warning about a rising plutocracy. It’s a warning about a rising multi-generational plutocracy. The three wealthiest families in American have seen their net wealth increase %6,000 percent (60-fold) since 1982, which is not coincidentally the year after Ronald Reagan’s massive 1981 supply-side tax cuts for the wealthy. And during this same period, median US household wealth dropped by 3 percent. You almost couldn’t ask for more compelling real-world evidence that the rise of the American plutocracy is coming at the expense of everyone else:


    One troubling indicator that we are drifting toward a society governed by the wealthy is the expanding fortunes of multi-generational wealth dynasties.

    The three wealthiest US families are the Waltons of Walmart, the Mars candy family and the Koch brothers, heirs to the country’s second largest private company, the energy conglomerate Koch Industries. These are all enterprises built by the grandparents and parents of today’s wealthy heirs and heiresses.

    These three families own a combined fortune of $348.7bn, which is 4m times the median wealth of a US family.

    Since 1982, these three families have seen their wealth increase nearly 6,000%, factoring in inflation. Meanwhile, the median household wealth went down 3% over the same period.

    The dynastic wealth of the Walton family grew from $690m in 1982 (or $1.81bn in 2018 dollars) to $169.7bn in 2018, a mind-numbing increase of more than 9,000%.

    This isn’t the normal physics of wealth in the US, where we’ve traditionally abhorred the idea of hereditary wealth and power. Since 1900, most grand fortunes have been dispersed by the time the great-grandchildren come around – hence the old adage: “Shirtsleeves to shirtsleeves in three generations.”

    Usually wealth diminishes over multiple generations, as money is spent, passed down to heirs, given to charity and paid in taxes. Only when families aggressively intervene to arrest this cycle does wealth continue to expand over multiple generations, even as the number of heirs increases.

    So how long will it be before it’s a 100-fold increase? Or 500-fold? We’ll find out, sooner than you probably expect because it’s not like this trend is showing any sign of slowing down. Especially after the GOP’s 2017 tax cuts, which is only going to accelerate it.

    And, of course, much of the rise of the American plutocracy can be seen as a direct consequence of the aggressive use of tax tricks designed to protect dynastic wealth. In other words, cheating the public out of taxes so the children of the super-rich can get super-richer:


    Several dynastic families have used their considerable clout to stage just such an intervention, spending millions to save themselves billions.

    They’ve lobbied Congress to tip the rules in favor of dynastic wealth, including tax cuts and public policies that will further enrich their enterprises. In the early 2000s, the Mars, Walton and Gallo families actively lobbied to abolish the federal estate tax, a tax paid exclusively by multimillionaires and billionaires. The Koch brothers have since organized their famous donor network to lobby for tax cuts for the rich and to roll back regulations on the energy industry, the source of their wealth.

    Others aggressively use dynasty protection techniques to hide wealth and transfer it to heirs. They hire armies of tax accountants, wealth managers and trust lawyers to create trusts, shell corporations and offshore accounts to move money around and dodge taxation and accountability.

    For example, the casino magnate Sheldon Adelson, number 15 on the Forbes 400 list, has used complicated trust mechanisms to pass on $7.9bn to his children while avoiding $2.8bn in gift and estate taxation. Adelson recently broke spending records on midterm elections, with more than $100m in campaign donations.

    And if it wasn’t clear that tax dodging has played a key role in the rise of this modern day plutocracy, let’s take a quick look at more of what Reagan’s former Federal Reserve chairman, Paul Volcker, had to say about this phenomena: “The central issue is we’re developing into a plutocracy…We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government, and they don’t like to pay taxes:

    The New York Times

    Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction’

    The former Fed chairman, whose memoir will be published this month, had a feisty take on the state of politics and government during an interview.

    By Andrew Ross Sorkin
    Oct. 23, 2018

    Paul Volcker, wearing a blue sweatsuit and black dress socks, stretched out on a recliner in the den of his Upper East Side apartment on a Sunday afternoon. His lanky 6-foot-7 frame extended beyond the end of the chair’s leg rest. He added an ottoman to rest his feet.

    “I’m not good,” said Mr. Volcker, 91, the former Federal Reserve chairman, who came to prominence after he used shockingly high interest rates to help end the runaway inflation of the late 1970s and early ’80s. Long one of finance’s wise men, he has been sick for several months.

    But he would rather not talk about himself. Instead, Mr. Volcker wants to talk about the country, the economy and the government. And if he had seemed lethargic when I arrived, he turned lively in his laments: “We’re in a hell of a mess in every direction,” he said.

    Hundreds of books surrounded Mr. Volcker — filling shelves and piled high on virtually every flat surface — as did pink pages of The Financial Times, folded into origami. “Respect for government, respect for the Supreme Court, respect for the president, it’s all gone,” he said. “Even respect for the Federal Reserve.

    “And it’s really bad. At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?”

    But there is something more worrisome affecting policy than fear, he told me. Money.

    Over the din of traffic outside an open window, Mr. Volcker hoarsely sounded an alarm on the power it has to shape our culture and our politics.

    “The central issue is we’re developing into a plutocracy,” he told me. “We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government, and they don’t like to pay taxes.”

    ———-

    “Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction’” by Andrew Ross Sorkin; The New York Times; 10/23/2018

    ““The central issue is we’re developing into a plutocracy,” he told me. “We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government, and they don’t like to pay taxes.””

    And that, right there, is why the story of the Trump family’s tax fraud is the kind of story that could capture the imaginations, and ire, of the American public, even if it seems like that explosive report has already been forgotten. We’ll see if that happens. But every single time there’s a new report about the super-rich getting richer, it’s going to be worth keeping in mind that both the GOP’s tax cut scam and Trump family’s history of tax fraud are part of that larger story of the rise of the American plutocracy. A story that isn’t going away and rapidly getting worse thanks to Trump and the GOP.

    Posted by Pterrafractyl | November 4, 2018, 8:16 pm

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