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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 2018 — is 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.

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.

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.

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...

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

The fact that US stocks have more or less erased their gains for the year over the last few days has received quite a few head­lines. Tech stock like Google and Face­book have been get­ting par­tic­u­lar­ly ham­mered.

A sto­ry that’s received far less atten­tion is the sto­ry of the impact of the GOP tax cuts of 2017 that have had near­ly a year to start tak­ing effect. As the fol­low­ing arti­cle points out, it’s not look­ing good. Not because the tax cuts haven’t had a stim­u­la­tive impact. In the short run they have had a pos­i­tive impact as they inevitably would. But the kinds of pri­vate sec­tor invest­ments that will lead to the greater longs-term growth, which is one of the argu­ments the advo­cates of sup­ply side eco­nom­ics always use for why we should accept high­er deficits in the short run from tax cuts. In the long run they’ll pay for them­selves through high­er pri­vate invest­ment. 10 months into the new GOP tax regime, which low­ered the cor­po­rate tax from 35 to 21 per­cent, and the promised cap­i­tal invest­ments by the pri­vate sec­tor has­n’t mate­ri­al­ized. In oth­er words, the seeds of that that promised long-term growth aren’t being sowed.

Plus, Alpha­bet, Face­book, Intel, Exxon Mobil and Gold­man Sachs make up about third of the entire rise cap­i­tal spend­ing. That’s awful­ly con­cen­trat­ed and not exact­ly signs of busi­ness sow­ing the seeds of a greater econ­o­my.

The arti­cle also men­tions the non­prof­it research of Just Cap­i­tal, which is track­ing 1,000 large pub­lic com­pa­nies’ reports of how they are spend­ing their tax cuts. Just Cap­i­tal finds that, since the tax cuts were passed, those 1,000 largest pub­lic com­pa­nies have actu­al­ly reduced employ­ment, announc­ing the elim­i­na­tion of near­ly 140,000 jobs — almost dou­ble the 73,000 jobs they say they have cre­at­ed in that time. Wages, for the most part, have grown but not at the pace of infla­tion, accord­ing to Just Cap­i­tal.

And about half of the $270 bil­lion in repa­tri­at­ed over­seas cor­po­rate prof­its were spent on $124 bil­lion in stock buy­backs. So instead of restruc­tur­ing US busi­ness incen­tives and encour­ag­ing the kinds of long-term invest­ments that the GOP promised would pay for the tax cuts by grow­ing the econ­o­my, one of the only ‘ben­e­fits’ of the tax cut was to inflate the stock val­ues of the largest US com­pa­nies and now those inflat­ed val­ues have been effec­tive­ly wiped out in the mar­ket rout:

The New York Times

Trump’s Tax Cut Was Sup­posed to Change Cor­po­rate Behav­ior. Here’s What Hap­pened.

Near­ly a year after the tax cut, eco­nom­ic growth has accel­er­at­ed. Wage growth has not. Com­pa­nies are buy­ing back stock and busi­ness invest­ment is a mixed bag.

By Jim Tanker­s­ley and Matt Phillips
Nov. 12, 2018

The $1.5 tril­lion tax over­haul that Pres­i­dent Trump signed into law late last year has already giv­en the Amer­i­can econ­o­my a jolt, at least tem­porar­i­ly. It has fat­tened the pay­checks of most Amer­i­can work­ers, padded the prof­its of large cor­po­ra­tions and sped eco­nom­ic growth.

Those results weren’t a sur­prise. Econ­o­mists across the ide­o­log­i­cal spec­trum pre­dict­ed the new law would fuel con­sumer spend­ing, in clas­sic fash­ion: When the gov­ern­ment bor­rows mon­ey and dumps it into the econ­o­my, growth tends to accel­er­ate. But Repub­li­cans did not sell the law as a sug­ar-high stim­u­lus. They sold it as a refash­ion­ing of the incen­tives in the Amer­i­can econ­o­my — one that would unleash more invest­ment, bet­ter effi­cien­cy and high­er wages, along with enough growth to off­set any rev­enue lost to the gov­ern­ment from low­er tax rates.

Ten months after the law took effect, that promised “sup­ply-side” bump is hard­er to find than the sug­ar-high stim­u­lus. It’s still ear­ly, but here’s what the num­bers tell us so far:

The Invest­ment Bump

Pro­po­nents of the tax over­haul said it would super­charge the recent lack­lus­ter pace of busi­ness spend­ing on long-term invest­ments like build­ings, fac­to­ries, equip­ment and tech­nol­o­gy.

Such spend­ing is cru­cial to keep­ing eco­nom­ic growth strong. And strong growth is cen­tral to Repub­li­can claims that the tax cuts would ulti­mate­ly pay for them­selves.

Cap­i­tal spend­ing did pick up steam ear­li­er this year. For com­pa­nies in the S&P 500, cap­i­tal expen­di­tures rose rough­ly 20 per­cent in the first half of 2018. Much of that was con­cen­trat­ed: The spend­ing of just five com­pa­nies — Google’s par­ent, Alpha­bet, and Face­book, Intel, Exxon Mobil and Gold­man Sachs — account­ed for rough­ly a third of the entire rise. Much of that spend­ing went toward tech­nol­o­gy, includ­ing increased invest­ment in data cen­ters and com­put­ing, serv­er and net­work­ing capac­i­ty.

For the full year, Gold­man Sachs ana­lysts expect that cap­i­tal expen­di­tures for com­pa­nies in the S&P 500 will be up about 14 per­cent, to $715 bil­lion. Research and devel­op­ment spend­ing, anoth­er com­po­nent of busi­ness invest­ment, was expect­ed to be up 12 per­cent, to $340 bil­lion.

For the econ­o­my as a whole, the surge in busi­ness invest­ment was a bit less impres­sive. It’s true that busi­ness spend­ing on fixed invest­ment — such as machin­ery, build­ings and equip­ment — rose, jump­ing 11.5 per­cent and 8.7 per­cent dur­ing the first and sec­ond quar­ters. The first-quar­ter jump was the fastest for invest­ment since 2011.

But that pace fiz­zled dur­ing the third quar­ter. Recent­ly data showed third-quar­ter busi­ness invest­ment rose at an annu­al pace of 0.8 per­cent. The last quar­ter of the year — tra­di­tion­al­ly a big one for cap­i­tal spend­ing — will fill out the pic­ture, but that data won’t be released until ear­ly 2019.

It will like­ly take years to get a bet­ter sense of whether the law fun­da­men­tal­ly reshaped Amer­i­can cor­po­rate invest­ment. But there’s lit­tle clear evi­dence that it is dras­ti­cal­ly reshap­ing the way in which most com­pa­nies invest and spend.

The results of a sur­vey pub­lished in late Octo­ber by the Nation­al Asso­ci­a­tion for Busi­ness Eco­nom­ics showed that 81 per­cent of the 116 com­pa­nies sur­veyed said they had not changed plans for invest­ment or hir­ing because of the tax bill.

The Buy­back Binge

Cheer­lead­ers for the tax cut argued that the heart of the law — cut­ting and restruc­tur­ing tax­es for cor­po­ra­tions — would give the econ­o­my a pos­i­tive bump, giv­ing com­pa­nies incen­tives to invest more, hire more work­ers and pay high­er wages.

Skep­tics said that the mon­ey com­pa­nies saved through tax cuts would mere­ly increase cor­po­rate prof­its, rather than trick­ling down to work­ers.

JPMor­gan Chase ana­lysts esti­mate that in the first half of 2018, about $270 bil­lion in cor­po­rate prof­its pre­vi­ous­ly held over­seas were repa­tri­at­ed to the Unit­ed States and spent as a result of changes to the tax code. Some 46 per­cent of that, JPMor­gan Chase ana­lysts said, was spent on $124 bil­lion in stock buy­backs.

The flow of repa­tri­at­ed cor­po­rate cash is just one trib­u­tary in what has become a flood of pay­outs to share­hold­ers, both as buy­backs and div­i­dends. Such pay­outs are expect­ed to hit almost $1.3 tril­lion this year, up 28 per­cent from 2017, accord­ing to esti­mates from Gold­man Sachs ana­lysts.

Debts and Deficits

Sup­port­ers of the tax cuts repeat­ed­ly claimed the bill would increase eco­nom­ic growth enough to off­set the decline in tax receipts. “I’m total­ly con­vinced this is a rev­enue-neu­tral bill,” said Sen­a­tor Mitch McConnell of Ken­tucky, the Repub­li­can leader, when a pre­lim­i­nary ver­sion of the bill was approved in the Sen­ate in Decem­ber 2017.

Despite a remark­ably strong econ­o­my, the fis­cal health of the Unit­ed States is dete­ri­o­rat­ing fast, as rev­enues have declined sharply. The fed­er­al bud­get deficit — the gap between what the gov­ern­ment col­lects in rev­enues and what it spends — rose to $779 bil­lion in the 2018 fis­cal year, which end­ed Sept. 30. That was a 17 per­cent increase from the pri­or year.

...

Cor­po­rate tax rev­enues are down one-third from a year ago. Fed­er­al rev­enues as a whole ran $200 bil­lion behind the Con­gres­sion­al Bud­get Office’s fore­cast for the 2018 fis­cal year — even though eco­nom­ic growth was faster than the C.B.O. expect­ed. The non­par­ti­san Com­mit­tee for a Respon­si­ble Fed­er­al Bud­get reports that nom­i­nal fed­er­al rev­enues are down by at least 3.6 per­cent since the tax cuts took effect.

The grow­ing bud­get gap means the Trea­sury must bor­row more to keep the gov­ern­ment run­ning. The Trea­sury expects to bor­row a total of $1.338 tril­lion from glob­al investors this cal­en­dar year. That would be 145 per­cent high­er than the $546 bil­lion the fed­er­al gov­ern­ment bor­rowed last year. That would be the high­est lev­el of bor­row­ing since 2010, when the Amer­i­can econ­o­my was strug­gling to recov­er from the great reces­sion.

Bonus Announce­ments

Short­ly after the tax law passed, hun­dreds of com­pa­nies — from large multi­na­tion­als to small man­u­fac­tur­ers — announced that they would be using some of their wind­fall from the law to give one-time bonus­es to employ­ees. Oth­ers said they would raise min­i­mum wages across the com­pa­ny, or expand work­er ben­e­fits.

Mr. Trump and Repub­li­cans hailed those announce­ments as evi­dence that the law’s ben­e­fits were flow­ing sub­stan­tial­ly to work­ers. Amer­i­cans for Tax Reform com­piled a list of 750 com­pa­nies, and grow­ing, that said they would pass tax sav­ings on to work­ers in some form.

Data from large pub­lic com­pa­nies, how­ev­er, sug­gest that most work­ers received rel­a­tive­ly small shares of their employ­ers’ cor­po­rate tax sav­ings.

The non­prof­it research group Just Cap­i­tal, which is track­ing 1,000 large pub­lic com­pa­nies’ reports of how they are spend­ing their tax cuts, cal­cu­lates that the typ­i­cal work­er at one of those large com­pa­nies has received about $225 this year in increased salary, a one-time bonus, or both, attrib­ut­able to the new law.

Work­ers for those com­pa­nies were more like­ly to see their wages rise if they lived in states where the min­i­mum wage was rel­a­tive­ly low — and where com­pa­nies do not have to pay work­ers more to com­pen­sate for high hous­ing costs. Cal­i­for­nia work­ers at those com­pa­nies saw an aver­age ben­e­fit of about $160 each, which is less than half the aver­age ben­e­fit for work­ers in Ken­tucky.

Many com­pa­nies also said they would use tax sav­ings to cre­ate jobs. But the Just Cap­i­tal research finds that, since the tax cuts were passed, the 1,000 largest pub­lic com­pa­nies have actu­al­ly reduced employ­ment, on bal­ance. They have announced the elim­i­na­tion of near­ly 140,000 jobs — which is almost dou­ble the 73,000 jobs they say they have cre­at­ed in that time. About half of those net loss­es came from com­pa­nies in the restau­rant and leisure indus­tries, the analy­sis found.

The Wage Sto­ry

Near­ly a year after the cuts were signed into law, wage growth has yet to pick up when account­ing for infla­tion. In Sep­tem­ber, the Labor Depart­ment report­ed that infla­tion-adjust­ed wages had risen 0.5 per­cent from the year before. That’s a slow­er rate of growth than the econ­o­my itself expe­ri­enced in Sep­tem­ber 2017, when it was 0.6 per­cent.

Growth has accel­er­at­ed in nom­i­nal terms. Medi­an wage growth was 3.5 per­cent in Sep­tem­ber, accord­ing to cal­cu­la­tions by the Fed­er­al Reserve Bank of Atlanta, up from 3 per­cent in Jan­u­ary, but still below its recent highs in 2016. Growth in the Employ­ment Cost Index rose from 2.9 per­cent at the end of 2017 to 3 per­cent in the third quar­ter.

By Repub­li­cans’ own eco­nom­ic the­o­ries, it should take a while for cor­po­rate tax cuts to trans­late into high­er work­er pay. First, the cuts need to stim­u­late increased cap­i­tal invest­ments, which in turn raise work­er pro­duc­tiv­i­ty. More pro­duc­tive work­ers would then see their wages rise accord­ing­ly.

Pro­duc­tiv­i­ty grew 3 per­cent in the sec­ond quar­ter of this year and 2.2 per­cent in the third — healthy num­bers, which will need to con­tin­ue apace to deliv­er the sort of long-term eco­nom­ic jolt Repub­li­cans promised.

———-

“Trump’s Tax Cut Was Sup­posed to Change Cor­po­rate Behav­ior. Here’s What Hap­pened.” by Jim Tanker­s­ley and Matt Phillips; The New York Times; 11/12/2018

“Ten months after the law took effect, that promised “sup­ply-side” bump is hard­er to find than the sug­ar-high stim­u­lus. It’s still ear­ly, but here’s what the num­bers tell us so far:”

The sup­ply-side bump isn’t even a bump. Wages haven’t even kept up with infla­tion and wage growth is actu­al­ly slow­ing. But the back­ers of sup­ply-side eco­nom­ic poli­cies always warn that it will take time for the long-term growth pos­i­tive impacts of the tax cuts to take effect. First com­pa­nies need to invest in more cap­i­tal which will raise work­er pro­duc­tiv­i­ty, and only after those cap­i­tal invest­ments raise work­er pro­duc­tiv­i­ty will Amer­i­can work­ers see the promised wage gains. That’s the sup­ply-side nar­ra­tive. A nar­ra­tive that con­ve­nient­ly excus­es away the lack of mean­ing­ful ben­e­fits for aver­age Amer­i­cans and excus­es away the imme­di­ate dam­age to the nation­al debt and deficits cause by these poli­cies:

...
The Wage Sto­ry

Near­ly a year after the cuts were signed into law, wage growth has yet to pick up when account­ing for infla­tion. In Sep­tem­ber, the Labor Depart­ment report­ed that infla­tion-adjust­ed wages had risen 0.5 per­cent from the year before. That’s a slow­er rate of growth than the econ­o­my itself expe­ri­enced in Sep­tem­ber 2017, when it was 0.6 per­cent.

...

By Repub­li­cans’ own eco­nom­ic the­o­ries, it should take a while for cor­po­rate tax cuts to trans­late into high­er work­er pay. First, the cuts need to stim­u­late increased cap­i­tal invest­ments, which in turn raise work­er pro­duc­tiv­i­ty. More pro­duc­tive work­ers would then see their wages rise accord­ing­ly.

Pro­duc­tiv­i­ty grew 3 per­cent in the sec­ond quar­ter of this year and 2.2 per­cent in the third — healthy num­bers, which will need to con­tin­ue apace to deliv­er the sort of long-term eco­nom­ic jolt Repub­li­cans promised.
...

“By Repub­li­cans’ own eco­nom­ic the­o­ries, it should take a while for cor­po­rate tax cuts to trans­late into high­er work­er pay. First, the cuts need to stim­u­late increased cap­i­tal invest­ments, which in turn raise work­er pro­duc­tiv­i­ty. More pro­duc­tive work­ers would then see their wages rise accord­ing­ly.”

It’s a con­ve­nient nar­ra­tive for the advo­cates of sup­ply-side eco­nom­ic the­o­ries: patience is all that is required. Patience and faith in the sup­ply-side eco­nom­ic the­o­ries. The­o­ries that have yet to be proven to work despite being repeat­ed­ly employed in the Unit­ed States since Ronald Rea­gan intro­duced them in the 80’s, although they have proven to explode the wealth gap quite effec­tive­ly while wages stag­nat­ed.

The nar­ra­tive is par­tic­u­lar­ly con­ve­nient in the face of evi­dence that the top 1000 largest US com­pa­nies have actu­al­ly reduced employ­ment since the tax cut was passed:

...
Bonus Announce­ments

Short­ly after the tax law passed, hun­dreds of com­pa­nies — from large multi­na­tion­als to small man­u­fac­tur­ers — announced that they would be using some of their wind­fall from the law to give one-time bonus­es to employ­ees. Oth­ers said they would raise min­i­mum wages across the com­pa­ny, or expand work­er ben­e­fits.

Mr. Trump and Repub­li­cans hailed those announce­ments as evi­dence that the law’s ben­e­fits were flow­ing sub­stan­tial­ly to work­ers. Amer­i­cans for Tax Reform com­piled a list of 750 com­pa­nies, and grow­ing, that said they would pass tax sav­ings on to work­ers in some form.

Data from large pub­lic com­pa­nies, how­ev­er, sug­gest that most work­ers received rel­a­tive­ly small shares of their employ­ers’ cor­po­rate tax sav­ings.

The non­prof­it research group Just Cap­i­tal, which is track­ing 1,000 large pub­lic com­pa­nies’ reports of how they are spend­ing their tax cuts, cal­cu­lates that the typ­i­cal work­er at one of those large com­pa­nies has received about $225 this year in increased salary, a one-time bonus, or both, attrib­ut­able to the new law.

Work­ers for those com­pa­nies were more like­ly to see their wages rise if they lived in states where the min­i­mum wage was rel­a­tive­ly low — and where com­pa­nies do not have to pay work­ers more to com­pen­sate for high hous­ing costs. Cal­i­for­nia work­ers at those com­pa­nies saw an aver­age ben­e­fit of about $160 each, which is less than half the aver­age ben­e­fit for work­ers in Ken­tucky.

Many com­pa­nies also said they would use tax sav­ings to cre­ate jobs. But the Just Cap­i­tal research finds that, since the tax cuts were passed, the 1,000 largest pub­lic com­pa­nies have actu­al­ly reduced employ­ment, on bal­ance. They have announced the elim­i­na­tion of near­ly 140,000 jobs — which is almost dou­ble the 73,000 jobs they say they have cre­at­ed in that time. About half of those net loss­es came from com­pa­nies in the restau­rant and leisure indus­tries, the analy­sis found.
...

And while cap­i­tal invest­ments have indeed risen in 2018, the rise has been high­ly con­cen­trat­ed, with Alpha­bet, and Face­book, Intel, Exxon Mobil and Gold­man Sachs alone account­ing for a third of the rise and the vast major­i­ty of com­pa­nies indi­cat­ing the tax cuts have made no change of invest­ment plans:

...
The Invest­ment Bump

Pro­po­nents of the tax over­haul said it would super­charge the recent lack­lus­ter pace of busi­ness spend­ing on long-term invest­ments like build­ings, fac­to­ries, equip­ment and tech­nol­o­gy.

Such spend­ing is cru­cial to keep­ing eco­nom­ic growth strong. And strong growth is cen­tral to Repub­li­can claims that the tax cuts would ulti­mate­ly pay for them­selves.

Cap­i­tal spend­ing did pick up steam ear­li­er this year. For com­pa­nies in the S&P 500, cap­i­tal expen­di­tures rose rough­ly 20 per­cent in the first half of 2018. Much of that was con­cen­trat­ed: The spend­ing of just five com­pa­nies — Google’s par­ent, Alpha­bet, and Face­book, Intel, Exxon Mobil and Gold­man Sachs — account­ed for rough­ly a third of the entire rise. Much of that spend­ing went toward tech­nol­o­gy, includ­ing increased invest­ment in data cen­ters and com­put­ing, serv­er and net­work­ing capac­i­ty.

...

The results of a sur­vey pub­lished in late Octo­ber by the Nation­al Asso­ci­a­tion for Busi­ness Eco­nom­ics showed that 81 per­cent of the 116 com­pa­nies sur­veyed said they had not changed plans for invest­ment or hir­ing because of the tax bill.
...

But there has been one big change in cor­po­rate behav­ior as a result of the tax code: $270 bil­lion in over­seas cor­po­rate prof­its have been repa­tri­at­ed as a result. Unfor­tu­nate­ly, almost half of that repa­tri­at­ed mon­ey has been spent on stock buy­backs, which helps no one but exist­ing share­hold­ers and the exec­u­tives:

...
The Buy­back Binge

Cheer­lead­ers for the tax cut argued that the heart of the law — cut­ting and restruc­tur­ing tax­es for cor­po­ra­tions — would give the econ­o­my a pos­i­tive bump, giv­ing com­pa­nies incen­tives to invest more, hire more work­ers and pay high­er wages.

Skep­tics said that the mon­ey com­pa­nies saved through tax cuts would mere­ly increase cor­po­rate prof­its, rather than trick­ling down to work­ers.

JPMor­gan Chase ana­lysts esti­mate that in the first half of 2018, about $270 bil­lion in cor­po­rate prof­its pre­vi­ous­ly held over­seas were repa­tri­at­ed to the Unit­ed States and spent as a result of changes to the tax code. Some 46 per­cent of that, JPMor­gan Chase ana­lysts said, was spent on $124 bil­lion in stock buy­backs.

The flow of repa­tri­at­ed cor­po­rate cash is just one trib­u­tary in what has become a flood of pay­outs to share­hold­ers, both as buy­backs and div­i­dends. Such pay­outs are expect­ed to hit almost $1.3 tril­lion this year, up 28 per­cent from 2017, accord­ing to esti­mates from Gold­man Sachs ana­lysts.
...

Then there’s the explod­ing nation­al debt and deficits. Sup­ply-side pro­po­nents assure us that this is just tem­po­rary as we wait for the mag­ic of the tax cuts to take effect, mag­ic that would be a lot eas­i­er to believe in if busi­ness­es actu­al­ly appeared to be increas­ing their invest­ments as a result of this tax cut. But they aren’t, so the only thing we should real­ly believe at this point is that US debts and deficits are going to be going a lot high­er for the fore­see­able future:

...
Debts and Deficits

Sup­port­ers of the tax cuts repeat­ed­ly claimed the bill would increase eco­nom­ic growth enough to off­set the decline in tax receipts. “I’m total­ly con­vinced this is a rev­enue-neu­tral bill,” said Sen­a­tor Mitch McConnell of Ken­tucky, the Repub­li­can leader, when a pre­lim­i­nary ver­sion of the bill was approved in the Sen­ate in Decem­ber 2017.

Despite a remark­ably strong econ­o­my, the fis­cal health of the Unit­ed States is dete­ri­o­rat­ing fast, as rev­enues have declined sharply. The fed­er­al bud­get deficit — the gap between what the gov­ern­ment col­lects in rev­enues and what it spends — rose to $779 bil­lion in the 2018 fis­cal year, which end­ed Sept. 30. That was a 17 per­cent increase from the pri­or year.

...

Cor­po­rate tax rev­enues are down one-third from a year ago. Fed­er­al rev­enues as a whole ran $200 bil­lion behind the Con­gres­sion­al Bud­get Office’s fore­cast for the 2018 fis­cal year — even though eco­nom­ic growth was faster than the C.B.O. expect­ed. The non­par­ti­san Com­mit­tee for a Respon­si­ble Fed­er­al Bud­get reports that nom­i­nal fed­er­al rev­enues are down by at least 3.6 per­cent since the tax cuts took effect.
...

So it’s look­ing like the GOP tax cuts are turn­ing out to be a fail­ure in pret­ty much every pos­si­ble dimen­sion of pol­i­cy per­for­mance. It’s a notable fail­ure because one of the fears of pass­ing this tax cut at the height of an eco­nom­ic recov­ery was the fear that it would over­stim­u­late the econ­o­my so much that wages would rise rapid­ly and the Fed­er­al Reserve would respond with rapid inter­est rate hikes and trig­ger the next reces­sion. And yet we haven’t even seen that wage growth. That’s how wild­ly unhelp­ful this tax cut was for aver­age Amer­i­cans.

And as the fol­low­ing piece by Paul Krug­man reminds us, the rea­son for this spec­tac­u­lar pol­i­cy fail­ure is clear and has been clear for quite some time: sup­ply-side eco­nom­ics is a fraud:

The New York Times

Why Was Trump’s Tax Cut a Fiz­zle?

The G.O.P.’s only leg­isla­tive achieve­ment has been a big dis­ap­point­ment.

By Paul Krug­man
Opin­ion Colum­nist

Nov. 15, 2018

Last week’s blue wave means that Don­ald Trump will go into the 2020 elec­tion with only one major leg­isla­tive achieve­ment: a big tax cut for cor­po­ra­tions and the wealthy. Still, that tax cut was sup­posed to accom­plish big things. Repub­li­cans thought it would give them a big elec­toral boost, and they pre­dict­ed dra­mat­ic eco­nom­ic gains. What they got instead, how­ev­er, was a big fiz­zle.

The polit­i­cal pay­off, of course, nev­er arrived. And the eco­nom­ic results have been dis­ap­point­ing. True, we’ve had two quar­ters of fair­ly fast eco­nom­ic growth, but such growth spurts are fair­ly com­mon — there was a sub­stan­tial­ly big­ger spurt in 2014, and hard­ly any­one noticed. And this growth was dri­ven large­ly by con­sumer spend­ing and, sur­prise, gov­ern­ment spend­ing, which wasn’t what the tax cut­ters promised.

Mean­while, there’s no sign of the vast invest­ment boom the law’s back­ers promised. Cor­po­ra­tions have used the tax cut’s pro­ceeds large­ly to buy back their own stock rather than to add jobs and expand capac­i­ty.

But why have the tax cut’s impacts been so min­i­mal? Leave aside the glitch-filled changes in indi­vid­ual tax­es, which will keep accoun­tants busy for years; the core of the bill was a huge cut in cor­po­rate tax­es. Why hasn’t this done more to increase invest­ment?

The answer, I’d argue, is that busi­ness deci­sions are a lot less sen­si­tive to finan­cial incen­tives — includ­ing tax rates — than con­ser­v­a­tives claim. And appre­ci­at­ing that real­i­ty doesn’t just under­mine the case for the Trump tax cut. It under­mines Repub­li­can eco­nom­ic doc­trine as a whole.

About busi­ness deci­sions: It’s a dirty lit­tle secret of mon­e­tary analy­sis that changes in inter­est rates affect the econ­o­my main­ly through their effect on the hous­ing mar­ket and the inter­na­tion­al val­ue of the dol­lar (which in turn affects the com­pet­i­tive­ness of U.S. goods on world mar­kets). Any direct effect on busi­ness invest­ment is so small that it’s hard even to see it in the data. What dri­ves such invest­ment is, instead, per­cep­tions about mar­ket demand.

Why is this the case? One main rea­son is that busi­ness invest­ments have rel­a­tive­ly short work­ing lives. If you’re con­sid­er­ing whether to take out a mort­gage to buy a house that will stand for many decades, the inter­est rate mat­ters a lot. But if you’re think­ing about tak­ing out a loan to buy, say, a work com­put­er that will either break down or become obso­les­cent in a few years, the inter­est rate on the loan will be a minor con­sid­er­a­tion in decid­ing whether to make the pur­chase.

And the same log­ic applies to tax rates: There aren’t many poten­tial busi­ness invest­ments that will be worth doing with a 21 per­cent prof­its tax, the cur­rent rate, but weren’t worth doing at 35 per­cent, the rate before the Trump tax cut.

Also, a sub­stan­tial frac­tion of cor­po­rate prof­its real­ly rep­re­sents rewards to monop­oly pow­er, not returns on invest­ment — and cut­ting tax­es on monop­oly prof­its is a pure give­away, offer­ing no rea­son to invest or hire.

Now, pro­po­nents of the tax cut, includ­ing Trump’s own econ­o­mists, made a big deal about how we now have a glob­al cap­i­tal mar­ket, in which mon­ey flows to wher­ev­er it gets the high­est after-tax return. And they point­ed to coun­tries with low cor­po­rate tax­es, like Ire­land, which appear to attract lots of for­eign invest­ment.

...

But there’s much less to these invest­ments than meets the eye. For exam­ple, the vast sums cor­po­ra­tions have sup­pos­ed­ly invest­ed in Ire­land have yield­ed remark­ably few jobs and remark­ably lit­tle income for the Irish them­selves — because most of that huge invest­ment in Ire­land is noth­ing more than an account­ing fic­tion.

Now you know why the mon­ey U.S. com­pa­nies report­ed mov­ing home after tax­es were cut hasn’t shown up in jobs, wages and invest­ment: Noth­ing real­ly moved. Over­seas sub­sidiaries trans­ferred some assets back to their par­ent com­pa­nies, but this was just an account­ing maneu­ver, with almost no impact on any­thing real.

So the basic result of low­er tax­es on cor­po­ra­tions is that cor­po­ra­tions pay less in tax­es — full stop. Which brings me to the prob­lem with con­ser­v­a­tive eco­nom­ic doc­trine.

That doc­trine is all about the sup­posed need to give the already priv­i­leged incen­tives to do nice things for the rest of us. We must, the right says, cut tax­es on the wealthy to induce them to work hard, and cut tax­es on cor­po­ra­tions to induce them to invest in Amer­i­ca.

But this doc­trine keeps fail­ing in prac­tice.. Pres­i­dent George W. Bush’s tax cuts didn’t pro­duce a boom; Pres­i­dent Barack Obama’s tax hike didn’t cause a depres­sion. Tax cuts in Kansas didn’t jump-start the state’s econ­o­my; tax hikes in Cal­i­for­nia didn’t slow growth.

And with the Trump tax cut, the doc­trine has failed again. Unfor­tu­nate­ly, it’s dif­fi­cult to get politi­cians to under­stand some­thing when their cam­paign con­tri­bu­tions depend on their not under­stand­ing it.

———–

“Why Was Trump’s Tax Cut a Fiz­zle?” By Paul Krug­man; The New York Times; 11/15/2018

“Mean­while, there’s no sign of the vast invest­ment boom the law’s back­ers promised. Cor­po­ra­tions have used the tax cut’s pro­ceeds large­ly to buy back their own stock rather than to add jobs and expand capac­i­ty.”

The big pre­dict­ed invest­ment boom turned out to be a anoth­er Repub­li­can myth. A now famil­iar myth we’ve been hear­ing for decades. And that’s part of why the fail­ure of the GOP tax cuts is such a sig­nif­i­cant sto­ry: it’s a big piece of empir­i­cal evi­dence that the Repub­li­can Par­ty’s eco­nom­ic doc­trine as a whole is a giant pile of destruc­tive garbage. As Krug­man argues, it’s a dirty secret in macro­eco­nom­ics that busi­ness deci­sions aren’t actu­al­ly very respon­sive to inter­est rate changes, oth­er than the impact inter­est rate have on the val­ue of the dol­lar and the hous­ing mar­ket. And the same log­ic applies to tax rates. Busi­ness­es sim­ply aren’t more like­ly to make a spend­ing deci­sion due to low­er tax­es on that spend­ing. And if it’s the case that busi­ness spend­ing deci­sions aren’t near­ly as respon­sive to things like inter­est rates as sup­ply-side the­o­ry sug­gests, that makes sup­ply-side the­o­ries fun­da­men­tal­ly garbage because they are the­o­ries that emerge only when you assume that busi­ness deci­sions actu­al­ly are very respon­sive to things like tax rates:

...
But why have the tax cut’s impacts been so min­i­mal? Leave aside the glitch-filled changes in indi­vid­ual tax­es, which will keep accoun­tants busy for years; the core of the bill was a huge cut in cor­po­rate tax­es. Why hasn’t this done more to increase invest­ment?

The answer, I’d argue, is that busi­ness deci­sions are a lot less sen­si­tive to finan­cial incen­tives — includ­ing tax rates — than con­ser­v­a­tives claim. And appre­ci­at­ing that real­i­ty doesn’t just under­mine the case for the Trump tax cut. It under­mines Repub­li­can eco­nom­ic doc­trine as a whole.

About busi­ness deci­sions: It’s a dirty lit­tle secret of mon­e­tary analy­sis that changes in inter­est rates affect the econ­o­my main­ly through their effect on the hous­ing mar­ket and the inter­na­tion­al val­ue of the dol­lar (which in turn affects the com­pet­i­tive­ness of U.S. goods on world mar­kets). Any direct effect on busi­ness invest­ment is so small that it’s hard even to see it in the data. What dri­ves such invest­ment is, instead, per­cep­tions about mar­ket demand.

Why is this the case? One main rea­son is that busi­ness invest­ments have rel­a­tive­ly short work­ing lives. If you’re con­sid­er­ing whether to take out a mort­gage to buy a house that will stand for many decades, the inter­est rate mat­ters a lot. But if you’re think­ing about tak­ing out a loan to buy, say, a work com­put­er that will either break down or become obso­les­cent in a few years, the inter­est rate on the loan will be a minor con­sid­er­a­tion in decid­ing whether to make the pur­chase.

And the same log­ic applies to tax rates: There aren’t many poten­tial busi­ness invest­ments that will be worth doing with a 21 per­cent prof­its tax, the cur­rent rate, but weren’t worth doing at 35 per­cent, the rate before the Trump tax cut.

Also, a sub­stan­tial frac­tion of cor­po­rate prof­its real­ly rep­re­sents rewards to monop­oly pow­er, not returns on invest­ment — and cut­ting tax­es on monop­oly prof­its is a pure give­away, offer­ing no rea­son to invest or hire.
...

So what about the obser­va­tion that coun­tries with very low cor­po­rate tax rates can attract addi­tion­al for­eign invest­ment? Well, as Krug­man points out, when you look at a coun­try like Ire­land, those for­eign invest­ments are large­ly account­ing fic­tions. And that’s part of why there’s been no sub­stan­tial impact felt from the deci­sion of US cor­po­ra­tions to trans­fer assets from over­seas sub­sidiaries in low-tax places like Ire­land back to the par­ent com­pa­nies in the US: those invest­ments in low-tax coun­tries like Ire­land were nev­er real invest­ments. They were invest­ments on paper alone:

...
Now, pro­po­nents of the tax cut, includ­ing Trump’s own econ­o­mists, made a big deal about how we now have a glob­al cap­i­tal mar­ket, in which mon­ey flows to wher­ev­er it gets the high­est after-tax return. And they point­ed to coun­tries with low cor­po­rate tax­es, like Ire­land, which appear to attract lots of for­eign invest­ment.

...

But there’s much less to these invest­ments than meets the eye. For exam­ple, the vast sums cor­po­ra­tions have sup­pos­ed­ly invest­ed in Ire­land have yield­ed remark­ably few jobs and remark­ably lit­tle income for the Irish them­selves — because most of that huge invest­ment in Ire­land is noth­ing more than an account­ing fic­tion.

Now you know why the mon­ey U.S. com­pa­nies report­ed mov­ing home after tax­es were cut hasn’t shown up in jobs, wages and invest­ment: Noth­ing real­ly moved. Over­seas sub­sidiaries trans­ferred some assets back to their par­ent com­pa­nies, but this was just an account­ing maneu­ver, with almost no impact on any­thing real.
...

And as Krug­man also points out, it’s objec­tive­ly the case that sup­ply-side the­o­ries just keep fail­ing and the fail­ure of the GOP tax cuts is sim­ply the lat­est exam­ple of this fail­ure. Amer­i­ca keeps giv­ing sup­ply-siders the ben­e­fit of the doubt despite this hor­ri­ble track record:

...
So the basic result of low­er tax­es on cor­po­ra­tions is that cor­po­ra­tions pay less in tax­es — full stop. Which brings me to the prob­lem with con­ser­v­a­tive eco­nom­ic doc­trine.

That doc­trine is all about the sup­posed need to give the already priv­i­leged incen­tives to do nice things for the rest of us. We must, the right says, cut tax­es on the wealthy to induce them to work hard, and cut tax­es on cor­po­ra­tions to induce them to invest in Amer­i­ca.

But this doc­trine keeps fail­ing in prac­tice.. Pres­i­dent George W. Bush’s tax cuts didn’t pro­duce a boom; Pres­i­dent Barack Obama’s tax hike didn’t cause a depres­sion. Tax cuts in Kansas didn’t jump-start the state’s econ­o­my; tax hikes in Cal­i­for­nia didn’t slow growth.

And with the Trump tax cut, the doc­trine has failed again. Unfor­tu­nate­ly, it’s dif­fi­cult to get politi­cians to under­stand some­thing when their cam­paign con­tri­bu­tions depend on their not under­stand­ing it.
...

So that’s all one big rea­son aver­age Amer­i­cans prob­a­bly did­n’t end up giv­ing too much tanks for the GOP tax cuts dur­ing Thanks­giv­ing this year. But it’s also all one big rea­son why Amer­i­cans should­n’t for­get to be not thank­ful for the lat­est GOP tax cut next Thanks­giv­ing and each one after that for the fore­see­able future, not just this year. Because the promised pos­i­tive impact of these tax cuts is sup­posed to emerge in the long-run, and that means the fail­ure of these tax cuts is actu­al­ly going to grow year after year as that long-term growth fails to mate­ri­al­ize.

And per­haps most impor­tant­ly, the fail­ure of sup­ply-side eco­nom­ic the­o­ries due to a lack of cor­po­rate sen­si­tiv­i­ty to tax rates also means that we should­n’t fear some sort of big wave of eco­nom­ic dam­age should the US actu­al­ly try to cor­rect the sup­ply-side dis­as­ter and raise tax­es on cor­po­ra­tions and the wealthy. In oth­er words, the empir­i­cal fail­ure of the repeat­ed exper­i­ments with sup­ply-side poli­cies dou­bles as empir­i­cal evi­dence that we should­n’t real­ly fear rais­ing tax­es on the wealthy and cor­po­ra­tions. Amer­i­cans can address the grow­ing wealth gap and wild pow­er imbal­ance in Amer­i­can soci­ety by sim­ply revers­ing these dis­as­trous GOP tax cuts with­out wor­ry­ing about the threats of eco­nom­ic dam­age. Amer­i­ca can actu­al­ly wake up from its mul­ti-decade sup­ply-side night­mare and that’s def­i­nite­ly some­thing aver­age Amer­i­cans should be thank­ful for this year and every year.

The Dai­ly Beast has a new piece with a behind-the-scenes peek at Trump that’s typ­i­cal­ly shock­ing­ly unshock­ing: It turns out Trump does­n’t care about the the fact that the GOP tax cuts are explod­ing the nation­al debt because “I won’t be here” when it blows up.

It’s an unshock­ing rev­e­la­tion because it’s com­plete­ly obvi­ous that Trump and the rest of the Repub­li­can Par­ty has­n’t actu­al­ly care about the nation­al debt since Ronald Rea­gan and the par­ty’s embrace of sup­ply-side ‘voodoo’ eco­nom­ics.

But it’s still kind of shock­ing that Trump appar­ent­ly straight up tells peo­ple behind closed doors that he does­n’t care because he does­n’t expect to still be in office when there’s some sort of nation­al debt cri­sis. You’d think he’d be con­cerned about arti­cles like this com­ing out, but appar­ent­ly not. After all, you almost could­n’t come up with a bet­ter exam­ple of the “time incon­sis­ten­cy” scam that the Repub­li­can Par­ty has been run­ning for decades now — the scam described by for­mer Rea­gan advi­sor Bruce Bartlett where the GOP cuts tax­es to get imme­di­ate polit­i­cal ben­e­fits know­ing that vot­ers won’t know who to blame when the long-term neg­a­tive con­se­quences of those tax cuts play out years lat­er at which point the debt cri­sis can be used to jus­ti­fy cuts to enti­tle­ments and oth­er pub­lic pro­grams — than to learn that the Repub­li­can pres­i­dent does­n’t care about the long-term con­se­quences of a giant tax cut for the rich because it’s going to hap­pen after they are out of office. That’s all part of why this was shock­ing­ly unshock­ing. Per­haps unshock­ing­ly shock­ing is a bet­ter way to put it.

Plus, when sto­ries like this inevitably come out if he talks like this behind closed doors, that’s prob­a­bly not going to do great things to the finan­cial mar­kets.

The arti­cle’s behind-the-scenes peek is based on anony­mous “sources close the pres­i­dent”. You have to won­der who they might be. But there are some non-anony­mous sources who come to Trump’s defense in the arti­cle and their argu­ments are high­ly illus­tra­tive of the deceptive/lunatic nature of Repub­li­can Par­ty’s jus­ti­fi­ca­tions for sup­ply-side poli­cies.

One of the peo­ple com­ing to Trump’s defense is Marc Short, Trump’s for­mer leg­isla­tive affairs direc­tor. Short claimed that, yes, Trump is actu­al­ly very con­cerned about the debt. Short goes on to say that he believes “this admin­is­tra­tion” and “this con­gress” need to deal with “out-of-con­trol enti­tle­ment pro­grams”. It’s an omi­nous rec­om­men­da­tion because “this con­gress” is a lame duck con­gress that’s going to end in Jan­u­ary. Might we be see­ing the hints of a lame duck GOP attack on enti­tle­ments?

Hogan Gid­ley, a spokesman for the pres­i­dent, also defend­ed Trump by point­ed to his 2017 bud­get pro­pos­al not­ed which the admin­is­tra­tion claimed would bal­ance the bud­get in 10 years. That pro­pos­al, of course, was noto­ri­ous­ly dra­con­ian and called for mas­sive cuts to almost all non-mil­i­tary fed­er­al spend­ing, the pri­va­ti­za­tion of pub­lic assets, and mas­sive cuts to spend­ing for rur­al Amer­i­ca.

An anony­mous “cur­rent senior Trump admin­is­tra­tion offi­cial” com­plains that Trump “doesn’t real­ly care” about actu­al­ly attack­ing the debt “cri­sis,” and prefers sim­ply “jobs and growth, what­ev­er that means.” This anony­mous offi­cial laugh­ably gripes that “He under­stands the mes­sag­ing of it, but he isn’t a doc­tri­naire con­ser­v­a­tive who deeply cares about the nation­al debt, espe­cial­ly not on his watch… It’s not actu­al­ly a top pri­or­i­ty for him… He under­stands the polit­i­cal nature of the debt but it’s clear­ly not, frankly, some­thing he sees as cru­cial to his lega­cy.”

Giv­en that the idea that a mod­ern Repub­li­can gen­uine­ly cares about the nation­al debt is beyond far­ci­cal giv­en the his­toric real­i­ty of the pro­found fail­ure of Amer­i­can’s decades-long exper­i­ment with sup­ply-side eco­nom­ics, this anony­mous cur­rent offi­cial was real­ly mere­ly com­plain­ing that Trump does­n’t spend much time pre­tend­ing to care about the debt. Trump does­n’t incor­po­rate talk about the urgent need to cut spend­ing into his nor­mal rhetoric like pre-Trump Repub­li­cans almost always used to do. That’s what this anony­mous offi­cial was con­cerned about when he talked about how Trump “under­stands the mes­sag­ing of it”.

And this anony­mous offi­cial does have a point: Trump real­ly has dropped the “we must cut spend­ing now or it’s doom!” part of clas­sic GOP pro­pa­gan­da and swapped it for a “eco­nom­ic growth is the solu­tion!” brand­ing, which is a brand­ing that is implic­it­ly much more open towards rec­og­niz­ing the stim­u­la­tive val­ue of gov­ern­ment spend­ing. To some extent it’s an acknowl­edg­ment of the fail­ure of the right-wing bil­lion­aires to sell even the Repub­li­can base on the need for mas­sive spend­ing cuts, espe­cial­ly to enti­tle­ments. The Trumpi­fied Repub­li­can base wants red meat nativist pol­i­tics, not sup­ply-side eco­nom­ics. And does­n’t want enti­tle­ment cuts. That’s what sells. So Trump’s “growth is the solu­tion” approach real­ly is a bet­ter sales pitch even if the pub­lic is get­ting the same ol’ GOP behav­ior of spend­ing like black­out drunk sailors when they’re in pow­er while they plan for mas­sive spend­ing cuts after their poli­cies cause a fis­cal cri­sis.

Inter­est­ing­ly, one of the big defend­ers of Trump’s new “growth is the key!” brand­ing for the Repub­li­can pol­i­cy agen­da is Stephen Moore of the Her­itage Foun­da­tion. Moore was one of Trump’s eco­nom­ic advis­ers dur­ing the cam­paign. And not only does he defend Trump’s approach to the debt and deficit, he actu­al­ly takes cred­it for Trump going down this path. As Moore puts it, he per­son­al­ly assured then-can­di­date Trump that the way to deal with the US’s long-term debt issues is to focus increas­ing eco­nom­ic growth. Moore describes a belief by Trump that strong eco­nom­ic growth would solve all prob­lems and allow him to slash tax­es and spend big on infra­struc­ture with­out big enti­tle­ment cuts. Moore calls it “Trumpo­nom­ics” and co-authored a book advo­cat­ing it.

Don’t for­get that Stephen Moore is one of the most lunatic sup­ply-side econ­o­mists out there. So to have him guide Trump’s “growth alone is the key” rebrand­ing of the GOP’s eco­nom­ic agen­da is a notable event. It also high­lights how it’s mere­ly a rebrand­ing. Again, don’t for­get that Trump’s first bud­get pro­pos­al includ­ed dra­con­ian cuts to pub­lic spend­ing includ­ing to enti­tle­ment pro­grams and want­ed to use the pri­va­ti­za­tion of pub­lic assets to fuel the infra­struc­ture plan. His admin­is­tra­tion has nev­er accept­ed Key­ne­sian-style stim­u­lus. They mere­ly used a “growth is the key!” slo­gan to avoid using the tra­di­tion­al Repub­li­can unpop­u­lar rhetoric about deficit cut­ting and enti­tle­ment cuts. It’s still clear­ly the same Repub­li­can old pol­i­cy. A pol­i­cy of cre­at­ing fis­cal crises that can be used to force the Democ­rats into bipar­ti­san aus­ter­i­ty pro­grams so the polit­i­cal bur­den for cut­ting beloved pub­lic pro­grams can be shared. The big spend­ing cuts only hap­pen if Democ­rats agree to share the blame, hence the need for a fis­cal cri­sis.

And that’s a reminder of anoth­er rea­son why we should­n’t be shocked that Trump does­n’t actu­al­ly care about his poli­cies cre­at­ing a debt cri­sis: caus­ing a debt cri­sis is lit­er­al­ly the key part of the GOP’s strat­e­gy for forc­ing its plan cuts to enti­tle­ments while shar­ing the blame with Democ­rats. A giant debt cri­sis is the plan. So this is about as shock­ing as learn­ing that Trump is fine with things going as planned:

The Dai­ly Beast

Trump on Com­ing Debt Cri­sis: ‘I Won’t Be Here’ When It Blows Up
The pres­i­dent thinks the bal­anc­ing of the nation’s books is going to, ulti­mate­ly, be a future president’s prob­lem.

Asaw­in Sueb­saeng,
Lach­lan Markay
12.05.18 10:32 AM ET

Since the 2016 pres­i­den­tial cam­paign, Don­ald Trump’s aides and advis­ers have tried to con­vince him of the impor­tance of tack­ling the nation­al debt.

Sources close to the pres­i­dent say he has repeat­ed­ly shrugged it off, imply­ing that he doesn’t have to wor­ry about the mon­ey owed to America’s creditors—currently about $21 trillion—because he won’t be around to shoul­der the blame when it becomes even more unten­able.

The fric­tion came to a head in ear­ly 2017 when senior offi­cials offered Trump charts and graph­ics lay­ing out the num­bers and show­ing a “hock­ey stick” spike in the nation­al debt in the not-too-dis­tant future. In response, Trump not­ed that the data sug­gest­ed the debt would reach a crit­i­cal mass only after his pos­si­ble sec­ond term in office.

“Yeah, but I won’t be here,” the pres­i­dent blunt­ly said, accord­ing to a source who was in the room when Trump made this com­ment dur­ing dis­cus­sions on the debt.

The episode illus­trates the extent of the president’s ambiva­lence toward tack­ling an issue that has pre­vi­ous­ly ani­mat­ed the Repub­li­can Par­ty from the days of Ronald Rea­gan to the pres­i­den­cy of Barack Oba­ma.

But for those who have worked with Trump, it was par for the course. Sev­er­al peo­ple close to the pres­i­dent, both with­in and out­side his admin­is­tra­tion, con­firmed that the nation­al debt has nev­er both­ered him in a tru­ly mean­ing­ful way, despite his pub­lic lip ser­vice. “I nev­er once heard him talk about the debt,” one for­mer senior White House offi­cial attest­ed.

Marc Short, who until recent­ly worked for Trump as his leg­isla­tive affairs direc­tor, said he believed the pres­i­dent rec­og­nized “the threat that debt pos­es” and he point­ed to Trump’s con­cern “about ris­ing inter­est rates” as evi­dence of his con­cern for the mat­ter.

“But there’s no doubt this admin­is­tra­tion and this Con­gress need to address spend­ing because we have out-of-con­trol enti­tle­ment pro­grams,” Short said, adding, “it’s fair to say that... the pres­i­dent would be skep­ti­cal of any­one who claims that they would know exact­ly when a [debt] cri­sis real­ly comes home to roost.”

Recent reports have sug­gest­ed that Trump is deter­mined, at least rhetor­i­cal­ly, to address the issue. Hogan Gid­ley, a spokesman for the pres­i­dent, not­ed that the pres­i­dent and his team have pro­posed poli­cies to achieve some deficit reduc­tion, “includ­ing in his first bud­get that actu­al­ly would’ve bal­anced in 10 years, a his­toric, com­mon-sense rescis­sions pro­pos­al.”

...

Those close to Trump say that one rea­son the issue of debt reduc­tion has nev­er been an ani­mat­ing one for him is because he is con­vinced that it can be solved through means oth­er than tax hikes or sharp spend­ing reduc­tions.

Stephen Moore, a con­ser­v­a­tive econ­o­mist at the Her­itage Foun­da­tion and an eco­nom­ic advis­er to Trump’s 2016 cam­paign, recalled mak­ing visu­al pre­sen­ta­tions to Trump in mid-2016 that showed him the sever­i­ty of the debt prob­lem. But Moore told The Dai­ly Beast that he per­son­al­ly assured can­di­date Trump that it could be dealt with by focus­ing on eco­nom­ic growth.

“That was why, when he was con­front­ed with these night­mare sce­nar­ios on the debt, I think he reject­ed them, because if you grow the econ­o­my… you don’t have a debt prob­lem,” Moore con­tin­ued. “I know a few times when peo­ple would bring up the enor­mous debt, he would say, ‘We’re gonna grow our way out of it.’”

Moore has since cham­pi­oned this approach to tack­ling the debt as a key part of “Trumpo­nom­ics,” and has co-authored a book sup­port­ing it.

As Moore recalled, a belief that robust eco­nom­ic growth would solve all prob­lems was the way Trump—starting in 2016—justified the cost of his ambi­tious pro­pos­als to slash tax­es, pur­sue big infra­struc­ture projects, and sim­ply avoid mas­sive cuts to Social Secu­ri­ty and Medicare. Since then, the pres­i­dent has con­tin­ued to show indif­fer­ence over the nation­al debt, to the con­ster­na­tion of more tra­di­tion­al­ly con­ser­v­a­tive asso­ciates.

Remem­ber, as a sen­a­tor, Oba­ma did not vote for increas­ing the debt ceil­ing http://t.co/wTQ96Itg I guess things change when Pres­i­dent?!— Don­ald J. Trump (@realDonaldTrump) Jan­u­ary 14, 2013

One cur­rent senior Trump admin­is­tra­tion offi­cial vent­ed that Trump “doesn’t real­ly care” about actu­al­ly attack­ing the debt “cri­sis,” and prefers sim­ply “jobs and growth, what­ev­er that means.”

For the most part, the Repub­li­can Par­ty has gone along. Over the first two years of the Trump admin­is­tra­tion, con­gres­sion­al Repub­li­cans have slashed tax­es dra­mat­i­cal­ly while increas­ing defense and dis­cre­tionary spend­ing, all with­out giv­ing much indi­ca­tion that they’re going to take a stab at dra­mat­i­cal­ly gut­ting cer­tain pop­u­lar enti­tle­ments.

The results have not been what Trump and Moore have promised; at least not yet. Eco­nom­ic growth increased over the past year—including a robust 4.1 per­cent in the sec­ond quar­ter of 2018—but the fed­er­al deficit has bal­looned as well, in part because the gov­ern­ment has tak­en in less rev­enue because of the tax cuts. Cur­rent fore­casts are not too rosy about the future econ­o­my.

Recent­ly, both Trump and some Repub­li­can law­mak­ers have hint­ed at regret over their approach. Ear­li­er this year, Trump con­veyed his dis­ap­point­ment with sign­ing a large spend­ing bill, par­tic­u­lar­ly after he saw typ­i­cal­ly friend­ly allies on Fox News tear into him for sup­port­ing leg­is­la­tion that they viewed as fund­ing Demo­c­ra­t­ic pri­or­i­ties, exac­er­bat­ing the nation­al debt, and ditch­ing his pledge to build a gigan­tic bor­der wall, accord­ing to a report at the time in Axios.

Sources close to the pres­i­dent tell The Dai­ly Beast that Trump was gen­uine­ly tak­en aback by the sever­i­ty of this mini-revolt from MAGA loy­al­ists.

Fun­ny to hear the Democ­rats talk­ing about the Nation­al Debt when Pres­i­dent Oba­ma dou­bled it in only 8 years!— Don­ald J. Trump (@realDonaldTrump) Novem­ber 30, 2017

How­ev­er, right-lean­ing reform­ers shouldn’t be hold­ing their breath.

The Wash­ing­ton Post recent­ly report­ed that Trump had instruct­ed his Cab­i­net to devise plans to trim their bud­gets in an effort to reduce the fed­er­al deficit. But Trump also set strict lim­its on what sorts of pro­grams could be cut—and quick­ly pro­ceed­ed to pro­pose increased spend­ing in oth­er areas of the fed­er­al gov­ern­ment.

“He under­stands the mes­sag­ing of it,” the for­mer senior White House offi­cial told The Dai­ly Beast. “But he isn’t a doc­tri­naire con­ser­v­a­tive who deeply cares about the nation­al debt, espe­cial­ly not on his watch… It’s not actu­al­ly a top pri­or­i­ty for him… He under­stands the polit­i­cal nature of the debt but it’s clear­ly not, frankly, some­thing he sees as cru­cial to his lega­cy.”

The for­mer Trump offi­cial adding, “It’s not like it’s going to haunt him.”

———-

“Trump on Com­ing Debt Cri­sis: ‘I Won’t Be Here’ When It Blows Up” by Asaw­in Sueb­saeng, Lach­lan Markay; The Dai­ly Beast; 12/05/2018

“Sources close to the pres­i­dent say he has repeat­ed­ly shrugged it off, imply­ing that he doesn’t have to wor­ry about the mon­ey owed to America’s creditors—currently about $21 trillion—because he won’t be around to shoul­der the blame when it becomes even more unten­able.”

The con­se­quences of the Grand Slow Motion GOP Smash and Grab pol­i­cy agen­da does­n’t con­cern Trump because he’s pret­ty sure some­one else will take the blame, just like the rest of the Repub­li­cans in con­gress. Imag­ine that:

...
The fric­tion came to a head in ear­ly 2017 when senior offi­cials offered Trump charts and graph­ics lay­ing out the num­bers and show­ing a “hock­ey stick” spike in the nation­al debt in the not-too-dis­tant future. In response, Trump not­ed that the data sug­gest­ed the debt would reach a crit­i­cal mass only after his pos­si­ble sec­ond term in office.

“Yeah, but I won’t be here,” the pres­i­dent blunt­ly said, accord­ing to a source who was in the room when Trump made this com­ment dur­ing dis­cus­sions on the debt.
...

And this lack of exhibit­ing a per­son­al con­cern about the debt is very con­cern­ing to the anony­mous sources in this arti­cle. One senior cur­rent offi­cial com­plains that Trump prefers sim­ply “jobs and growth, what­ev­er that means”:

...
The episode illus­trates the extent of the president’s ambiva­lence toward tack­ling an issue that has pre­vi­ous­ly ani­mat­ed the Repub­li­can Par­ty from the days of Ronald Rea­gan to the pres­i­den­cy of Barack Oba­ma.

But for those who have worked with Trump, it was par for the course. Sev­er­al peo­ple close to the pres­i­dent, both with­in and out­side his admin­is­tra­tion, con­firmed that the nation­al debt has nev­er both­ered him in a tru­ly mean­ing­ful way, despite his pub­lic lip ser­vice. “I nev­er once heard him talk about the debt,” one for­mer senior White House offi­cial attest­ed.

...

One cur­rent senior Trump admin­is­tra­tion offi­cial vent­ed that Trump “doesn’t real­ly care” about actu­al­ly attack­ing the debt “cri­sis,” and prefers sim­ply “jobs and growth, what­ev­er that means.”

For the most part, the Repub­li­can Par­ty has gone along. Over the first two years of the Trump admin­is­tra­tion, con­gres­sion­al Repub­li­cans have slashed tax­es dra­mat­i­cal­ly while increas­ing defense and dis­cre­tionary spend­ing, all with­out giv­ing much indi­ca­tion that they’re going to take a stab at dra­mat­i­cal­ly gut­ting cer­tain pop­u­lar enti­tle­ments.
...

But Trumps for­mer direc­tor of leg­isla­tive affairs, Marc Short, assures us that Trump cares about debt. Short then goes on to call for “this admin­is­tra­tion and this Con­gress” to “address spend­ing because we have out-of-con­trol enti­tle­ment pro­grams”. It’s an omi­nous hint at a lame duck ses­sion attack on pub­lic pro­grams and enti­tle­ments com­ing from some­one like Short, who should know some­thing about the GOP’s planned upcom­ing moves in con­gress:

...
Marc Short, who until recent­ly worked for Trump as his leg­isla­tive affairs direc­tor, said he believed the pres­i­dent rec­og­nized “the threat that debt pos­es” and he point­ed to Trump’s con­cern “about ris­ing inter­est rates” as evi­dence of his con­cern for the mat­ter.

“But there’s no doubt this admin­is­tra­tion and this Con­gress need to address spend­ing because we have out-of-con­trol enti­tle­ment pro­grams,” Short said, adding, “it’s fair to say that... the pres­i­dent would be skep­ti­cal of any­one who claims that they would know exact­ly when a [debt] cri­sis real­ly comes home to roost.”
...

Then Trump’s spokesman points to his dra­con­ian first bud­get pro­pos­al as evi­dence of his com­mit­ment to tack­ling the debt. So his bud­get pro­pos­al that nev­er stood a chance of becom­ing law because it was so dra­con­ian is what we should look to when deter­min­ing if Trump cares about the nation­al debt, not the giant tax cut Trump fought for that’s already explod­ing the debt:

...
Recent reports have sug­gest­ed that Trump is deter­mined, at least rhetor­i­cal­ly, to address the issue. Hogan Gid­ley, a spokesman for the pres­i­dent, not­ed that the pres­i­dent and his team have pro­posed poli­cies to achieve some deficit reduc­tion, “includ­ing in his first bud­get that actu­al­ly would’ve bal­anced in 10 years, a his­toric, com­mon-sense rescis­sions pro­pos­al.”
...

And then Stephen Moore informs us that he per­son­al­ly sold Trump on the idea that focus­ing on eco­nom­ic growth alone will solve the debt prob­lems, which is anoth­er was a say­ing he gave his bless­ing to Trump’s strat­e­gy of drop­ping the tra­di­tion­al GOP rhetoric about the need for spend­ing cuts. Spend­ing cuts will still be pur­sued in areas like the safe­ty-net and enti­tle­ments when the oppor­tu­ni­ty is there, but they won’t talk about it. That’s what the ‘focus on growth’ strat­e­gy is all about and it is a gen­uine­ly new thing for the GOP. The same wolf in new­er, shinier sheep­’s cloth­ing:

...
Those close to Trump say that one rea­son the issue of debt reduc­tion has nev­er been an ani­mat­ing one for him is because he is con­vinced that it can be solved through means oth­er than tax hikes or sharp spend­ing reduc­tions.

Stephen Moore, a con­ser­v­a­tive econ­o­mist at the Her­itage Foun­da­tion and an eco­nom­ic advis­er to Trump’s 2016 cam­paign, recalled mak­ing visu­al pre­sen­ta­tions to Trump in mid-2016 that showed him the sever­i­ty of the debt prob­lem. But Moore told The Dai­ly Beast that he per­son­al­ly assured can­di­date Trump that it could be dealt with by focus­ing on eco­nom­ic growth.

“That was why, when he was con­front­ed with these night­mare sce­nar­ios on the debt, I think he reject­ed them, because if you grow the econ­o­my… you don’t have a debt prob­lem,” Moore con­tin­ued. “I know a few times when peo­ple would bring up the enor­mous debt, he would say, ‘We’re gonna grow our way out of it.’”

Moore has since cham­pi­oned this approach to tack­ling the debt as a key part of “Trumpo­nom­ics,” and has co-authored a book sup­port­ing it.

As Moore recalled, a belief that robust eco­nom­ic growth would solve all prob­lems was the way Trump—starting in 2016—justified the cost of his ambi­tious pro­pos­als to slash tax­es, pur­sue big infra­struc­ture projects, and sim­ply avoid mas­sive cuts to Social Secu­ri­ty and Medicare. Since then, the pres­i­dent has con­tin­ued to show indif­fer­ence over the nation­al debt, to the con­ster­na­tion of more tra­di­tion­al­ly con­ser­v­a­tive asso­ciates.
...

But as we’ve seen, the promised sup­ply-side seeds of new busi­ness invest­ment has­n’t shown up yet. And as the cur­rent swoon­ing US bond and equi­ty mar­kets hint at, the prospects for future growth on the glob­al stage appears to be wan­ing. The ‘growth is the key!’ strat­e­gy is already fail­ing and set to fail big­ger going for­ward:

...
The results have not been what Trump and Moore have promised; at least not yet. Eco­nom­ic growth increased over the past year—including a robust 4.1 per­cent in the sec­ond quar­ter of 2018—but the fed­er­al deficit has bal­looned as well, in part because the gov­ern­ment has tak­en in less rev­enue because of the tax cuts. Cur­rent fore­casts are not too rosy about the future econ­o­my.
...

So it’s going to be inter­est­ing to see how a pos­si­bly slow­ly econ­o­my alters the Trump admin­is­tra­tion’s lack of rhetor­i­cal focus on spend­ing cuts.

Also keep in mind that the polit­i­cal dynam­ic that is keep­ing Trump from need­ing to talk about spending/entitlement cuts. The fact that the GOP held com­plete con­trol of con­gress and the White House gave the Repub­li­cans the option of uni­lat­er­al­ly impos­ing cuts but that’s not how the GOP oper­ates because then they would sole­ly take the blame. The par­ty waits for the inevitable fis­cal crises that will come for their bud­get-bust­ing tax cuts to force the Democ­rats to go in on a bipar­ti­san aus­ter­i­ty agen­da. And hav­ing the Democ­rats take con­trol of the House is exact­ly the kind of sit­u­a­tion where the GOP is going to start try­ing to coax/force the Democ­rats to sign on to a bipar­ti­san aus­ter­i­ty agen­da with big cuts.

In oth­er words, now that the Democ­rats are in con­trol of the House, the GOP could sud­den­ly real­ly use a fis­cal cri­sis. Soon. More accu­rate­ly, the bil­lion­aires behind the GOP who des­per­ate­ly want to slash enti­tle­ments and pub­lic spend­ing as much as pos­si­ble could real­ly use a fis­cal cri­sis very soon.

Trump him­self prob­a­bly does­n’t want a fis­cal cri­sis. Not on his watch. As we are told, deal­ing with a fis­cal cri­sis is sup­posed to be for some future pres­i­dent accord­ing to Trump. But his bil­lion­aire bud­dies could sure use a fis­cal cri­sis on Trump’s watch.

So that’s all one big source of finan­cial uncer­tain­ty investors should keep in mind. If the US or glob­al econ­o­my goes south fast, just how bad is the US’s fis­cal sit­u­a­tion going to get after this tax cut dis­as­ter? What if there’s almost no growth and actu­al­ly eco­nom­ic shrink­age? What hap­pens to the US deficit the Trump/Moore ‘Trumpo­nom­ics’ mod­el under those con­di­tions? That seems like a big ques­tion investors must be ask­ing them­selves these days?

And what about the per­verse incen­tive of the GOP’s bil­lion­aire back­ers to see a fis­cal cri­sis unfold now that the GOP is in con­trol of the White House and Sen­ate but Democ­rats in con­trol of the House. The stars are once again aligned for a big push at the key long-term goals on the right-wing bil­lion­aire agen­da like big enti­tle­ment cuts. And a fis­cal cri­sis is a key part of that plan. So just how inter­est­ed is that net­work of bil­lion­aires see­ing a fis­cal cri­sis hap­pen? And how much more like­ly is a fis­cal cri­sis to to hap­pen if that net­work of right-wing bil­lion­aires is inter­est­ing in see­ing it hap­pen? That’s some­thing investors should also be ask­ing them­selves too. And Trump. He should def­i­nite­ly be ask­ing him­self that ques­tion too.

With Pres­i­dent Trump con­tin­u­ing to threat­en to declare a nation­al emer­gency at the US bor­der with Mex­i­co as part of a strat­e­gy for get­ting fund­ing for ‘the Wall’ with­out going through Con­gress, even some con­gres­sion­al Repub­li­cans in are warn­ing that using a nation­al emer­gency to get around Con­gress sets a bad prece­dent. Which is espe­cial­ly true when ille­gal bor­der cross­ings are at a mul­ti-decade low that ‘nation­al emer­gency’ is a man­u­fac­tured cri­sis large­ly dri­ven by right-wing media out­lets.

So giv­en that the US appears to be in the midst of fake cri­sis man­u­fac­tured to allow Trump to get basi­cal­ly remove Con­gress from the law-mak­ing process, it’s worth not­ing one of the inter­est­ing par­al­lels this whole sit­u­a­tion has to lone sig­nif­i­cant leg­isla­tive ‘vic­to­ry’ Trump actu­al­ly achieved dur­ing his two years of Repub­li­can con­trol of con­gress: the GOP tax cut, which was based on fake eco­nom­ic doc­trines and designed to cre­ate future fis­cal crises in order to jus­ti­fy cuts to social pro­grams. A cri­sis-mak­ing machine built to cre­ate large deficits so Repub­li­cans can pre­tend that the only solu­tion is to cut enti­tle­ments and the safe­ty-net. That’s pret­ty much only sig­nif­i­cant leg­isla­tive accom­plish­ment of the first two years of the Trump admin­is­tra­tion. A tax law that designed to cre­ate crises that a simul­ta­ne­ous­ly fake and real. Which is kind of impres­sive.

So when might those inevitable fake/real fis­cal crises arise as a con­se­quence of this tax law? That’s unclear at this point, but if a fis­cal cri­sis emerges soon than expect­ed we should prob­a­bly expect that at this point. Because as the fol­low­ing col­umn by Paul Krug­man reminds us, the GOP tax scam is worse than you think:

The New York Times
Opin­ion

The Trump Tax Cut: Even Worse Than You’ve Heard

Skep­ti­cal report­ing has still been too favor­able.
Paul Krug­man

By Paul Krug­man
Jan. 1, 2019

The 2017 tax cut has received pret­ty bad press, and right­ly so. Its pro­po­nents made big promis­es about soar­ing invest­ment and wages, and also assured every­one that it would pay for itself; none of that has hap­pened.

Yet cov­er­age actu­al­ly hasn’t been neg­a­tive enough. The sto­ry you most­ly read runs some­thing like this: The tax cut has caused cor­po­ra­tions to bring some mon­ey home, but they’ve used it for stock buy­backs rather than to raise wages, and the boost to growth has been mod­est. That doesn’t sound great, but it’s still bet­ter than the real­i­ty: No mon­ey has, in fact, been brought home, and the tax cut has prob­a­bly reduced nation­al income. Indeed, at least 90 per­cent of Amer­i­cans will end up poor­er thanks to that cut.

...

First, when peo­ple say that U.S. cor­po­ra­tions have “brought mon­ey home” they’re refer­ring to div­i­dends over­seas sub­sidiaries have paid to their par­ent cor­po­ra­tions. These did indeed surge briefly in 2018, as the tax law made it advan­ta­geous to trans­fer some assets from the books of those sub­sidiaries to the home com­pa­nies; these trans­ac­tions also showed up as a reduc­tion in the mea­sured stake of the par­ents in the sub­sidiaries, i.e., as neg­a­tive direct invest­ment (Fig­ure 1).

[See Fig­ure 1]

But these trans­ac­tions are sim­ply rearrange­ments of com­pa­nies’ books for tax pur­pos­es; they don’t nec­es­sar­i­ly cor­re­spond to any­thing real. Sup­pose that Multi­na­tion­al Mega­corp USA decides to have its sub­sidiary, Multi­na­tion­al Mega Ire­land, trans­fer some assets to the home com­pa­ny. This will pro­duce the kind of simul­ta­ne­ous and oppo­site move­ment in div­i­dends and direct invest­ment you see in Fig­ure 1. But the company’s over­all bal­ance sheet – which always includ­ed the assets of MM Ire­land – hasn’t changed at all. No real resources have been trans­ferred; MM USA has nei­ther gained nor lost the abil­i­ty to invest here.

If you want to know whether investable funds are real­ly being trans­ferred to the U.S., you need to look at the over­all bal­ance on finan­cial account – or, what should be the same (and is more accu­rate­ly mea­sured), the inverse of the bal­ance on cur­rent account. Fig­ure 2 shows that bal­ance as a share of GDP – and as you can see, basi­cal­ly noth­ing has hap­pened.
[See Fig­ure 2]

So the tax cut induced some account­ing maneu­vers, but did noth­ing to pro­mote cap­i­tal flows to Amer­i­ca.

The tax cut did, how­ev­er, have one impor­tant inter­na­tion­al effect: We’re now pay­ing more mon­ey to for­eign­ers.

Bear in mind that the one clear, over­whelm­ing result of the tax cut is a big break for cor­po­ra­tions: Fed­er­al tax receipts on cor­po­rate income have plunged (Fig­ure 3).
[See Fig­ure 3.]

The key point to real­ize is that in today’s glob­al­ized cor­po­rate sys­tem, a lot of any country’s cor­po­rate sec­tor, our own very much includ­ed, is actu­al­ly owned by for­eign­ers, either direct­ly because cor­po­ra­tions here are for­eign sub­sidiaries, or indi­rect­ly because for­eign­ers own Amer­i­can stocks. Indeed, rough­ly a third of U.S. cor­po­rate prof­its basi­cal­ly flow to for­eign nation­als – which means that a third of the tax cut flowed abroad, rather than stay­ing at home. This prob­a­bly out­weighs any pos­i­tive effect on GDP growth. So the tax cut prob­a­bly made Amer­i­ca poor­er, not rich­er.

And it cer­tain­ly made most Amer­i­cans poor­er. While 2/3 of the cor­po­rate tax cut may have gone to U.S. res­i­dents, 84 per­cent of stocks are held by the wealth­i­est 10 per­cent of the pop­u­la­tion. Every­one else will see hard­ly any ben­e­fit.

Mean­while, since the tax cut isn’t pay­ing for itself, it will even­tu­al­ly have to be paid for some oth­er way – either by rais­ing oth­er tax­es, or by cut­ting spend­ing on pro­grams peo­ple val­ue. The cost of these hikes or cuts will be much less con­cen­trat­ed on the top 10 per­cent than the ben­e­fit of the orig­i­nal tax cut. So it’s a near-cer­tain­ty that the vast major­i­ty of Amer­i­cans will be worse off thanks to Trump’s only major leg­isla­tive suc­cess.

As I said, even the main­ly neg­a­tive report­ing doesn’t con­vey how bad a deal this whole thing is turn­ing out to be.

———-

“The Trump Tax Cut: Even Worse Than You’ve Heard” by Paul Krug­man; The New York Times; 01/01/2019

“Yet cov­er­age actu­al­ly hasn’t been neg­a­tive enough. The sto­ry you most­ly read runs some­thing like this: The tax cut has caused cor­po­ra­tions to bring some mon­ey home, but they’ve used it for stock buy­backs rather than to raise wages, and the boost to growth has been mod­est. That doesn’t sound great, but it’s still bet­ter than the real­i­ty: No mon­ey has, in fact, been brought home, and the tax cut has prob­a­bly reduced nation­al income. Indeed, at least 90 per­cent of Amer­i­cans will end up poor­er thanks to that cut.”

At least 90 per­cent of Amer­i­cans will end up poor­er thanks to the GOP tax cut. That’s how big of a scam it was.

But the tax scam isn’t just net harm­ful. It’s also unhelp­ful, in the sense that it does­n’t even pro­vide the pos­i­tive ben­e­fits it was sup­posed to pro­vide. Like greater invest­ment in the US. It’s sim­ply not hap­pen­ing:

...
First, when peo­ple say that U.S. cor­po­ra­tions have “brought mon­ey home” they’re refer­ring to div­i­dends over­seas sub­sidiaries have paid to their par­ent cor­po­ra­tions. These did indeed surge briefly in 2018, as the tax law made it advan­ta­geous to trans­fer some assets from the books of those sub­sidiaries to the home com­pa­nies; these trans­ac­tions also showed up as a reduc­tion in the mea­sured stake of the par­ents in the sub­sidiaries, i.e., as neg­a­tive direct invest­ment (Fig­ure 1).

[See Fig­ure 1]

But these trans­ac­tions are sim­ply rearrange­ments of com­pa­nies’ books for tax pur­pos­es; they don’t nec­es­sar­i­ly cor­re­spond to any­thing real. Sup­pose that Multi­na­tion­al Mega­corp USA decides to have its sub­sidiary, Multi­na­tion­al Mega Ire­land, trans­fer some assets to the home com­pa­ny. This will pro­duce the kind of simul­ta­ne­ous and oppo­site move­ment in div­i­dends and direct invest­ment you see in Fig­ure 1. But the company’s over­all bal­ance sheet – which always includ­ed the assets of MM Ire­land – hasn’t changed at all. No real resources have been trans­ferred; MM USA has nei­ther gained nor lost the abil­i­ty to invest here.

If you want to know whether investable funds are real­ly being trans­ferred to the U.S., you need to look at the over­all bal­ance on finan­cial account – or, what should be the same (and is more accu­rate­ly mea­sured), the inverse of the bal­ance on cur­rent account. Fig­ure 2 shows that bal­ance as a share of GDP – and as you can see, basi­cal­ly noth­ing has hap­pened.
[See Fig­ure 2]

So the tax cut induced some account­ing maneu­vers, but did noth­ing to pro­mote cap­i­tal flows to Amer­i­ca.
...

This isn’t to say the tax bill did­n’t help any­one. It’s been a big help to the share­hold­ers of large cor­po­ra­tions. Share­hold­ers that hap­pen to be for­eign share­hold­ers for about a third of the cor­po­rate own­er­ship of Amer­i­can busi­ness­es. So for­eign wealthy peo­ple got a big boost from the GOP tax bill. At least some­one ben­e­fit­ed:

...
The tax cut did, how­ev­er, have one impor­tant inter­na­tion­al effect: We’re now pay­ing more mon­ey to for­eign­ers.

Bear in mind that the one clear, over­whelm­ing result of the tax cut is a big break for cor­po­ra­tions: Fed­er­al tax receipts on cor­po­rate income have plunged (Fig­ure 3).
[See Fig­ure 3.]

The key point to real­ize is that in today’s glob­al­ized cor­po­rate sys­tem, a lot of any country’s cor­po­rate sec­tor, our own very much includ­ed, is actu­al­ly owned by for­eign­ers, either direct­ly because cor­po­ra­tions here are for­eign sub­sidiaries, or indi­rect­ly because for­eign­ers own Amer­i­can stocks. Indeed, rough­ly a third of U.S. cor­po­rate prof­its basi­cal­ly flow to for­eign nation­als – which means that a third of the tax cut flowed abroad, rather than stay­ing at home. This prob­a­bly out­weighs any pos­i­tive effect on GDP growth. So the tax cut prob­a­bly made Amer­i­ca poor­er, not rich­er.
...

And, of course, there’s the price that’s going to even­tu­al­ly be paid by the Amer­i­can pub­lic when the inevitable deficit explo­sion leads to dec­la­ra­tions of a ‘nation­al emer­gency’ and calls for cut­ting pro­grams (or rais­ing tax­es on the poor and mid­dle-class):

...
And it cer­tain­ly made most Amer­i­cans poor­er. While 2/3 of the cor­po­rate tax cut may have gone to U.S. res­i­dents, 84 per­cent of stocks are held by the wealth­i­est 10 per­cent of the pop­u­la­tion. Every­one else will see hard­ly any ben­e­fit.

Mean­while, since the tax cut isn’t pay­ing for itself, it will even­tu­al­ly have to be paid for some oth­er way – either by rais­ing oth­er tax­es, or by cut­ting spend­ing on pro­grams peo­ple val­ue. The cost of these hikes or cuts will be much less con­cen­trat­ed on the top 10 per­cent than the ben­e­fit of the orig­i­nal tax cut. So it’s a near-cer­tain­ty that the vast major­i­ty of Amer­i­cans will be worse off thanks to Trump’s only major leg­isla­tive suc­cess.

As I said, even the main­ly neg­a­tive report­ing doesn’t con­vey how bad a deal this whole thing is turn­ing out to be.
...

And that’s the only mean­ing­ful leg­isla­tive accom­plish­ment Trump and the GOP man­aged to get done dur­ing two years of uni­fied Repub­li­can rule.

So while the prospect of Trump cre­at­ing a fake nation­al emer­gency at the bor­der does indeed threat­ened to estab­lish a harm­ful embrace of ‘nation­al emer­gen­cies’ as a means of forc­ing through poli­cies in order to get around oppo­si­tion in Con­gress, it’s going to be worth keep­ing in mind that the strate­gic cre­ation of nation­al emer­gen­cies is a cen­tral part of the GOP’s approach to advanc­ing their pol­i­cy agen­da when Con­gress is involved too.

Well that’s refresh­ing­ly and dis­turbing­ly can­did: An anony­mous “senior White House offi­cial” wrote an op-ed pub­lished in the Dai­ly Caller where this indi­vid­ual basi­cal­ly express­es their desire that the ongo­ing par­tial fed­er­al gov­ern­ment shut­down goes on indef­i­nite­ly. Why? Because, accord­ing to this anony­mous offi­cial, almost all fed­er­al work­ers do noth­ing use­ful any­way so this per­son is hop­ing that the gov­ern­ment shut­down can be used to effec­tive­ly shrink the fed­er­al gov­ern­ment down to the “free mar­ket night watch­man” state “our founders envi­sioned.” In oth­er words, this anony­mous senior White House offi­cial is glee­ful that Grover Norquist’s infa­mous dec­la­ra­tion that “I don’t want to abol­ish gov­ern­ment. I sim­ply want to reduce it to the size where I can drag it into the bath­room and drown it in the bath­tub” is com­ing to fruition as long as they keep the gov­ern­ment closed:

New York Mag­a­zine

Fur­lough the Beast: Anony­mous Trump Offi­cial Calls for Con­tin­u­ing Shut­down Indef­i­nite­ly

01/15/2019 12:10 PM
By Ed Kil­go­re

The offi­cial GOP–White House par­ty line on the now-record-length par­tial gov­ern­ment shut­down is that those mean and hyp­o­crit­i­cal Democ­rats caused it because they wouldn’t respect the uni­ver­sal cry of the Amer­i­can peo­ple for a big, beau­ti­ful bor­der wall. It’s not an inter­pre­ta­tion that most of those Amer­i­cans buy, but because Repub­li­cans large­ly do, the pres­i­dent is hap­py to keep the gov­ern­ment closed for the time being. Yes­ter­day at the Dai­ly Caller, how­ev­er, a sin­is­ter, anony­mous senior Trump admin­is­tra­tion offi­cial offered a dif­fer­ent ratio­nale for con­tin­u­ing the shut­down indef­i­nite­ly:

As one of the senior offi­cials work­ing with­out a pay­check, a few words of advice for the president’s next move at shut­tered gov­ern­ment agen­cies: lock the doors, sell the fur­ni­ture, and cut them down.

Fed­er­al employ­ees are start­ing to feel the strain of the shut­down. I am one of them. But for the sake of our nation, I hope it lasts a very long time, till the gov­ern­ment is changed and can nev­er return to its pre­vi­ous form.

This lat­est Anony­mous goes on in that vein for para­graph after fatu­ous para­graph, weav­ing a right-wing fan­ta­sy vision of lazy, evil bureau­crats sab­o­tag­ing the noble pres­i­dent and his patri­ot­ic polit­i­cal appointees. With­out a shred of doc­u­men­ta­tion, this very Trump‑y indi­vid­ual stip­u­lates that 80 per­cent of the employ­ees in her/his agency, and appar­ent­ly all of the fur­loughed employ­ees, do no work at all because they can­not be fired, and con­spire with Con­gress (the Con­gress that until 11 days ago was con­trolled by Repub­li­cans) to cre­ate and main­tain worth­less pro­grams. Thus, although it will impose sac­ri­fices on the hand­ful of essen­tial employ­ees cur­rent­ly work­ing with­out pay, an extend­ed shut­down is nec­es­sary to prove to the Amer­i­can peo­ple that the only gov­ern­ment they need is the “free mar­ket night watch­man” state “our founders envi­sioned.”

This piece is full of strange and men­da­cious pas­sages. There’s a ref­er­ence to the lack of job secu­ri­ty enjoyed by pri­vate cit­i­zens who “bring com­pet­i­tive val­ue every day, while pay­ing more than a third of their salary in fed­er­al tax­es.” Actu­al­ly, you have to earn about a mil­lion dol­lars a year to pay that much in com­bined fed­er­al tax­es. And I don’t know how to inter­pret the writer’s angry obses­sion with fed­er­al agency “process,” unless he or she has been on the wrong end of some par­tic­u­lar­ly nasty employ­ee griev­ances. That wouldn’t be sur­pris­ing for a “senior offi­cial” who so clear­ly hates every­one and every­thing in their vicin­i­ty.

But what strikes the read­er most about this cri de coeur for an indef­i­nite shut­down is how nice­ly it fits into the annals of gut­less con­ser­v­a­tive strate­gies for shrink­ing gov­ern­ment indi­rect­ly and dis­hon­est­ly. The most famous was the late-20th-cen­tu­ry “starve the beast” strat­e­gy, which meant cut­ting tax­es and delib­er­ate­ly engi­neer­ing large fed­er­al bud­get deficits in order to force spend­ing cuts (ide­al­ly by lib­er­als) that con­ser­v­a­tives couldn’t or wouldn’t pro­pose straight­for­ward­ly. I once called this “the fis­cal equiv­a­lent of a bot­tom­less crack pipe” for Repub­li­cans, because it enabled them to tell them­selves and their “base” they were doing brave things like attack­ing enti­tle­ment pro­grams while nev­er actu­al­ly tak­ing the polit­i­cal heat for it. Sim­i­lar­ly, the Dai­ly Caller’s cor­re­spon­dent wants to use the essen­tial­ly mind­less vehi­cle of a par­tial gov­ern­ment shut­down to do what Trump and Repub­li­can pols don’t have the courage to pro­pose. You could call it a “fur­lough the beast” strat­e­gy.

The sup­po­si­tion that “[m]ost Amer­i­cans will not miss non-essen­tial gov­ern­ment func­tions” is already prov­ing to be erro­neous — unless “most Amer­i­cans” is meant to exclude those who might want safe food or adju­di­ca­tion of tax dis­putes or fed­er­al-guar­an­teed mort­gages or any num­ber of oth­er ser­vices and ben­e­fits that would be strained or elim­i­nat­ed in an extend­ed shut­down. That’s aside from the fact that “essen­tial employ­ees” can’t be expect­ed to toil with­out pay per­pet­u­al­ly, as this “senior offi­cial” appar­ent­ly has the where­with­al to do.

...

———-

“Fur­lough the Beast: Anony­mous Trump Offi­cial Calls for Con­tin­u­ing Shut­down Indef­i­nite­ly” by Ed Kil­go­re; New York Mag­a­zine; 01/15/2019

“Fed­er­al employ­ees are start­ing to feel the strain of the shut­down. I am one of them. But for the sake of our nation, I hope it lasts a very long time, till the gov­ern­ment is changed and can nev­er return to its pre­vi­ous form.”

Yep, this anony­mous senior White House offi­cial is hop­ing this gov­ern­ment shut­down lasts so long that it per­ma­nent­ly shrinks the fed­er­al gov­ern­ment. Of course, this is por­trayed is a desir­able out­come because, accord­ing to this anony­mous offi­cial, the fed­er­al gov­ern­ment is filled with lazy, evil bureau­crats stand­ing in the way of the Trump admin­is­tra­tion’s bold agen­da. And per­haps an extend­ed shut­down will prove to the Amer­i­can peo­ple that the only gov­ern­ment they need is the “free mar­ket night watch­man” state “our founders envi­sioned” (anoth­er meme rou­tine­ly pushed in right-wing media). So an extend­ed gov­ern­ment shut­down isn’t just per­ceived as being awe­some to this anony­mous offi­cial. This offi­cial appears to also believe that the Amer­i­can pub­lic itself will think an extend­ed shut­down is awe­some too. It’s the Trump-era ver­sion of ‘starve the beast’: ‘fur­lough the beast’. Instead of cut­ting tax­es in order to force ris­ing deficits to encour­age pub­lic approval for spend­ing cuts (the tra­di­tion­al ‘starve the beast’ GOP strat­e­gy), this time they’re just shut­ting down the gov­ern­ment first and hop­ing the pub­lic approves after the fact:

...
This lat­est Anony­mous goes on in that vein for para­graph after fatu­ous para­graph, weav­ing a right-wing fan­ta­sy vision of lazy, evil bureau­crats sab­o­tag­ing the noble pres­i­dent and his patri­ot­ic polit­i­cal appointees. With­out a shred of doc­u­men­ta­tion, this very Trump‑y indi­vid­ual stip­u­lates that 80 per­cent of the employ­ees in her/his agency, and appar­ent­ly all of the fur­loughed employ­ees, do no work at all because they can­not be fired, and con­spire with Con­gress (the Con­gress that until 11 days ago was con­trolled by Repub­li­cans) to cre­ate and main­tain worth­less pro­grams. Thus, although it will impose sac­ri­fices on the hand­ful of essen­tial employ­ees cur­rent­ly work­ing with­out pay, an extend­ed shut­down is nec­es­sary to prove to the Amer­i­can peo­ple that the only gov­ern­ment they need is the “free mar­ket night watch­man” state “our founders envi­sioned.”

...

But what strikes the read­er most about this cri de coeur for an indef­i­nite shut­down is how nice­ly it fits into the annals of gut­less con­ser­v­a­tive strate­gies for shrink­ing gov­ern­ment indi­rect­ly and dis­hon­est­ly. The most famous was the late-20th-cen­tu­ry “starve the beast” strat­e­gy, which meant cut­ting tax­es and delib­er­ate­ly engi­neer­ing large fed­er­al bud­get deficits in order to force spend­ing cuts (ide­al­ly by lib­er­als) that con­ser­v­a­tives couldn’t or wouldn’t pro­pose straight­for­ward­ly. I once called this “the fis­cal equiv­a­lent of a bot­tom­less crack pipe” for Repub­li­cans, because it enabled them to tell them­selves and their “base” they were doing brave things like attack­ing enti­tle­ment pro­grams while nev­er actu­al­ly tak­ing the polit­i­cal heat for it. Sim­i­lar­ly, the Dai­ly Caller’s cor­re­spon­dent wants to use the essen­tial­ly mind­less vehi­cle of a par­tial gov­ern­ment shut­down to do what Trump and Repub­li­can pols don’t have the courage to pro­pose. You could call it a “fur­lough the beast” strat­e­gy.

The sup­po­si­tion that “[m]ost Amer­i­cans will not miss non-essen­tial gov­ern­ment func­tions” is already prov­ing to be erro­neous — unless “most Amer­i­cans” is meant to exclude those who might want safe food or adju­di­ca­tion of tax dis­putes or fed­er­al-guar­an­teed mort­gages or any num­ber of oth­er ser­vices and ben­e­fits that would be strained or elim­i­nat­ed in an extend­ed shut­down. That’s aside from the fact that “essen­tial employ­ees” can’t be expect­ed to toil with­out pay per­pet­u­al­ly, as this “senior offi­cial” appar­ent­ly has the where­with­al to do.
...

So will the Amer­i­can pub­lic actu­al­ly agree with this anony­mous White House offi­cial that the US should return to an era where the fed­er­al gov­ern­ment is shrunk down to “free mar­ket night watch­man” state and things like food safe­ty inspec­tions and the fed­er­al safe­ty-net pro­grams should just sud­den­ly and per­ma­nent­ly be shut­down? That seems pret­ty unlike­ly based on polls.

But who knows, maybe the right-wing media dis­in­fo­tain­ment com­plex will suc­ceed in shift­ing pub­lic opin­ion and con­vince the pub­lic that all of the shut­down func­tions of the fed­er­al gov­ern­ment were nev­er nec­es­sar­i­ly in the first place. We’ll see. But for the pub­lic to be con­vinced that it only needs a “free mar­ket night watch­man” state and noth­ing else, there bet­ter not be too many more sto­ries like this: the chair­man of the FCC, Ajit Pai, just told Con­gress that he can’t meet with them to dis­cuss the grow­ing scan­dal about US cell­phone providers sell­ing detailed loca­tion infor­ma­tion to third-par­ties because the gov­ern­ment shut­down effec­tive­ly shut­down the FCC’s inves­ti­ga­tion:

CNet

FCC’s Ajit Pai won’t meet Con­gress about phone-track­ing scan­dal

The chair­man blames the ongo­ing gov­ern­ment shut­down.

by Sean Keane
Jan­u­ary 15, 2019 6:01 AM PST

Fed­er­al Com­mu­ni­ca­tions Com­mis­sion Chair­man Ajit Pai won’t brief a Con­gres­sion­al com­mit­tee Mon­day about mobile car­ri­ers’ abil­i­ty to share their sub­scribers’ loca­tion data with third par­ties.

Rep. Frank Pal­lone Jr., the chair of the House Com­mit­tee on Ener­gy and Com­merce, sought Pai for an emer­gency brief­ing after a a Moth­er­board inves­ti­ga­tion revealed car­ri­ers are sell­ing cus­tomers’ loca­tion data. But the com­mit­tee was told the FCC boss would­n’t appear due to the ongo­ing gov­ern­ment shut­down.

“In a phone con­ver­sa­tion today, his staff assert­ed that these egre­gious actions are not a threat to the safe­ty of human life or prop­er­ty that the FCC will address dur­ing the Trump shut­down,” the New Jer­sey Demo­c­rat said in a state­ment.

Pal­lone not­ed that Pai is still work­ing, even though the shut­down result­ed in the FCC ceas­ing most of its oper­a­tions on Jan. 3.

“There’s noth­ing in the law that should stop the Chair­man per­son­al­ly from meet­ing about this seri­ous threat that could allow crim­i­nals to track the loca­tion of police offi­cers on patrol, vic­tims of domes­tic abuse, or for­eign adver­saries to track mil­i­tary per­son­nel on Amer­i­can soil,” he said.

The FCC, how­ev­er, stood firm in an emailed state­ment.

“The Com­mis­sion has been inves­ti­gat­ing wire­less car­ri­ers’ han­dling of loca­tion infor­ma­tion,” a spokesper­son wrote. “Unfor­tu­nate­ly, we were required to sus­pend that inves­ti­ga­tion ear­li­er this month because of the lapse in fund­ing, and pur­suant to guid­ance from our expert attor­neys, the career staff that is work­ing on this issue are cur­rent­ly on fur­lough.”

It not­ed that the inves­ti­ga­tion would con­tin­ue once nor­mal FCC oper­a­tions resume.

Sen. Ron Wyden, an Ore­gon Demo­c­rat who ques­tioned last May why cops can track any phone in sec­onds, report­ed­ly slammed Pai for tweet­ing “cat videos and tired memes” instead of brief­ing Con­gress.

“It’s a new low for some­one who has spent his tenure at the FCC refus­ing to do his job and stand up for Amer­i­can con­sumers,” Wyden said in a state­ment to Giz­mo­do.

...

———-

“FCC’s Ajit Pai won’t meet Con­gress about phone-track­ing scan­dal” by Sean Keane; CNet; 01/15/2019

““The Com­mis­sion has been inves­ti­gat­ing wire­less car­ri­ers’ han­dling of loca­tion infor­ma­tion,” a spokesper­son wrote. “Unfor­tu­nate­ly, we were required to sus­pend that inves­ti­ga­tion ear­li­er this month because of the lapse in fund­ing, and pur­suant to guid­ance from our expert attor­neys, the career staff that is work­ing on this issue are cur­rent­ly on fur­lough.””

Yep, the FCC can’t inves­ti­gate the scan­dalous recent rev­e­la­tions that cell­phone providers have been sell­ing mas­sive amounts of detailed loca­tion infor­ma­tion on hun­dreds of mil­lions of Amer­i­cans. Because the shut­down fur­loughed the inves­ti­ga­tors.

Although it sounds like there’s noth­ing stop­ping Pai him­self from meet­ing with con­gress because he’s not actu­al­ly fur­loughed, but he’s still stick­ing with the shut­down as an excuse to put that meet­ing off:

...
Pal­lone not­ed that Pai is still work­ing, even though the shut­down result­ed in the FCC ceas­ing most of its oper­a­tions on Jan. 3.

“There’s noth­ing in the law that should stop the Chair­man per­son­al­ly from meet­ing about this seri­ous threat that could allow crim­i­nals to track the loca­tion of police offi­cers on patrol, vic­tims of domes­tic abuse, or for­eign adver­saries to track mil­i­tary per­son­nel on Amer­i­can soil,” he said.
...

It’s a reminder of how the shut­down isn’t just lit­er­al­ly direct­ly shut­ting down a vari­ety of fed­er­al func­tions. It’s also pro­vid­ing a great excuse for cronies like Pai to shut­down inves­ti­ga­tions into their cor­po­rate bene­fac­tors.

Are Amer­i­cans going to want to keep this FCC inves­ti­ga­tion, and any oth­er fed­er­al inves­ti­ga­tions that might pop up, shut­down for good? The anony­mous senior White House offi­cial had bet­ter hope so. Pai is pre­sum­ably also hop­ing to see this shut­down con­tin­ue for as long as pos­si­ble. You almost have to won­der if Pai is the mys­te­ri­ous “anony­mous senior offi­cial”, although the posi­tion of FCC chair­man does­n’t quite fit the descrip­tion of a White House offi­cial. Who might the anony­mous offi­cial be? Well, as the fol­low­ing arti­cle makes clear, their iden­ti­ty is kind of beside the point because that Dai­ly Caller arti­cle mere­ly expressed the views that numer­ous senior White House offi­cials have been voic­ing for years:

The Wash­ing­ton Post

The shut­down is giv­ing some Trump advis­ers what they’ve long want­ed: A small­er gov­ern­ment

By Lisa Rein, Robert Cos­ta and Danielle Paque­tte
Jan­u­ary 14, 2019 at 9:20 PM

Pres­i­dent Trump has cast the shut­ter­ing of fed­er­al agen­cies as a stand­off over his plan to build a wall on the south­ern bor­der. But for many White House aides and allies, the par­tial shut­down is advanc­ing anoth­er long-stand­ing pri­or­i­ty: con­strain­ing the gov­ern­ment.

Promi­nent advis­ers to the pres­i­dent have forged their polit­i­cal careers in relent­less pur­suit of a lean fed­er­al bud­get and a reined-in bureau­cra­cy. As a result, they have shown a high tol­er­ance for keep­ing large swaths of the gov­ern­ment dark, ser­vices offline and 800,000 fed­er­al work­ers with­out pay, with the shut­down hav­ing entered an unprece­dent­ed fourth week.

Those encour­ag­ing a hard line include act­ing White House chief of staff Mick Mul­vaney and act­ing White House bud­get direc­tor Rus­sell T. Vought, as well as lead­ers of the House Free­dom Cau­cus, whose mem­bers have tak­en on an influ­en­tial role with the White House.

Mul­vaney and Vought have tak­en steps to blunt some of the shutdown’s most unpop­u­lar effects, call­ing back fur­loughed employ­ees to process tax refunds, col­lect trash in nation­al parks and ensure food stamps will con­tin­ue to be issued.

But Mul­vaney is not rat­tled by the fall­out and instead has been focused on pro­tect­ing Trump from crit­i­cism, accord­ing to two admin­is­tra­tion offi­cials who were not autho­rized to speak pub­licly.

Mul­vaney did momen­tar­i­ly urge com­pro­mise on fund­ing for a wall in a meet­ing on Jan. 4, the offi­cials said. But Trump quick­ly shot down his sug­ges­tion, and Mul­vaney has since been in step with Trump.

Reps. Mark Mead­ows (R‑N.C.) and Jim Jor­dan (R‑Ohio) — lead­ers of the Free­dom Cau­cus and the president’s top allies in the House — have urged Trump to stay the course. They have built nation­al pro­files with calls to slash fed­er­al spend­ing — not as much on strength­en­ing bor­der secu­ri­ty.

The shut­down is “a means to an end for some­thing they have long pur­sued, which is lim­it­ing the size and scope and role of gov­ern­ment,” for­mer House GOP staffer Kurt Bardel­la said of the con­ser­v­a­tive Free­dom Cau­cus. Bardel­la became a Demo­c­rat in 2017.

“These are small-gov­ern­ment guys, not wall guys,” one for­mer White House offi­cial, who spoke on the con­di­tion of anonymi­ty to dis­cuss pri­vate exchanges, said of Mead­ows and Jor­dan.

Con­ser­v­a­tives have for decades ques­tioned the size and effec­tive­ness of the fed­er­al bureau­cra­cy. The shut­down has in some ways under­scored their view that gov­ern­ment can func­tion with few­er employ­ees.

“There’s a moment when peo­ple say, ‘Did you notice what per­cent­age of this agency was viewed as nonessen­tial?’?” said anti-tax activist Grover Norquist.

For­mer White House chief strate­gist Stephen K. Ban­non called shut­downs “blunt-force mea­sures that cer­tain­ly show what’s essen­tial and what’s not.”

Some argue that fur­loughed employ­ees are not suf­fer­ing sig­nif­i­cant harm.

About 420,000 employ­ees are still work­ing with­out pay dur­ing the shut­down because their jobs are con­sid­ered essen­tial to pub­lic safe­ty or nation­al secu­ri­ty. An addi­tion­al 350,000 are on fur­lough. Both groups are expect­ed to get back pay when the gov­ern­ment reopens.

“It’s incon­ve­nient that they’re not get­ting paid,” Bar­ry Ben­nett, a for­mer Trump cam­paign advis­er, said of the fur­loughed work­ers. “But it’s for time they’re not even going into the office.”

He said, though, that while con­ser­v­a­tives want to rein in the size of gov­ern­ment, a shut­down is not an opti­mal path: “We pre­fer to use a scalpel rather than a sledge­ham­mer.”

Trump has been unfazed about leav­ing so much of the gov­ern­ment dor­mant. On Mon­day his stand­off with con­gres­sion­al Democ­rats, already the longest shut­down on record, dragged into its 24th day.

He has received scat­tered brief­in­gs on how the shut­tered agen­cies are cop­ing, accord­ing to two senior admin­is­tra­tion offi­cials. He has shown fleet­ing inter­est in the minu­ti­ae as Vought has out­lined which ser­vices are being affect­ed.

...

The clo­sure of 10 Cab­i­net agen­cies and dozens of small­er ones has rat­tled many Amer­i­cans and cur­tailed ser­vices such as food safe­ty inspec­tions and approvals of low-income loans.

The polit­i­cal costs for the Trump admin­is­tra­tion could mount start­ing this week, as fed­er­al courts run out of mon­ey to oper­ate on Fri­day and the Coast Guard miss­es its first pay­checks. Air­ports have begun clos­ing ter­mi­nals as bag­gage screen­ers call in sick instead of report­ing to their jobs.

There is a grow­ing sense with­in the White House that a pro­tract­ed shut­down will pro­duce a cas­cade of unan­tic­i­pat­ed effects that could even­tu­al­ly dam­age the pres­i­dent polit­i­cal­ly.

But for now, Trump’s con­ser­v­a­tive allies have few qualms about Washington’s emp­ty streets and dark offices. The small-gov­ern­ment con­tin­gent “is not a voice of con­straint here,” said a for­mer senior admin­is­tra­tion offi­cial who spoke on the con­di­tion of anonymi­ty to describe pri­vate con­ver­sa­tions. “There is a real­iza­tion among some that the shut­down is not the end of the world.”

Trump’s inner cir­cle is stocked with offi­cials and senior advis­ers who have long shrugged off shut­downs as painful but need­ed laps­es.

Mul­vaney joked dur­ing last year’s brief shut­down that he has been accused by crit­ics of being an “arson­ist” of gov­ern­ment.

“Cut it or shut it,” Vice Pres­i­dent Pence, then an Indi­ana con­gress­man, said at a tea par­ty ral­ly in 2011.

Lar­ry Kud­low, a con­ser­v­a­tive com­men­ta­tor who now serves as the top White House eco­nom­ic advis­er, the same year called a gov­ern­ment shut­down in Wash­ing­ton “a minus­cule price to be paid for the greater good of finan­cial sol­ven­cy and eco­nom­ic growth.”

From its start, the Trump coali­tion has mixed small-gov­ern­ment ide­ol­o­gy with a pen­chant for dis­rup­tion.

“The Democ­rats have always had much more anx­i­ety about” a pro­longed shut­down, said Repub­li­can for­mer House speak­er Newt Gin­grich, an infor­mal Trump advis­er.

The shut­down fol­lows two years of con­trac­tion of the fed­er­al work­force under Trump. Dur­ing his first 18 months in office, the gov­ern­ment shrank by 17,000 employ­ees, accord­ing to an analy­sis of fed­er­al per­son­nel data by The Wash­ing­ton Post — the first down­ward shift in two decades.

As one of his first acts, Trump froze hir­ing across the gov­ern­ment, except at the Depart­ment of Vet­er­ans Affairs and a few oth­er agen­cies. The freeze mor­phed into a slow­down that has left hun­dreds of jobs unfilled as employ­ees retire and quit.

Trump has signed exec­u­tive orders — lat­er large­ly struck down by a fed­er­al judge — to weak­en the pow­er­ful unions that rep­re­sent fed­er­al employ­ees and make it eas­i­er to fire them. Just before Christ­mas, he announced that civ­il ser­vants would not receive a cost-of-liv­ing raise for 2019.
...

———-

“The shut­down is giv­ing some Trump advis­ers what they’ve long want­ed: A small­er gov­ern­ment” by Lisa Rein, Robert Cos­ta and Danielle Paque­tte; The Wash­ing­ton Post; 01/14/2019

“Those encour­ag­ing a hard line include act­ing White House chief of staff Mick Mul­vaney and act­ing White House bud­get direc­tor Rus­sell T. Vought, as well as lead­ers of the House Free­dom Cau­cus, whose mem­bers have tak­en on an influ­en­tial role with the White House.”

Is Mick Mul­vaney the anony­mous senior White House offi­cial? White House bud­get direc­tor Rus­sell Vought? How about Mike Pence? Or Maybe Lar­ry Kud­low? It’s very unclear, because they are all prime sus­pects based on their past rhetoric:

...
There is a grow­ing sense with­in the White House that a pro­tract­ed shut­down will pro­duce a cas­cade of unan­tic­i­pat­ed effects that could even­tu­al­ly dam­age the pres­i­dent polit­i­cal­ly.

But for now, Trump’s con­ser­v­a­tive allies have few qualms about Washington’s emp­ty streets and dark offices. The small-gov­ern­ment con­tin­gent “is not a voice of con­straint here,” said a for­mer senior admin­is­tra­tion offi­cial who spoke on the con­di­tion of anonymi­ty to describe pri­vate con­ver­sa­tions. “There is a real­iza­tion among some that the shut­down is not the end of the world.”

Trump’s inner cir­cle is stocked with offi­cials and senior advis­ers who have long shrugged off shut­downs as painful but need­ed laps­es.

Mul­vaney joked dur­ing last year’s brief shut­down that he has been accused by crit­ics of being an “arson­ist” of gov­ern­ment.

“Cut it or shut it,” Vice Pres­i­dent Pence, then an Indi­ana con­gress­man, said at a tea par­ty ral­ly in 2011.

Lar­ry Kud­low, a con­ser­v­a­tive com­men­ta­tor who now serves as the top White House eco­nom­ic advis­er, the same year called a gov­ern­ment shut­down in Wash­ing­ton “a minus­cule price to be paid for the greater good of finan­cial sol­ven­cy and eco­nom­ic growth.”
...

“Trump’s inner cir­cle is stocked with offi­cials and senior advis­ers who have long shrugged off shut­downs as painful but need­ed laps­es.”

And that’s all why it’s actu­al­ly pret­ty appro­pri­ate that iden­ti­ty of the senior White House offi­cial who wrote that twist­ed far right fan­ta­sy screed in the Dai­ly Caller was left anony­mous: they were just say­ing what Trump’s entire inner cir­cle, the broad­er Repub­li­can Par­ty, and right-wing media has been telling itself for decades. Any one of Trump’s inner cir­cle could have plau­si­bly writ­ten that piece.

In relat­ed news, the FDA just announced that it’s going to be bring­ing 150 fur­lough employ­ees back to work to inspect foods deemed “high-risk” that weren’t get­ting inspect­ed: seafood; dairy prod­ucts; cus­tard-filled bak­ery prod­ucts; unpas­teur­ized juices; fresh fruits and veg­eta­bles; spices; shell eggs; sand­wich­es; pre­pared sal­ads; and infant for­mu­la. These 150 work­ers will unpaid.

In oth­er relat­ed news, it turns out the GOP’s cor­po­rate tax cuts are bring­ing in about $600 bil­lion less over the next decade than was pro­ject­ed. That will pre­sum­ably be blamed on evil lazy fed­er­al work­ers and used to jus­ti­fy more cuts to fed­er­al pro­grams.

The Trump Shut­down had anoth­er dra­mat­ic day that does­n’t bode well. Dra­ma both staged and real. Pres­i­dent Trump’s effec­tive­ly dou­bled down on the gov­ern­ment shut­down with his Sat­ur­day after­noon pub­lic address we he demand­ed Democ­rats accept his ‘com­pro­mise’ offer. It’s the kind of offer the Democ­rats imme­di­ate­ly shot down, large­ly because it was bare­ly a com­pro­mise: Trump offered to give the ‘Dream­er’ kids a three year reprieve from his threats to deport them in exchange for the Democ­rats giv­ing him the $5.7 bil­lion he wants for the wall. A com­pro­mise set up to be bro­ken in three years. It’s not exact­ly an entic­ing offer.

The crap­pi­ness of Trump’s offer cre­ates a seem­ing­ly hope­less sit­u­a­tion because it puts the Democ­rats in a moral vice. There’s the moral haz­ard of val­i­dat­ing Trumps shut­down tac­tics and the moral urgency of pre­vent­ing the haz­ard that this shut­down is inflict­ing on the lives of fed­er­al work­ers and mil­lions of Amer­i­cans in need of dis­rupt­ed ser­vices. Trump has cre­at­ed such a bad sit­u­a­tion with the shut­down that the Democ­rats are in a ‘damned if you do [accept Trump’s bad faith ‘com­pro­mise’], damned if you don’t [accept Trump’s bad faith ‘com­pro­mise’]’ sit­u­a­tion. It’s not the great­est nego­ti­at­ing tac­tic.

So we have to hope that Trump’s plan was to make an offer the Democ­rats had to refuse so he could declare them unwill­ing to nego­ti­ate and use that as an excuse to huff and puff and end the shut­down.

But as the fol­low­ing arti­cle makes clear, it’s becom­ing increas­ing­ly clear to econ­o­mists that this shut­down is hav­ing real eco­nom­ic con­se­quences. Those econ­o­mist include the Chica­go Fed pres­i­dent Charles Evans, who warned of self-rein­forc­ing forces that could be unleashed if drop­ping con­sumer sen­ti­ment leads to a drop in invest­ments. Con­sumer spend­ing is two-thirds of the US econ­o­my. So when con­sumer sen­ti­ment starts head­ing south, that’s the kind of thing that could rever­ber­ate across the econ­o­my in self-rein­forc­ing ways and be sub­stan­tial if it leads to things like post­poned busi­ness invest­ments.

Adding to Evan­s’s warn­ing is the obser­va­tion from for­mer Fed chair Janet Yellen, who report­ed a gen­er­al cool­ing of busi­ness sen­ti­ment at a retail trade show in New York.

So we now have Fed offi­cials voic­ing warn­ings of the eco­nom­ic impact of this shut­down and there’s no end to it in sight. It’s a reminder that we can add hold­ing the econ­o­my hostage as part of Trump’s shut­down black­mail as part of the ‘damned if you do [accept Trump’s bad faith ‘com­pro­mise’], damned if you don’t [accept Trump’s bad faith ‘com­pro­mise’]’ moral vice sit­u­a­tion the Democ­rats find them­selves in. They cer­tain­ly don’t want to val­i­date Trump’s shut­down tac­tics, but don’t want this eco­nom­ic dam­age to con­tin­ue either.

The arti­cle also reminds of of one area of the econ­o­my that appears to be get­ting hit extra hard from the shut­down that’s going to add to that moral vice Trump has placed the Democ­rats in: any­thing food relat­ed is going to get hurt. Restau­rants are los­ing that busi­ness from the fur­loughed fed­er­al work­ers that they’ll nev­er earn back. That’s a lot of tips.

And gro­cery stores in need of get­ting their licens­ing processed to legal­ly accept SNAP food stamps aren’t cur­rent able to get a license due to the shut­down. Accord­ing to the Nation­al Gro­cers Asso­ci­a­tion more than 2,500 retail­ers have expe­ri­enced a lapse or inabil­i­ty to reau­tho­rize their license. That’s a lot of places that sud­den­ly can’t process food stamps and a lot of avoid­able hunger. It’s not like poor peo­ple on food stamps can nec­es­sar­i­ly eas­i­ly trav­el to the next clos­est place with a license. And this kind of avoid­able hunger and dam­age to the food sec­tors of the econ­o­my just adds to the rea­sons Democ­rats don’t want to award this kind of black­mail shut­down nego­ti­at­ing tac­tic and also adds to the rea­sons Democ­rats urgent­ly want to find a way out of this.

So we’ll see how con­sumer sen­ti­ment responds to the fact that the pres­i­dent is act­ing like a mad king, but it’s pre­sum­ably not going to get more pos­i­tive response as this shut­down show­down eco­nom­ic slow­down grinds on:

Reuters

Shut­down clouds out­look for con­sumer-dri­ven U.S. eco­nom­ic growth

Nan­di­ta Bose, Howard Schnei­der
Jan­u­ary 18, 2019 / 12:07 AM

NEW YORK (Reuters) — After tax cuts, ris­ing incomes and buoy­ant stock mar­kets set off a con­sumer boom in 2018, signs are emerg­ing that the main engine of U.S. eco­nom­ic growth could sput­ter, and a record-long gov­ern­ment shut­down fur­ther mud­dies the waters.

Fed­er­al Reserve offi­cials and many econ­o­mists have long count­ed on con­tin­ued robust con­sumer spend­ing to keep the econ­o­my chug­ging along, despite head­winds from recent finan­cial mar­kets tur­bu­lence, trade con­flicts and weak­en­ing glob­al growth.

Now they fear the con­sumer boom could be on the cusp of a rever­sal.

The warn­ing signs span the income spec­trum — from the well-heeled pos­si­bly cut­ting back after their stocks got ham­mered last fall, to the poor poten­tial­ly get­ting squeezed if a lin­ger­ing gov­ern­ment shut­down delays food assis­tance pay­ments.

Econ­o­mists are also not cer­tain, for exam­ple, whether last year’s per­son­al income tax cut will lead to high­er refunds and boost big-tick­et pur­chas­es, such as home appli­ances, typ­i­cal for this time of year, or whether the wind­fall was already spent last year when pay­check with­hold­ing declined.

The shut­down, now in its 28th day, could delay refunds and hit com­pa­nies that rely on con­sumers spend­ing a chunk of that mon­ey on their goods or ser­vices.

The chief finan­cial offi­cer at T‑Mobile US told investors last week any delay in refunds was a con­cern for the com­pa­ny because its pre­paid busi­ness, rough­ly 30 per­cent of sales, was “par­tic­u­lar­ly sen­si­tive” to tax refunds.

“Hope­ful­ly, this sit­u­a­tion doesn’t go on too long,” J. Brax­ton Carter said.

A delay in refunds could also hurt home improve­ment chains, such as Home Depot, Lowe’s Cos Inc and Way­fair Inc that see fur­ni­ture pur­chas­es and ear­ly spring projects boost sales. “We don’t see any mate­r­i­al impact,” a Home Depot spokesman said with­out elab­o­rat­ing. Lowe’s and Way­fair did not respond to a request for com­ment.

The gov­ern­ment shut­down clouds the out­look for spend­ing, retail­ers and the econ­o­my at large because exec­u­tives and pol­i­cy­mak­ers weigh not the direct impact of 800,000 fed­er­al work­ers going with­out pay, but also how much it can hurt con­sumer and busi­ness con­fi­dence.

Chica­go Fed­er­al Reserve Pres­i­dent Charles Evans said last week that while the imme­di­ate effects of the shut­down on the U.S. $20.7‑trillion econ­o­my would be small, the indi­rect, psy­cho­log­i­cal impact could be sub­stan­tial.

“Con­sumers get risk averse and start hun­ker­ing down, busi­ness­es start plan­ning to do less, and you start mag­ni­fy­ing these effects,” Evans said.

For­mer Fed­er­al Reserve chair Janet Yellen not­ed a gen­er­al cool­ing of busi­ness sen­ti­ment at a retail trade show in New York last week. “We are hear­ing anec­do­tal reports about busi­ness­es begin­ning to put invest­ment plans on hold because of [eco­nom­ic] uncer­tain­ty,” she said. Those invest­ments could include things like upgrades to a retailer’s sup­ply chain, Yellen said.

Con­stance Hunter, chief econ­o­mist at KPMG told Reuters if the shut­down goes on until the end of the month “we will shave a cou­ple of per­cent­age points from first quar­ter (gross domes­tic prod­uct).”

Such con­cerns have spread among Fed offi­cials who now advo­cate patience before con­sid­er­ing any fur­ther rate hikes.

FAST FOOD, GROCERS AT RISK

Con­sumer spend­ing accounts for about two-thirds of U.S. eco­nom­ic activ­i­ty, and the 4 per­cent jump in house­hold spend­ing on goods last year was a major rea­son the econ­o­my prob­a­bly grew by a healthy 3 per­cent in 2018. More recent­ly, robust con­sump­tion off­set weak­er-than-expect­ed busi­ness invest­ment and the drag from trade, and was expect­ed to mit­i­gate the wan­ing impact of the Trump administration’s ear­li­er spend­ing splurge.

Econ­o­mists had already antic­i­pat­ed that high­er inter­est rates and trade ten­sions would slow growth in house­hold spend­ing on goods and ser­vices after it hit $13 tril­lion last year.

The ques­tion is how much and the shut­down made the answer more dif­fi­cult.

Steven Blitz, chief U.S. econ­o­mist at TS Lom­bard said the econ­o­my appeared to be slow­ing down, not­ing reports from Macy’s, Nord­strom and oth­er retail­ers talk­ing of a weak Decem­ber, and he expect­ed the shut­down to hurt first quar­ter growth.

“Some of it will come back in the sec­ond quar­ter, but there will be some indus­tries that will see last­ing dam­age such as restau­rant oper­a­tors,” he told Reuters.

These would include chains like McDonald’s Corp, Chipo­tle Mex­i­can Grill and Star­bucks Corp, which ana­lysts said will be unable to make up for lost sales to gov­ern­ment work­ers dur­ing a shut­down.

...

Bri­an Can­tor, man­ag­ing direc­tor of Alvarez & Marsal’s retail per­for­mance improve­ment group, said gro­cery chains, includ­ing Wal­mart Inc and Kroger, could feel the pinch of weak­er dis­cre­tionary spend­ing. While food sta­ples sales will hold up, typ­i­cal add-on pur­chas­es like bat­ter­ies, chips, mag­a­zines or choco­lates will suf­fer, hurt­ing prof­it mar­gins.

Kroger CEO Rod­ney McMullen expressed this con­cern last week at a retail trade show. “From a cus­tomer stand­point ... they feel incred­i­bly good about the econ­o­my, but very ner­vous about where are things head­ed,” he said.

Wal­mart declined com­ment.

Small, inde­pen­dent retail­ers, which often serve low-income com­mu­ni­ties, may also suf­fer.

While the admin­is­tra­tion has assured fund­ing through Feb­ru­ary for gov­ern­ment trans­fer pay­ments for the Sup­ple­men­tal Nutri­tion Assis­tance Pro­gram (SNAP), which pro­vides food assis­tance to 19 mil­lion low income house­holds, the shut­down has impaired grant­i­ng new licens­es and renewals.

Peter Larkin, Pres­i­dent and Chief Exec­u­tive of the Nation­al Gro­cers Asso­ci­a­tion, sent a let­ter to Con­gress on Jan. 10, say­ing the shut­down pre­vents many inde­pen­dent retail­ers from acquir­ing SNAP licens­es for their new­ly opened stores, and that more than 2,500 retail­ers have expe­ri­enced a lapse or inabil­i­ty to reau­tho­rize their license.

“The inabil­i­ty to acquire new SNAP licens­es for new­ly-opened or pur­chased stores could have sig­nif­i­cant neg­a­tive impacts to local economies,” Larkin said.

———-

“Shut­down clouds out­look for con­sumer-dri­ven U.S. eco­nom­ic growth” by Nan­di­ta Bose, Howard Schnei­der; Reuters; 01/18/2019

“Fed­er­al Reserve offi­cials and many econ­o­mists have long count­ed on con­tin­ued robust con­sumer spend­ing to keep the econ­o­my chug­ging along, despite head­winds from recent finan­cial mar­kets tur­bu­lence, trade con­flicts and weak­en­ing glob­al growth.”

Con­tin­u­ous robust con­sumer spend­ing. It’s sort of an Amer­i­can spe­cial­ty. And the assump­tion of robust con­sumer spend­ing has been a big part of the eco­nom­ic fore­cast that assume the US econ­o­my keeps hum­ming along. If con­sumers get spooked it becomes a self-ful­fill­ing prophe­cy as busi­ness retrench in response. That’s the warn­ing from the Chica­go Fed chair Charles Evans. And Janet Yellen is warn­ing we’re already see­ing signs of the retail sec­tor retrench­ing:

...
The gov­ern­ment shut­down clouds the out­look for spend­ing, retail­ers and the econ­o­my at large because exec­u­tives and pol­i­cy­mak­ers weigh not the direct impact of 800,000 fed­er­al work­ers going with­out pay, but also how much it can hurt con­sumer and busi­ness con­fi­dence.

Chica­go Fed­er­al Reserve Pres­i­dent Charles Evans said last week that while the imme­di­ate effects of the shut­down on the U.S. $20.7‑trillion econ­o­my would be small, the indi­rect, psy­cho­log­i­cal impact could be sub­stan­tial.

“Con­sumers get risk averse and start hun­ker­ing down, busi­ness­es start plan­ning to do less, and you start mag­ni­fy­ing these effects,” Evans said.

For­mer Fed­er­al Reserve chair Janet Yellen not­ed a gen­er­al cool­ing of busi­ness sen­ti­ment at a retail trade show in New York last week. “We are hear­ing anec­do­tal reports about busi­ness­es begin­ning to put invest­ment plans on hold because of [eco­nom­ic] uncer­tain­ty,” she said. Those invest­ments could include things like upgrades to a retailer’s sup­ply chain, Yellen said.

Con­stance Hunter, chief econ­o­mist at KPMG told Reuters if the shut­down goes on until the end of the month “we will shave a cou­ple of per­cent­age points from first quar­ter (gross domes­tic prod­uct).”

Such con­cerns have spread among Fed offi­cials who now advo­cate patience before con­sid­er­ing any fur­ther rate hikes.
...

And with con­sumer spend­ing com­pris­ing two thirds of the US econ­o­my, hits to con­sumer con­fi­dence get mag­ni­fied and rever­ber­ate. The Trump Shut­down eco­nom­i­cal­ly echos. But it’s a bad echo:

...
Con­sumer spend­ing accounts for about two-thirds of U.S. eco­nom­ic activ­i­ty, and the 4 per­cent jump in house­hold spend­ing on goods last year was a major rea­son the econ­o­my prob­a­bly grew by a healthy 3 per­cent in 2018. More recent­ly, robust con­sump­tion off­set weak­er-than-expect­ed busi­ness invest­ment and the drag from trade, and was expect­ed to mit­i­gate the wan­ing impact of the Trump administration’s ear­li­er spend­ing splurge.

Econ­o­mists had already antic­i­pat­ed that high­er inter­est rates and trade ten­sions would slow growth in house­hold spend­ing on goods and ser­vices after it hit $13 tril­lion last year.

The ques­tion is how much and the shut­down made the answer more dif­fi­cult.
...

But not all sec­tors of the econ­o­my will get hit equal­ly. Restau­rants, and their work­ers, are already see­ing per­ma­nent­ly lost income from the fur­loughed fed­er­al work­ers. So under­paid restau­rant work­ers are get­ting hit extra hard:

...
Steven Blitz, chief U.S. econ­o­mist at TS Lom­bard said the econ­o­my appeared to be slow­ing down, not­ing reports from Macy’s, Nord­strom and oth­er retail­ers talk­ing of a weak Decem­ber, and he expect­ed the shut­down to hurt first quar­ter growth.

“Some of it will come back in the sec­ond quar­ter, but there will be some indus­tries that will see last­ing dam­age such as restau­rant oper­a­tors,” he told Reuters.

These would include chains like McDonald’s Corp, Chipo­tle Mex­i­can Grill and Star­bucks Corp, which ana­lysts said will be unable to make up for lost sales to gov­ern­ment work­ers dur­ing a shut­down.
...

And then there’s the hit gro­cery stores and retail­ers are tak­ing from the inabil­i­ty to get SNAP licensed to accept food stamps. That’s already hap­pen­ing to 2,500 stores accord­ing to the Nation­al Gro­cers Asso­ci­a­tion. And it’s going to dis­pro­por­tion­ate­ly impact poor neigh­bor­hoods. That’s def­i­nite­ly not going to help con­sumer sen­ti­ment:

...
Small, inde­pen­dent retail­ers, which often serve low-income com­mu­ni­ties, may also suf­fer.

While the admin­is­tra­tion has assured fund­ing through Feb­ru­ary for gov­ern­ment trans­fer pay­ments for the Sup­ple­men­tal Nutri­tion Assis­tance Pro­gram (SNAP), which pro­vides food assis­tance to 19 mil­lion low income house­holds, the shut­down has impaired grant­i­ng new licens­es and renewals.

Peter Larkin, Pres­i­dent and Chief Exec­u­tive of the Nation­al Gro­cers Asso­ci­a­tion, sent a let­ter to Con­gress on Jan. 10, say­ing the shut­down pre­vents many inde­pen­dent retail­ers from acquir­ing SNAP licens­es for their new­ly opened stores, and that more than 2,500 retail­ers have expe­ri­enced a lapse or inabil­i­ty to reau­tho­rize their license.

“The inabil­i­ty to acquire new SNAP licens­es for new­ly-opened or pur­chased stores could have sig­nif­i­cant neg­a­tive impacts to local economies,” Larkin said.
...

It’s also worth keep­ing in mind that this shut­down expe­ri­ence and the warn­ings of of drops in con­sumer sen­ti­ment can rever­ber­ate across the econ­o­my with sub­stan­tial impacts are are all big reminder of the inter­con­nect­ed­ness of gov­ern­ment, busi­ness, and soci­ety. And the basic recog­ni­tion of that inter­con­nect­ed­ness is actu­al­ly quite impor­tant giv­en the right-wing mantras like ‘gov­ern­ment does­n’t do any­thing use­ful’ and ‘we would be fine if we just shut almost all gov­ern­ment ser­vices down’. That’s the kind of non­sense that obscures all the ways the gov­ern­ment can make life bet­ter and gen­er­ates real social good. Wip­ing out that recog­ni­tion of the val­ue gov­ern­ment pro­vides has been one of the chief ide­o­log­i­cal­ly goals of the right-wing decades and now we have Trump and the GOP careen­ing the gov­ern­ment into one shut­down after at every avail­able oppor­tu­ni­ty. Some­times it’s for ide­o­log­i­cal rea­sons and some­times it’s for black­mail nego­ti­a­tion pur­pos­es. But the GOP has become the shut­down par­ty and the prop­a­ga­tion of this myth of the use­less­ness of gov­ern­ment has been both the ends and means in this pat­tern of behav­ior. And now we have Trump, who polit­i­cal­ly backed him­self into a cor­ner with his ‘Wall’ pledge, who appears to be will­ing to keep the fed­er­al gov­ern­ment shut down indef­i­nite­ly.

So we’ll see how much dam­age this shut­down ends up doing to con­sumer sen­ti­ment. That pre­sum­ably will depend heav­i­ly on how long this goes on. But it’s going to be worth keep­ing in mind one of things with the proven track record of help­ing an econ­o­my suf­fer­ing from flag­ging con­sumer sen­ti­ment: gov­ern­ment spend­ing, which does­n’t depend on con­sumer sen­ti­ment. There’s noth­ing like gov­ern­ment spend­ing for an econ­o­my as a reli­able eco­nom­ic stim­u­lus and a source of Key­ne­sian stim­u­lus boosts when need­ed. It’s the iron­i­cal­ly appro­pri­ate les­son to take from this whole night­mare sit­u­a­tion: Eras­ing from the pub­lic con­scious­ness the knowl­edge about the eco­nom­ic val­ue of gov­ern­ment spend­ing and ser­vices by pro­mot­ing a ‘gov­ern­ment does­n’t mat­ter’ myth that’s dri­ving this shut­down is part of what this shut­down is all about. Pro­mot­ing that myth to pro­mote the idea that a per­ma­nent shut­down will be fine. In oth­er words, while ‘the Wall’ is part of what this shut­down is all about, the shut­down is also about the long-term right-wing project of shut­ting down the gov­ern­ment. So it’s going to be iron­i­cal­ly impor­tant to keep in mind that gov­ern­ment spend­ing and ser­vices is lit­er­al­ly one of the best proven tools for deal­ing with the kind of eco­nom­ic dam­age the GOP’s shut­down phi­los­o­phy is doing and is going to keep doing for the fore­see­able future.

With the fed­er­al gov­ern­ment shut­down now in its sec­ond month and fed­er­al work­ers get­ting increas­ing­ly des­per­ate as a result, the Trump admin­is­tra­tion’s Com­merce Sec­re­tary, bil­lion­aire Wilbur Ross — who earned the nick­name “The King of Bank­rupt­cy” for mak­ing his for­tune buy­ing dis­tressed com­pa­nies for cheap — respond­ed to reports of fur­loughed fed­er­al work­ers being forced to go to food banks to get by with what he pre­sum­ably thought was good advice to those fed­er­al work­er: Ross claimed to be baf­fled that fed­er­al work­ers had to go to food banks at all because some banks and cred­it unions are offer­ing zero inter­est or low inter­est loans to fed­er­al work­ers who will (even­tu­al­ly) receive back pay for their missed pay­checks.

It was one of those chill­ing snap­shots inside the mind of an out of touch bil­lion­aire that’s becom­ing a sig­na­ture fea­ture of our con­tem­po­rary Gild­ed Age. Not only was it wild­ly tone deaf, but Ross’s advice ignores all of the fed­er­al work­ers who either don’t use the banks or cred­it unions offer­ing these loans or won’t be receiv­ing back pay (not all fed­er­al employ­ees receive back pay). Or maybe they have bad cred­it and won’t qual­i­fy for their banks’ spe­cial deal. And, of course, it ignores fed­er­al work­ers who are con­trac­tors who often won’t be receiv­ing back pay.

So was Ross unaware that his ‘solu­tion’ for des­per­ate fur­loughed fed­er­al work­ers does­n’t actu­al­ly apply to a lot of those work­ers? Or does he just not care? Both? Who knows, but the fact that the Com­merce Sec­re­tary casu­al­ly dis­missed the plight of thou­sands of fed­er­al work­ers by rec­om­mend­ing they just get a loan is an exam­ple of why hav­ing a gov­ern­ment run by and for bil­lion­aire is a real­ly bad idea

CNN

Wilbur Ross does­n’t ‘quite under­stand’ why fur­loughed work­ers are going to home­less shel­ters to get food

By Kate Sul­li­van,
Updat­ed 5:45 PM ET, Thu Jan­u­ary 24, 2019

Wash­ing­ton (CNN Business)Commerce Sec­re­tary Wilbur Ross says he does­n’t “real­ly quite under­stand why” fed­er­al work­ers who have missed pay­checks due to the par­tial gov­ern­ment shut­down don’t just take out loans to cov­er the gap.

When asked in a CNBC inter­view on Thurs­day about reports that fed­er­al work­ers are going to home­less shel­ters or seek­ing food assis­tance, the bil­lion­aire investor said: “Well, I know they are and I don’t real­ly quite under­stand why, because as I men­tioned before, the oblig­a­tions that they would under­take, say bor­row­ing from a bank or a cred­it union, are in effect fed­er­al­ly guar­an­teed, so the 30 days of pay that some peo­ple will be out is no real rea­son why they should­n’t be able to get a loan against it.”

The gov­ern­ment has been par­tial­ly shut down for more than a month, with no appar­ent end in sight.

A food pantry opened by chef Jose Andres in cen­tral Wash­ing­ton has been swamped with work­ers seek­ing hot meals, while fur­loughed employ­ees across the coun­try have been vis­it­ing food banks and seek­ing oth­er assis­tance.

The com­ments from the com­merce sec­re­tary came after a senior eco­nom­ic advis­er to Pres­i­dent Don­ald Trump com­pared the shut­down to a vaca­tion.

White House eco­nom­ic advis­er Kevin Has­sett said ear­li­er this month that fur­loughed fed­er­al work­ers who are not get­ting paid dur­ing the par­tial gov­ern­ment shut­down are “bet­ter off” because they won’t be docked vaca­tion days and will even­tu­al­ly get paid any­way.

“Huge share of gov­ern­ment work­ers were going to take vaca­tion days, say between Christ­mas and New Year’s. And then we have a shut­down and so they can’t go to work, and so then they have the vaca­tion but they don’t have to use their vaca­tion days,” Has­sett told PBS dur­ing an appear­ance on “New­sHour.” He sub­se­quent­ly said he sym­pa­thizes with work­ers and that his com­ments were tak­en out of con­text.

Ross, who made his for­tune buy­ing dis­tressed debt, not­ed that banks and cred­it unions have been extend­ing zero-inter­est loans and oth­er help to cus­tomers.

“The banks and the cred­it unions should be mak­ing cred­it avail­able to them. When you think about it, these are basi­cal­ly gov­ern­ment-guar­an­teed loans because the gov­ern­ment has com­mit­ted these folks will get their back pay once this whole thing gets set­tled down,” Ross said in the inter­view.

“So there real­ly is not a good excuse why there real­ly should be a liq­uid­i­ty cri­sis,” Ross said. “Now, true that peo­ple might have to pay a lit­tle bit of inter­est, but the idea that it’s pay­check or zero is not a real­ly valid idea.”

Lat­er in the day, Ross appeared on Bloomberg TV to clar­i­fy his com­ments.

“There are peo­ple expe­ri­enc­ing hard­ship,” Ross told Bloomberg. “We had a lengthy ses­sion with some of the large por­tion of the work­force yes­ter­day try­ing to make sure we under­stand what their prob­lems are and we’re try­ing to do our best to mit­i­gate them.”

“We’re aware, painful­ly aware, that there are hard­ships inflict­ed on the indi­vid­ual work­ers,” Ross said. “All I was try­ing to do is make sure that they’re aware that there are pos­si­ble oth­er things that could help some­what mit­i­gate their prob­lems.”

...

Trump also weighed in Thurs­day evening on Ross’ remarks, telling reporters “per­haps he should have said it dif­fer­ent­ly.”

The Pres­i­dent added: “I haven’t heard the state­ment, but I do under­stand that per­haps he should have said it dif­fer­ent­ly. Local peo­ple know who they are, where they go for gro­ceries and every­thing else, and I think what Wilbur was prob­a­bly try­ing to say is that they will work along. I know banks are work­ing along,”

———–

“Wilbur Ross does­n’t ‘quite under­stand’ why fur­loughed work­ers are going to home­less shel­ters to get food” By Kate Sul­li­van; CNN; 01/24/2019

“A food pantry opened by chef Jose Andres in cen­tral Wash­ing­ton has been swamped with work­ers seek­ing hot meals, while fur­loughed employ­ees across the coun­try have been vis­it­ing food banks and seek­ing oth­er assis­tance.”

Food pantries for fed­er­al work­ers. It’s clear­ly a sor­ry state of affairs. Unless you’re Wilbur Ross, who can’t see why this “liq­uid­i­ty cri­sis” is a prob­lem at all because, “the banks and the cred­it unions should be mak­ing cred­it avail­able to them.” Why can’t all of these fur­loughed fed­er­al work­ers just get a loan? It’s a com­plete mys­tery to the Com­merce Sec­re­tary:

...
When asked in a CNBC inter­view on Thurs­day about reports that fed­er­al work­ers are going to home­less shel­ters or seek­ing food assis­tance, the bil­lion­aire investor said: “Well, I know they are and I don’t real­ly quite under­stand why, because as I men­tioned before, the oblig­a­tions that they would under­take, say bor­row­ing from a bank or a cred­it union, are in effect fed­er­al­ly guar­an­teed, so the 30 days of pay that some peo­ple will be out is no real rea­son why they should­n’t be able to get a loan against it.”

...

“The banks and the cred­it unions should be mak­ing cred­it avail­able to them. When you think about it, these are basi­cal­ly gov­ern­ment-guar­an­teed loans because the gov­ern­ment has com­mit­ted these folks will get their back pay once this whole thing gets set­tled down,” Ross said in the inter­view.

“So there real­ly is not a good excuse why there real­ly should be a liq­uid­i­ty cri­sis,” Ross said. “Now, true that peo­ple might have to pay a lit­tle bit of inter­est, but the idea that it’s pay­check or zero is not a real­ly valid idea.”
...

Then, lat­er in the day, Ross attempt­ed to walk back his com­ments by claim­ing that he was mere­ly try­ing to let fed­er­al work­ers know that some banks and cred­it unions are mak­ing low inter­est loans avail­able to fed­er­al work­ers that, in Ross’s words, “could help some­what mit­i­gate their prob­lems.” So we went from Ross express­ing puz­zle­ment that miss­ing pay­checks is an issue at all for fur­loughed fed­er­al work­ers to Ross assert­ing that he mere­ly want­ed to let these work­ers know that there’s some­thing that “could some­what mit­i­gate their prob­lems.” It’s quite a walk back:

...
Lat­er in the day, Ross appeared on Bloomberg TV to clar­i­fy his com­ments.

“There are peo­ple expe­ri­enc­ing hard­ship,” Ross told Bloomberg. “We had a lengthy ses­sion with some of the large por­tion of the work­force yes­ter­day try­ing to make sure we under­stand what their prob­lems are and we’re try­ing to do our best to mit­i­gate them.”

“We’re aware, painful­ly aware, that there are hard­ships inflict­ed on the indi­vid­ual work­ers,” Ross said. “All I was try­ing to do is make sure that they’re aware that there are pos­si­ble oth­er things that could help some­what mit­i­gate their prob­lems.”
...

But in Ross’s defense, at least he was­n’t act­ing like this was all a fun vaca­tion for fur­loughed work­ers, like one of Trump’s senior eco­nom­ic advi­sors, Kevin Has­sett, did a cou­ple of weeks ago:

...
The com­ments from the com­merce sec­re­tary came after a senior eco­nom­ic advis­er to Pres­i­dent Don­ald Trump com­pared the shut­down to a vaca­tion.

White House eco­nom­ic advis­er Kevin Has­sett said ear­li­er this month that fur­loughed fed­er­al work­ers who are not get­ting paid dur­ing the par­tial gov­ern­ment shut­down are “bet­ter off” because they won’t be docked vaca­tion days and will even­tu­al­ly get paid any­way.

“Huge share of gov­ern­ment work­ers were going to take vaca­tion days, say between Christ­mas and New Year’s. And then we have a shut­down and so they can’t go to work, and so then they have the vaca­tion but they don’t have to use their vaca­tion days,” Has­sett told PBS dur­ing an appear­ance on “New­sHour.” He sub­se­quent­ly said he sym­pa­thizes with work­ers and that his com­ments were tak­en out of con­text.
...

Pres­i­dent Trump even attempt­ed some dam­age con­trol by sug­gest­ing that “local peo­ple”, like peo­ple at gro­ceries, will some­how know who the fur­loughed fed­er­al work­ers are and “they will work along.” In oth­er words, Trump appears to be sug­gest­ing that local busi­ness will all spon­ta­neous­ly start extend­ing cred­it to fed­er­al work­ers or some­thing :

...
Trump also weighed in Thurs­day evening on Ross’ remarks, telling reporters “per­haps he should have said it dif­fer­ent­ly.”

The Pres­i­dent added: “I haven’t heard the state­ment, but I do under­stand that per­haps he should have said it dif­fer­ent­ly. Local peo­ple know who they are, where they go for gro­ceries and every­thing else, and I think what Wilbur was prob­a­bly try­ing to say is that they will work along. I know banks are work­ing along,”
...

Well, let’s hope Trump is cor­rect and local busi­ness­es will just start work­ing out arrange­ments for these hun­dreds of thou­sands of fed­er­al work­ers spread across the US.

But since that’s a fan­ta­sy solu­tion, and since lots of fed­er­al work­ers, espe­cial­ly fed­er­al con­trac­tors, aren’t going to have these cheap loans or spe­cial arrange­ments avail­able to them, it seems rea­son­able to con­clude that as this shut­down drags on a num­ber of these work­ers are going to be forced to take out the kind of short-term loans that mil­lions of low-income Amer­i­cans are already very famil­iar with: pay­day lender loans. The kinds of high-inter­est loans that demon­strate the need for usury laws.

So, since pay­day lenders are prob­a­bly going to expe­ri­ence a surge in demand in com­ing weeks, it’s worth recall­ing that the CFPB is basi­cal­ly on the side of the pay­day lenders now after Trump made Mick Mul­vaney the head of the Con­sumer Finan­cial Pro­tec­tion Bureau (CFPB):

The Nation

Why Loan Sharks, Car Sales­men, and Pay­day Lenders Love Mick Mul­vaney
Trump’s pick to pro­tect con­sumers is throw­ing stu­dents and mem­bers of the mil­i­tary under the bus.

By George Zor­nick
Sep­tem­ber 13, 2018

The Con­sumer Finan­cial Pro­tec­tion Bureau had a dif­fi­cult birth. Writ­ten into the Dodd-Frank reforms in the after­math of the 2008 finan­cial col­lapse, the CFPB was cre­at­ed to pro­tect con­sumers from pay­day lenders, cred­it-card com­pa­nies, stu­dent-loan sharks, and debt col­lec­tors.

That made the bureau a nat­ur­al tar­get of those indus­tries. In 2012, lob­by­ists pushed Con­gress to elim­i­nate the posi­tion of CFPB direc­tor in favor of a five-per­son board, and to put Con­gress, not the Trea­sury, in charge of its fund­ing. They also tried to slow down the bureau’s for­ma­tion, recalls Christo­pher Peter­son, a for­mer CFPB offi­cial who served as a spe­cial advis­er to the bureau’s first per­ma­nent direc­tor, Richard Cor­dray. “Mem­bers of Con­gress would send let­ters demand­ing expla­na­tions,” Peter­son says. “That doesn’t sound like that’s that big of a job, but it’s a lot eas­i­er to write a ques­tion [than to answer it]—especially if a lob­by­ist or an attor­ney for a finan­cial insti­tu­tion is actu­al­ly ghost­writ­ing.”

The goal, ulti­mate­ly, was to strip the CFPB of its inde­pen­dence. With the elec­tion of Don­ald Trump and the rapid imple­men­ta­tion of his vir­u­lent­ly anti-reg­u­la­to­ry agen­da, the lenders final­ly got their wish.

Last Novem­ber, Cor­dray resigned to run for gov­er­nor of Ohio (his direc­tor­ship was slat­ed to end in July 2018). Trump’s pick to replace him was former House mem­ber Mick Mul­vaney (R‑SC), who also heads the Office of Man­age­ment and Bud­get. Mul­vaney imme­di­ate­ly brought the bureau under the president’s direct polit­i­cal con­trol, assign­ing appointees to shad­ow career staffers in each CFPB divi­sion, mov­ing crit­i­cal super­vi­so­ry and enforce­ment func­tions into the director’s office, and request­ing no mon­ey for bureau oper­a­tions at all. In June, he fired his entire advi­so­ry board after sev­er­al mem­bers crit­i­cized his lead­er­ship. He also changed the agency’s name to the Bureau of Con­sumer Finan­cial Pro­tec­tion.

Among Mulvaney’s more rad­i­cal moves has been to defang the CFPB’s over­sight of stu­dent loans. Amer­i­can stu­dents are deeply in debt: 44 mil­lion peo­ple owe a com­bined $1.5 tril­lion. Eight mil­lion are now in default, while 3 mil­lion more are at least two pay­ments behind; three times as many peo­ple default­ed on stu­dent debt in 2016 than lost a home to fore­clo­sure. That makes these bor­row­ers sus­cep­ti­ble to scams: Under Cor­dray, the bureau received 60,000 com­plaints through August 2017—that’s one com­plaint per hour, 24 hours a day, sev­en days a week. The CFPB act­ed on many of them, return­ing $750 mil­lion to injured bor­row­ers, as well as con­duct­ing proac­tive super­vi­sion.

That didn’t sit well with lenders, and Trump’s new guard quick­ly moved to appease them. Even before Cor­dray resigned, the Edu­ca­tion Depart­ment ham­strung the CFPB by say­ing it would stop shar­ing stu­dent-loan data with the “over­reach­ing and unac­count­able” agency. Upon his appoint­ment, Mul­vaney fold­ed the bureau’s stu­dent-loan divi­sion into a con­sumer-edu­ca­tion office—a clear sig­nal that the CFPB would focus on pro­vid­ing infor­ma­tion about the loans, not on mon­i­tor­ing bad actors.

Seth Frot­man joined the CFPB in 2016. As the assis­tant direc­tor and stu­dent-loan ombuds­man, Frot­man was one of the high­est-rank­ing fed­er­al offi­cials over­see­ing stu­dent-loan ser­vicers. By August of this year, he’d had enough: “[Y]ou have used the Bureau to serve the wish­es of the most pow­er­ful finan­cial com­pa­nies in Amer­i­ca,” Frot­man wrote in his incen­di­ary res­ig­na­tion let­ter, not­ing that Mulvaney’s polit­i­cal appointees had “repeat­ed­ly under­cut and under­mined career CFPB staff” at the expense of stu­dents and to the great advan­tage of lenders. Frot­man fur­ther alleged that the bureau’s polit­i­cal staffers had sup­pressed evi­dence that the nation’s largest banks were “sad­dling [stu­dents] with legal­ly dubi­ous account fees.”

If Frot­man is right, this could have reper­cus­sions on a mas­sive civ­il action pre­vi­ous­ly filed by the CFPB against Navient, the largest stu­dent-loan ser­vicer in the coun­try. Navient is accused of sys­tem­at­i­cal­ly mis­lead­ing bor­row­ers about repay­ment options. In July, a judge reject­ed the company’s motion to have the civ­il action dis­missed; Mul­vaney hasn’t said whether the CFPB will pro­ceed with the suit, but con­ser­v­a­tive edi­to­r­i­al boards and Navient’s CEO are urg­ing him to aban­don it. “What this means is that there are col­lege kids out there who are being charged ille­gal fees by major banks,” Peter­son observes. “And the Trump administration’s polit­i­cal staff that’s in con­trol of the bureau cov­ered up that infor­ma­tion.”

Cyn­ics might expect Trump to throw stu­dents under the bus: This is, after all, a pres­i­dent who set­tled a mul­ti­mil­lion-dol­lar fraud case relat­ed to his own for-prof­it col­lege. Less predictable—but equal­ly disheartening—is the administration’s treat­ment of peo­ple in the armed forces.

Mem­bers of the mil­i­tary and vet­er­ans are unique­ly vul­ner­a­ble to loan sharks and scams. Rough­ly half of the Unit­ed States’ active-duty ser­vice mem­bers are under 25, and the mil­i­tary pro­vides many of them with their first reg­u­lar pay­check. Young sol­diers, sailors, and Air Force per­son­nel with lim­it­ed cred­it his­to­ries are required to move fre­quent­ly around the coun­try and over­seas, some­times with lit­tle notice, so their spous­es strug­gle to find sta­ble work. In mil­i­tary towns with a high pop­u­la­tion of young peo­ple far from home and in need of cred­it, finan­cial predators—particularly pay­day lenders and auto­mo­bile-financ­ing firms—are eager to swoop in. The Defense Depart­ment has found that ser­vice mem­bers are four times as like­ly as civil­ians to be tar­get­ed by unscrupu­lous lenders.

To lim­it the dam­age, Con­gress passed the Mil­i­tary Lend­ing Act of 2006, which capped inter­est rates and extra charges; until recent­ly, the CFPB sanc­tioned some lenders that vio­lat­ed the act. But the bureau’s work in this area seems unlike­ly to con­tin­ue. Pub­lic records show that on August 2, rep­re­sen­ta­tives from the Nation­al Auto­mo­bile Deal­ers Asso­ci­a­tion, the Amer­i­can Finan­cial Ser­vices Asso­ci­a­tion, and the Amer­i­can Bankers Asso­ci­a­tion met with offi­cials from the Depart­ment of Defense and Mulvaney’s Office of Man­age­ment and Bud­get to dis­cuss “Mil­i­tary Lend­ing Act lim­i­ta­tions on terms of con­sumer cred­it extend­ed to ser­vice mem­bers and depen­dents.” Doc­u­ments indi­cate that the indus­try groups want­ed relief from a rule restrict­ing the sale of a type of insur­ance, called “guar­an­teed accep­tance pro­tec­tion insur­ance” or GAP, to ser­vice mem­bers financ­ing their cars with MLA-pro­tect­ed loans.

Auto deal­ers like GAP insur­ance because it can be more prof­itable than the sale of the car itself. They por­tray it as a com­mon­sense prod­uct that pro­tects bor­row­ers who owe more than their car is worth if the vehi­cle gets totaled or stolen. But con­sumer advo­cates say GAP insur­ance is a cost­ly scam. A recent report from the Nation­al Con­sumer Law Cen­ter found that it was the sec­ond most fre­quent­ly pushed add-on by car deal­ers, after ser­vice con­tracts; that markups on the insur­ance aver­aged 170 per­cent; and that “con­sumers often find that GAP prod­ucts fail to pro­vide the promised ben­e­fits.”

Rep­re­sen­ta­tives of the nation’s car deal­ers and financiers present at the August 2 meet­ing want­ed per­mis­sion to keep push­ing GAP on mem­bers of the mil­i­tary, accord­ing to records. What they got was no more cops on their beat: The New York Times report­ed a week lat­er that the CFPB would stop proac­tive­ly super­vis­ing these deal­ers and lenders.

Paul Kantwill, a for­mer Army colonel who joined the CFPB under Cor­dray in late 2016 as assis­tant direc­tor for ser­vice-mem­ber affairs, likens this to “remov­ing your sen­tries from the guard tow­ers on your instal­la­tion.” Kantwill, who left the agency this past sum­mer, cau­tions that “you may have the guard tow­er there, but if there’s no one there to look at the fence line and to main­tain secu­ri­ty, you can expect that bad actors are going to get in.”

...

The sit­u­a­tion also pos­es a nation­al-secu­ri­ty risk. The Defense Depart­ment has found that finan­cial tur­moil has a demon­stra­ble effect on mil­i­tary readi­ness and morale. Kantwill says he’s seen it hap­pen: “There is a direct cor­re­la­tion between finan­cial readi­ness and mis­sion readi­ness.”

Think car deal­ers are scum­my? it gets worse. Per­haps no oth­er group has ben­e­fit­ed more direct­ly from Mulvaney’s largesse-by-neglect than pay­day lenders. Mul­vaney has trans­ferred the CFPB’s Office of Fair Lend­ing and Equal Oppor­tu­ni­ty from the spe­cial­ized Super­vi­sion, Enforce­ment, and Fair Lend­ing Divi­sion to the director’s office. He has also dropped a suit against some of the most decep­tive cred­i­tors in the coun­try: Gold­en Val­ley Lend­ing, Sil­ver Cloud Finan­cial, Moun­tain Sum­mit Finan­cial, and Majes­tic Lake Finan­cial.

Between August and Decem­ber 2013, Gold­en Val­ley Lend­ing and Sil­ver Cloud Finan­cial extend­ed $27 mil­lion in pay­day loans and vio­lat­ed the Truth in Lend­ing Act by hid­ing the true cost of these loans from con­sumers. Accord­ing to a CFPB com­plaint filed last year, these loans car­ried annu­al inter­est rates of any­where from 450 to 900 percent—meaning that a cus­tomer would have to repay up to $900 in inter­est alone over the course of a year on a $100 loan. (By con­trast, ear­li­er this year the New York attor­ney gen­er­al arrest­ed 10 peo­ple alleged­ly con­nect­ed to the Luc­ch­ese crime fam­i­ly for run­ning a lucra­tive loan-shark­ing oper­a­tion. The year­ly rate of their “usu­ri­ous loan pay­ments”: 200 per­cent.)

But there was a catch. Though Gold­en Val­ley and its ilk had straight­for­ward­ly vio­lat­ed state usury laws, they claimed to be pro­tect­ed by trib­al sov­er­eign immu­ni­ty, since they had been incor­po­rat­ed on Indi­an reser­va­tions. This kept state author­i­ties at bay, because they had no juris­dic­tion. But sov­er­eign immu­ni­ty can’t be invoked against the fed­er­al gov­ern­ment, and the CFPB took the oppor­tu­ni­ty to step in.

When Mul­vaney dropped the suit, he claimed that career CFPB staffers sup­port­ed his decision—only to back­track when NPR report­ed that his “entire career enforce­ment staff” had opposed it. The truth is, this type of lend­ing has helped bankroll Mulvaney’s polit­i­cal career. In the 2015–16 elec­tion cycle, pay­day lenders like the World Accep­tance Group (which also saw its CFPB charges dropped) gave Mul­vaney, then a con­gress­man from South Car­oli­na, $31,700, mak­ing him the ninth-high­est con­gres­sion­al recip­i­ent of dona­tions from the indus­try at the time. Gold­en Val­ley, mean­while, is still oper­at­ing and adver­tis­ing pay­day loans on its web­site.

To Mulvaney’s cred­it, he plays it straight with his donors: Last April, he told an Amer­i­can Bankers Asso­ci­a­tion con­fer­ence that “we had a hier­ar­chy in my office in Con­gress. 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.” And he has cer­tain­ly been doing a lot of “talk­ing.” The watch­dog group Pub­lic Cit­i­zen com­pared the 30 com­pa­nies with the most com­plaints in the CFPB data­base to Mulvaney’s donors through­out his con­gres­sion­al career. Nine­teen of the 30 companies—including eight of the top 10—had con­tributed, via polit­i­cal-action com­mit­tees, to him.

Mul­vaney has halt­ed enforce­ment and caused oth­er­wise ded­i­cat­ed pub­lic ser­vants to leave the CFPB in protest. But he hasn’t yet man­aged to pare back the bureau’s statu­to­ry author­i­ty. Waves of unsuc­cess­ful law­suits against the CFPB over the years have helped to estab­lish its legal author­i­ty, and Mul­vaney hasn’t con­vinced the Repub­li­can-con­trolled Con­gress to get rid of his posi­tion alto­geth­er, or to take over the inde­pen­dent agency’s bud­get out­right.

That might be because a vast major­i­ty of Amer­i­cans like finan­cial reg­u­la­tion in gen­er­al, and the CFPB in par­tic­u­lar. A poll con­duct­ed by Amer­i­cans for Finan­cial Reform found that three-quar­ters of like­ly 2018 vot­ers sup­port the exis­tence of the CFPB, and more than half are con­cerned about efforts to hob­ble it. That poll was tak­en before news of the planned pull­back on mil­i­tary lend­ing broke.

Christo­pher Peter­son says that the agency can, in the­o­ry, take up the mis­sion that he and many oth­er ide­al­ists signed up for in the years after the eco­nom­ic crash. “My sense is that the essen­tial strengths and fea­tures of the bureau are still intact,” he says. “With appro­pri­ate lead­er­ship in place, the bureau can con­tin­ue to serve the func­tion that Con­gress asked it to serve.”

Yet that would require the CFPB to be led by some­one who actu­al­ly cares about bor­row­ers. Let’s hope it doesn’t take anoth­er cri­sis.

———-

“Why Loan Sharks, Car Sales­men, and Pay­day Lenders Love Mick Mul­vaney” by George Zor­nick; The Nation; 09/13/2018

“Last Novem­ber, Cor­dray resigned to run for gov­er­nor of Ohio (his direc­tor­ship was slat­ed to end in July 2018). Trump’s pick to replace him was former House mem­ber Mick Mul­vaney (R‑SC), who also heads the Office of Man­age­ment and Bud­get. Mul­vaney imme­di­ate­ly brought the bureau under the president’s direct polit­i­cal con­trol, assign­ing appointees to shad­ow career staffers in each CFPB divi­sion, mov­ing crit­i­cal super­vi­so­ry and enforce­ment func­tions into the director’s office, and request­ing no mon­ey for bureau oper­a­tions at all. In June, he fired his entire advi­so­ry board after sev­er­al mem­bers crit­i­cized his lead­er­ship. He also changed the agency’s name to the Bureau of Con­sumer Finan­cial Pro­tec­tion.”

Yep, the impact of plac­ing Mick Mul­vaney at the head of the CFPB was imme­di­ate, in that he imme­di­ate­ly began defang­ing the agency and turn­ing it into a play­thing of spe­cial inter­ests. And per­haps no inter­est is more spe­cial in the eyes of the CFPB these day than the pay­day lenders. It’s an exam­ple of how the pay­day lend­ing indus­try is get­ting paid back for all the mon­ey its giv­en to Mul­vaney over the years:

...
Think car deal­ers are scum­my? it gets worse. Per­haps no oth­er group has ben­e­fit­ed more direct­ly from Mulvaney’s largesse-by-neglect than pay­day lenders. Mul­vaney has trans­ferred the CFPB’s Office of Fair Lend­ing and Equal Oppor­tu­ni­ty from the spe­cial­ized Super­vi­sion, Enforce­ment, and Fair Lend­ing Divi­sion to the director’s office. He has also dropped a suit against some of the most decep­tive cred­i­tors in the coun­try: Gold­en Val­ley Lend­ing, Sil­ver Cloud Finan­cial, Moun­tain Sum­mit Finan­cial, and Majes­tic Lake Finan­cial.

Between August and Decem­ber 2013, Gold­en Val­ley Lend­ing and Sil­ver Cloud Finan­cial extend­ed $27 mil­lion in pay­day loans and vio­lat­ed the Truth in Lend­ing Act by hid­ing the true cost of these loans from con­sumers. Accord­ing to a CFPB com­plaint filed last year, these loans car­ried annu­al inter­est rates of any­where from 450 to 900 percent—meaning that a cus­tomer would have to repay up to $900 in inter­est alone over the course of a year on a $100 loan. (By con­trast, ear­li­er this year the New York attor­ney gen­er­al arrest­ed 10 peo­ple alleged­ly con­nect­ed to the Luc­ch­ese crime fam­i­ly for run­ning a lucra­tive loan-shark­ing oper­a­tion. The year­ly rate of their “usu­ri­ous loan pay­ments”: 200 per­cent.)

But there was a catch. Though Gold­en Val­ley and its ilk had straight­for­ward­ly vio­lat­ed state usury laws, they claimed to be pro­tect­ed by trib­al sov­er­eign immu­ni­ty, since they had been incor­po­rat­ed on Indi­an reser­va­tions. This kept state author­i­ties at bay, because they had no juris­dic­tion. But sov­er­eign immu­ni­ty can’t be invoked against the fed­er­al gov­ern­ment, and the CFPB took the oppor­tu­ni­ty to step in.

When Mul­vaney dropped the suit, he claimed that career CFPB staffers sup­port­ed his decision—only to back­track when NPR report­ed that his “entire career enforce­ment staff” had opposed it. The truth is, this type of lend­ing has helped bankroll Mulvaney’s polit­i­cal career. In the 2015–16 elec­tion cycle, pay­day lenders like the World Accep­tance Group (which also saw its CFPB charges dropped) gave Mul­vaney, then a con­gress­man from South Car­oli­na, $31,700, mak­ing him the ninth-high­est con­gres­sion­al recip­i­ent of dona­tions from the indus­try at the time. Gold­en Val­ley, mean­while, is still oper­at­ing and adver­tis­ing pay­day loans on its web­site.

To Mulvaney’s cred­it, he plays it straight with his donors: Last April, he told an Amer­i­can Bankers Asso­ci­a­tion con­fer­ence that “we had a hier­ar­chy in my office in Con­gress. 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.” And he has cer­tain­ly been doing a lot of “talk­ing.” The watch­dog group Pub­lic Cit­i­zen com­pared the 30 com­pa­nies with the most com­plaints in the CFPB data­base to Mulvaney’s donors through­out his con­gres­sion­al career. Nine­teen of the 30 companies—including eight of the top 10—had con­tributed, via polit­i­cal-action com­mit­tees, to him.
...

Still, it’s worth keep­ing in mind that the CFPB isn’t yet per­ma­nent­ly bro­ken. The under­ly­ing stu­a­to­ry author­i­ty of the bureau is still in place. Mul­vaney is just choose to not use that author­i­ty. And that points towards one of the pos­si­ble con­se­quence of the pain this shut­down is inflict­ing on fed­er­al work­ers: if there ends up being a wave of fur­loughed work­ers being forced to use pay­day lenders, and get­ting fleeced in the process, this could end up being the kind of cri­sis that cre­ates pub­lic atten­tion and aware­ness of the numer­ous ways the Trump admin­is­tra­tion has neutered the CFPB and made the pub­lic vul­ner­a­ble to preda­to­ry lenders:

...
Mul­vaney has halt­ed enforce­ment and caused oth­er­wise ded­i­cat­ed pub­lic ser­vants to leave the CFPB in protest. But he hasn’t yet man­aged to pare back the bureau’s statu­to­ry author­i­ty. Waves of unsuc­cess­ful law­suits against the CFPB over the years have helped to estab­lish its legal author­i­ty, and Mul­vaney hasn’t con­vinced the Repub­li­can-con­trolled Con­gress to get rid of his posi­tion alto­geth­er, or to take over the inde­pen­dent agency’s bud­get out­right.

That might be because a vast major­i­ty of Amer­i­cans like finan­cial reg­u­la­tion in gen­er­al, and the CFPB in par­tic­u­lar. A poll con­duct­ed by Amer­i­cans for Finan­cial Reform found that three-quar­ters of like­ly 2018 vot­ers sup­port the exis­tence of the CFPB, and more than half are con­cerned about efforts to hob­ble it. That poll was tak­en before news of the planned pull­back on mil­i­tary lend­ing broke.

Christo­pher Peter­son says that the agency can, in the­o­ry, take up the mis­sion that he and many oth­er ide­al­ists signed up for in the years after the eco­nom­ic crash. “My sense is that the essen­tial strengths and fea­tures of the bureau are still intact,” he says. “With appro­pri­ate lead­er­ship in place, the bureau can con­tin­ue to serve the func­tion that Con­gress asked it to serve.”

Yet that would require the CFPB to be led by some­one who actu­al­ly cares about bor­row­ers. Let’s hope it doesn’t take anoth­er cri­sis.
...

All that’s required for the CFPB to return to the mis­sion of the agency is for it to be lead by some­one who actu­al­ly cares about pro­tect­ing bor­row­ers. Might the fleec­ing of fur­loughed fed­er­al work­ers by preda­to­ry lenders end up being the kind of cri­sis that forces Trump to replace Mul­vaney with some­one who isn’t a payed min­ion of preda­to­ry lenders? Prob­a­bly not, at least not as long as there’s a Repub­li­can pres­i­dent. But a short-term loan cri­sis could at least high­light the impor­tance of the CFPB pro­tec­tions to the Amer­i­can pub­lic. And high­light the fact that the Trump admin­is­tra­tion took those pro­tec­tions away.

So let’s hope there isn’t a fed­er­al work­er preda­to­ry loan cri­sis in the near future. But if there is such a cri­sis, let’s hope this results in a pub­lic recog­ni­tion that the Trump admin­is­tra­tion already effec­tive­ly ‘shut down’ the CFPB months ago when Mul­vaney took over and the only thing that’s going to re-open it and bring a return of those con­sumer bor­row­ing pro­tec­tions is a dif­fer­ent admin­is­tra­tion.

And, of course, if there does end up being a preda­to­ry loan cri­sis for these work­ers, let’s hope that results in a grow­ing pub­lic aware­ness that the only place where pain-free gov­ern­ment shut­downs exist is in the minds of out of touch bil­lion­aires like Wilbur Ross.

And in oth­er news...

Here’s a pair of sto­ries about the after­math of the now-end­ed fed­er­al gov­ern­ment shut­down that don’t real­ly tell us any­thing we did­n’t already know about the impact of shut­down on fed­er­al con­trac­tors — who often don’t qual­i­fy for back pay — but do pro­vide some more real world exam­ples of the impact that bring into focus how much point­less dam­age was done:

First, here’s an arti­cle that includes an inter­view of Yvette Hicks, a fed­er­al con­trac­tor who was work­ing as a secu­ri­ty guard at the Smith­son­ian Nation­al Air and Space Muse­um. Hicks explains how her excite­ment over the end­ing of the shut­down quick­ly revert­ed back to wor­ry. Why? Because all of those bill col­lec­tors over her unpaid bills start­ed call­ing right after the announce­ment of the end of the shut­down won­der­ing how soon they were going to get paid and Hicks — one of the thou­sands of low-wage fed­er­al con­trac­tors still does­n’t know how she’s going to pay those unpaid bills with­out back pay for those missed 5 weeks of work — sim­ply can­not pay those bills with­out that back pay. Also, she’s forced to ration her chil­dren’s asth­ma med­ica­tion and is wor­ried about becom­ing home­less again.

And while Hick­s’s sit­u­a­tion might sound like an excep­tion­al­ly bad non-rep­re­sen­ta­tive sit­u­a­tion for fed­er­al con­trac­tors, keep in mind that 40% of Amer­i­cans can’t cov­er a $400 emer­gency and almost 80% are liv­ing month-to-month. Decades of Repub­li­can neo-lib­er­al phi­los­o­phy have made Repub­li­can shut­downs a lot more painful for fur­loughed fed­er­al work­ers than would have been the case in the past. So the fact that Hicks sim­ply does­n’t have enough sav­ings to make up for 5 weeks of missed work is sad­ly typ­i­cal.

Hicks is in an unusu­al­ly bad sit­u­a­tion com­pared to her peers in one big way: she just start­ed her employ­ment and so did­n’t have any earned vaca­tion time built up. Her employ­er, Allied Uni­ver­sal, has announced that it’s allow­ing employ­ees to use vaca­tion buy­back for accrued vaca­tion time, which obvi­ous­ly won’t help new hires like Hicks. So when politi­cians try to dis­miss the dis­rup­tion the shut­down has on the lives of fed­er­al work­ers by describ­ing it as a vaca­tion, keep in mind that fed­er­al con­trac­tors may have been effec­tive­ly forced to use their vaca­tion time to pay for this missed work. A vaca­tion that involves sit­ting at home wor­ry­ing and maybe hold a yard sale. That’s the ‘vaca­tion’ thou­sands of fed­er­al con­trac­tors were just forced to take this year instead of their reg­u­lar vaca­tion, assum­ing they had this buy­back as an option at all.

And as the pres­i­dent of the SEIU union, which rep­re­sents hicks and oth­er fed­er­al con­trac­tors in jobs like secu­ri­ty guard and jan­i­to­r­i­al work, points out in the arti­cle, when some­one in Hick­s’s sit­u­a­tion missed debt pay­ments that could mean per­ma­nent dam­age to their cred­it rat­ing. So Hicks is being forced into a sit­u­a­tion that’s going to increase the odds of being forced to bor­row mon­ey to get by at the same time her cred­it rat­ing is poised to get dam­aged.

So while the shut­down has hope­ful­ly end­ed per­ma­nent­ly, Hick­s’s per­son­al sto­ry is a pow­er­ful reminder that the dam­age caused by the shut­down is still being accrued as the unpaid bills of the thou­sands of low wage fed­er­al work­ers who won’t be receiv­ing back pay remain unpaid:

Reuters

Wor­ries remain for U.S. gov­ern­ment con­trac­tors as shut­down ends

Katharine Jack­son
Jan­u­ary 26, 2019 / 2:31 PM

WASHINGTON (Reuters) — Min­utes after Pres­i­dent Don­ald Trump announced an end to the longest U.S. gov­ern­ment shut­down in his­to­ry on Fri­day, Yvette Hicks’ phone start­ed ring­ing.

“I had bill col­lec­tors call­ing me back-to-back-to-back won­der­ing when I could start mak­ing a pay­ment arrange­ment,” she said, recall­ing how her mood quick­ly changed from excite­ment back to wor­ry.

Hicks, 40, a secu­ri­ty guard at the Smith­son­ian Nation­al Air and Space Muse­um, is one of thou­sands of fed­er­al gov­ern­ment con­trac­tors who do not expect to be paid for the month of work they missed dur­ing the 35-day par­tial shut­down — and who remain at risk if Trump and law­mak­ers fail to reach a more last­ing agree­ment beyond the cur­rent three-week deal to reopen the gov­ern­ment.

Trump, who had demand­ed Democ­rats agree to fund con­struc­tion of a wall on the U.S.-Mexico bor­der before he would agree to reopen the gov­ern­ment, has signed leg­is­la­tion guar­an­tee­ing back pay for 800,000 fed­er­al employ­ees affect­ed by the shut­down.

Con­trac­tors, how­ev­er, were not includ­ed, leav­ing many wor­ried they won’t recov­er their loss­es.

With­out a pay­check, Hicks began rationing her children’s asth­ma med­ica­tion, con­sid­ered cash­ing in a life insur­ance pol­i­cy and prayed every day she could keep her fam­i­ly from becom­ing home­less again.

“I promised them that we would nev­er suf­fer like that again,” Hicks said in an inter­view at her home on Fri­day, cry­ing as she recalled the three years she and her four chil­dren spent with­out a home.

‘NO STABILITY’

It is not clear how many fed­er­al gov­ern­ment con­tract work­ers there are, though some esti­mates run into the mil­lions.

An offi­cial with the Ser­vice Employ­ees Inter­na­tion­al Union Local 32BJ, which rep­re­sents Hicks and near­ly 700 oth­er con­trac­tors, most­ly secu­ri­ty guards and jan­i­tors in Wash­ing­ton, said those mem­bers are among the low­est paid work­ers in the fed­er­al gov­ern­ment.

“These are not folks who can afford to miss a pay­check,” said Ali­son Hirsch, the unit’s vice pres­i­dent. “These are not folks who are mak­ing enough mon­ey to have a robust sav­ings account. It can per­ma­nent­ly alter their cred­it scores, their abil­i­ty to sup­port them­selves.”

When Hicks reports to work on Tues­day, it will be the first time she has been able to wear her uni­form since she was hired in late Decem­ber. Her first day was sched­uled for Jan. 1, the same day the Smith­son­ian, which over­sees the space muse­um and sev­er­al oth­ers in Wash­ing­ton, closed due to a lack of fund­ing.

With a book titled “Prayers for Dif­fi­cult Times” on the sofa beside her, Hicks tear­ful­ly described giv­ing her 8‑year-old son and 14-year-old daugh­ter small­er dos­es of their asth­ma med­i­cine to make it last longer, while lim­it­ing how much time they ran and spent out­side in the cold.

In a state­ment issued before Friday’s deal was reached, her employ­er, Allied Uni­ver­sal, said it would “pro­vide vaca­tion buy­back for accrued time,” which is unlike­ly to help new hires like Hicks. It also said it pro­vid­ed let­ters to fur­loughed employ­ees who were seek­ing to avoid late fees from cred­i­tors.

With bills pil­ing up and uncer­tain­ty over whether the gov­ern­ment will still be open beyond Feb. 15, Hicks said she still wor­ries about becom­ing home­less again.

...

———-

“Wor­ries remain for U.S. gov­ern­ment con­trac­tors as shut­down ends” by Katharine Jack­son; Reuters; 01/26/2019

““I had bill col­lec­tors call­ing me back-to-back-to-back won­der­ing when I could start mak­ing a pay­ment arrange­ment,” she said, recall­ing how her mood quick­ly changed from excite­ment back to wor­ry.”

That was how Yvette Hicks expe­ri­enced the end of the shut­down: from relief back to con­cern when the debt col­lec­tors all sud­den­ly start­ed call­ing about those unpaid bills. Unpaid bills that are going to remain unpaid with­out back pay for those 5 weeks of missed work. Because for thou­sands of of the low­est paid fed­er­al con­trac­tors like Hicks, like most Amer­i­cans, don’t have the sav­ings to cov­er a lost month of work. That’s the New Nor­mal in Amer­i­ca. The kind of New Nor­mal that makes gov­ern­ment shut­downs a lot more dam­ag­ing for fed­er­al con­trac­tors than it was in the past. Includ­ing the pos­si­bil­i­ty of per­ma­nent dam­age to their cred­it scores if they can’t pay those bills:

...

Hicks, 40, a secu­ri­ty guard at the Smith­son­ian Nation­al Air and Space Muse­um, is one of thou­sands of fed­er­al gov­ern­ment con­trac­tors who do not expect to be paid for the month of work they missed dur­ing the 35-day par­tial shut­down — and who remain at risk if Trump and law­mak­ers fail to reach a more last­ing agree­ment beyond the cur­rent three-week deal to reopen the gov­ern­ment.

Trump, who had demand­ed Democ­rats agree to fund con­struc­tion of a wall on the U.S.-Mexico bor­der before he would agree to reopen the gov­ern­ment, has signed leg­is­la­tion guar­an­tee­ing back pay for 800,000 fed­er­al employ­ees affect­ed by the shut­down.

Con­trac­tors, how­ev­er, were not includ­ed, leav­ing many wor­ried they won’t recov­er their loss­es.

...

‘NO STABILITY’

It is not clear how many fed­er­al gov­ern­ment con­tract work­ers there are, though some esti­mates run into the mil­lions.

An offi­cial with the Ser­vice Employ­ees Inter­na­tion­al Union Local 32BJ, which rep­re­sents Hicks and near­ly 700 oth­er con­trac­tors, most­ly secu­ri­ty guards and jan­i­tors in Wash­ing­ton, said those mem­bers are among the low­est paid work­ers in the fed­er­al gov­ern­ment.

“These are not folks who can afford to miss a pay­check,” said Ali­son Hirsch, the unit’s vice pres­i­dent. “These are not folks who are mak­ing enough mon­ey to have a robust sav­ings account. It can per­ma­nent­ly alter their cred­it scores, their abil­i­ty to sup­port them­selves.”
...

Per­ma­nent cred­it score dam­age for the low­est paid fed­er­al work­ers. That could still hap­pen despite the end the of the shut­down thanks to lack of back­pay for con­trac­tors.

And while Hick­s’s employ­er is offer­ing “vaca­tion buy­back for accrued time” which will help some of these con­trac­tors deal with the lack of back­pay, that won’t help employ­ees that don’t have the accrued vaca­tion time for what­ev­er rea­son:

...
When Hicks reports to work on Tues­day, it will be the first time she has been able to wear her uni­form since she was hired in late Decem­ber. Her first day was sched­uled for Jan. 1, the same day the Smith­son­ian, which over­sees the space muse­um and sev­er­al oth­ers in Wash­ing­ton, closed due to a lack of fund­ing.

With a book titled “Prayers for Dif­fi­cult Times” on the sofa beside her, Hicks tear­ful­ly described giv­ing her 8‑year-old son and 14-year-old daugh­ter small­er dos­es of their asth­ma med­i­cine to make it last longer, while lim­it­ing how much time they ran and spent out­side in the cold.

In a state­ment issued before Friday’s deal was reached, her employ­er, Allied Uni­ver­sal, said it would “pro­vide vaca­tion buy­back for accrued time,” which is unlike­ly to help new hires like Hicks. It also said it pro­vid­ed let­ters to fur­loughed employ­ees who were seek­ing to avoid late fees from cred­i­tors.

With bills pil­ing up and uncer­tain­ty over whether the gov­ern­ment will still be open beyond Feb. 15, Hicks said she still wor­ries about becom­ing home­less again.
...

Hicks was basi­cal­ly forced to take month long vaca­tion where she got the joy of rationing med­i­cine and wor­ry­ing about whether or not she might become home­less again. We can only hope that Hick­s’s sto­ry was an excep­tion­al­ly bad exam­ple of the lin­ger­ing impact of the shut­down, but there’s no deny­ing that the month-to-month liv­ing sit­u­a­tion with lit­tle to no sav­ings makes it a cer­tain­ty that 5 weeks of lost pay is finan­cial­ly per­ilous to a large por­tion of Amer­i­ca’s work­force, includ­ing its fed­er­al work­force. It’s one of the key fea­tures of our con­tem­po­rary gild­ed age.

Next, here’s an arti­cle with a cou­ple more exam­ples of fed­er­al con­trac­tor expe­ri­ences now that the shut­down has ten­ta­tive­ly end­ed. These work­ers are high­er up on the pay scale than Hicks is. Michelle Oler of St. Louis works as a con­trac­tor pro­cess­ing rur­al devel­op­ment claims for the Agri­cul­ture Depart­ment. She might be receiv­ing back­pay but does­n’t know if that hap­pens. So far she esti­mates the shut­down cost her $3,500. There’s also Kevin Doyle, a par­ent work­ing as an encryp­tion spe­cial­ist at Laugh­lin Air Force Base. He’s lost around $5,000. In direct finan­cial terms, that’s the kind of mon­ey this shut­down cost thou­sands of con­trac­tors like Doyle an Oler. And while fed­er­al employ­ees are back to work, their con­trac­tor coun­ter­parts may not be back to work right away. That depends on how soon the fed­er­al employ­ees get every­thing back up and run­ning. So thou­sands of fed­er­al con­trac­tors remain won­der­ing when exact­ly they’re going to be going back to work and whether Trump will shut it all down again in a few weeks. And while they both make much more than Hicks, nei­ther describes hav­ing the kind of finan­cial cush­ion that makes los­ing thou­sands of dol­lars a stress free expe­ri­ence. Instead, both Doyle and Oler describe expe­ri­enc­ing anx­i­ety and sleep­less­ness dur­ing the shut­down and both are so spooked by the expe­ri­ence that they’re plan­ning on get­ting dif­fer­ent jobs:

Asso­ci­at­ed Press

End Of Shut­down Still Leaves Con­tract Work­ers Hang­ing

By JAY REEVES
01/27/2019

BIRMINGHAM, Ala. (AP) — Fed­er­al employ­ees are turn­ing on office lights and com­put­ers and reopen­ing nation­al parks and muse­ums for the first time in weeks, but oth­ers employed by gov­ern­ment con­trac­tors face still more uncer­tain­ty over when they’ll resume work or whether they’ll ever be paid for time lost to the stale­mate over Pres­i­dent Don­ald Trump’s bor­der wall.

For the hun­dreds of thou­sands of peo­ple who work for pri­vate com­pa­nies that sup­port gov­ern­ment, the future will be decid­ed in part by how quick­ly fed­er­al agen­cies get run­ning after the record 35-day shut­down, the fine print of con­tracts and the kind­ness of strangers.

Michelle Oler of St. Louis resort­ed to online fundrais­ing to pay bills while side­lined from her con­tract­ing job pro­cess­ing rur­al devel­op­ment claims for the Agri­cul­ture Depart­ment, and she’s still unsure when she’ll resume work or receive mon­ey to com­pen­sate for missed pay­checks.

“The esti­mate of what I’ve lost finan­cial­ly due to the shut­down is upwards of $3,500. The anx­i­ety, sleep­less­ness and depres­sion make it feel like much more,” Oler said Sun­day in an inter­view by email. Her GoFundMe page has brought in only $50 so far.

Kevin Doyle, a father of three, esti­mat­ed he’s out around $5,000 from his con­tract­ing job as an encryp­tion spe­cial­ist at Laugh­lin Air Force Base on the Texas-Mex­i­co bor­der. He said he didn’t sleep and lost weight dur­ing the shut­down as both the stress and the bills piled up.

Doyle said he will return to work on Mon­day, but he starts a new job Fri­day with anoth­er com­pa­ny that he hopes will be more sta­ble if talks fail over Trump’s demand for mon­ey for a wall and anoth­er shut­down begins next month.

“We were scrap­ing pen­nies and nick­els togeth­er one day to get the baby a Hap­py Meal,” said Doyle, 40. “It’s just that bad.”

The par­tial gov­ern­ment shut­down end­ed when Trump backed off his demand that Con­gress com­mit $5.7 bil­lion for a U.S.-Mexico bor­der wall before fed­er­al agen­cies could resume work. All or parts of mul­ti­ple fed­er­al agen­cies were affect­ed, with some employ­ees fur­loughed and oth­ers forced to work with­out pay.

The 800,000 fed­er­al work­ers who were affect­ed will receive back pay, but con­trac­tors don’t have the same guar­an­tee.

...

Doyle said it could take his fam­i­ly a long time to dig out from under the shutdown’s effect. The mort­gage and pow­er bills are both two months behind, Doyle said, and he doesn’t expect anoth­er pay­check before Feb. 28.

Doyle’s wife can’t work because of a back injury, he said, and the fam­i­ly wasn’t eli­gi­ble for food assis­tance because of past wages. A food bank was out of items by the time they got there, he said.

“A work­er there gave us a $50 Wal­mart gift card out of the kind­ness of her heart,” he said.

In Mis­souri, Oler is thank­ful she moved in with two room­mates in ear­ly Decem­ber before the shut­down began. The change dropped her expens­es dras­ti­cal­ly from the $800 a month she was pay­ing for rent, util­i­ties, inter­net, phone, car insur­ance and food for her and her cat.

Even with small­er bills, though, Oler said she is still look­ing for a new job because she can’t take the stress of work­ing with the gov­ern­ment any­more.

...

———-

“End Of Shut­down Still Leaves Con­tract Work­ers Hang­ing” by JAY REEVES; Asso­ci­at­ed Press; 01/27/2019

“For the hun­dreds of thou­sands of peo­ple who work for pri­vate com­pa­nies that sup­port gov­ern­ment, the future will be decid­ed in part by how quick­ly fed­er­al agen­cies get run­ning after the record 35-day shut­down, the fine print of con­tracts and the kind­ness of strangers.”

Thou­sands of fed­er­al con­trac­tors like Michelle Oler are are still effec­tive­ly fur­loughed. Oler does­n’t know if she’ll get back­pay or when she actu­al­ly returns to work. She’s look­ing for a new job:

...
Michelle Oler of St. Louis resort­ed to online fundrais­ing to pay bills while side­lined from her con­tract­ing job pro­cess­ing rur­al devel­op­ment claims for the Agri­cul­ture Depart­ment, and she’s still unsure when she’ll resume work or receive mon­ey to com­pen­sate for missed pay­checks.

“The esti­mate of what I’ve lost finan­cial­ly due to the shut­down is upwards of $3,500. The anx­i­ety, sleep­less­ness and depres­sion make it feel like much more,” Oler said Sun­day in an inter­view by email. Her GoFundMe page has brought in only $50 so far.

...

In Mis­souri, Oler is thank­ful she moved in with two room­mates in ear­ly Decem­ber before the shut­down began. The change dropped her expens­es dras­ti­cal­ly from the $800 a month she was pay­ing for rent, util­i­ties, inter­net, phone, car insur­ance and food for her and her cat.

Even with small­er bills, though, Oler said she is still look­ing for a new job because she can’t take the stress of work­ing with the gov­ern­ment any­more.
...

Kevin Doyle found him­self out $5,000 pay and two months behind of the mort­gage and pow­er bills. He does­n’t expect to receive his next pay­check for anoth­er month. He’s start­ing a new job Fri­day that he hopes is more sta­ble:

...
Kevin Doyle, a father of three, esti­mat­ed he’s out around $5,000 from his con­tract­ing job as an encryp­tion spe­cial­ist at Laugh­lin Air Force Base on the Texas-Mex­i­co bor­der. He said he didn’t sleep and lost weight dur­ing the shut­down as both the stress and the bills piled up.

Doyle said he will return to work on Mon­day, but he starts a new job Fri­day with anoth­er com­pa­ny that he hopes will be more sta­ble if talks fail over Trump’s demand for mon­ey for a wall and anoth­er shut­down begins next month.

“We were scrap­ing pen­nies and nick­els togeth­er one day to get the baby a Hap­py Meal,” said Doyle, 40. “It’s just that bad.”

...

Doyle said it could take his fam­i­ly a long time to dig out from under the shutdown’s effect. The mort­gage and pow­er bills are both two months behind, Doyle said, and he doesn’t expect anoth­er pay­check before Feb. 28.

Doyle’s wife can’t work because of a back injury, he said, and the fam­i­ly wasn’t eli­gi­ble for food assis­tance because of past wages. A food bank was out of items by the time they got there, he said.

“A work­er there gave us a $50 Wal­mart gift card out of the kind­ness of her heart,” he said.
...

It’s also all a reminder of one of the lin­ger­ing costs of this shut­down that does­n’t go away even after the shut­down ends: the psy­chic cost of nev­er know­ing when the next shut­down will hap­pen that grows with each Repub­li­can shut­down. So now it’s a lit­tle big­ger. And even­tu­al­ly that psy­chic cost grows enough to dri­ve peo­ple out of gov­ern­ment work and shrink the avail­able pool.

So as we can see, even a tem­po­rary shut­down feeds into the GOP’s long-stand­ing ‘starve the beast’ strat­e­gy of shrink­ing the fed­er­al gov­ern­ment. Instead of starv­ing the gov­ern­ment of mon­ey though tax cuts for the rich and cor­po­ra­tions, the Repub­li­can shut­down strat­e­gy is starv­ing the fed­er­al gov­ern­ment of poten­tial employ­ees by mak­ing fears of get­ting fur­loughed some­thing to be increas­ing­ly expect­ed each time the GOP forces anoth­er shut­down as a nego­ti­at­ing tac­tic. It’s anoth­er Repub­li­can con­tri­bu­tion to the Amer­i­can New Nor­mal.

Here’s a pair of arti­cles that, tak­en togeth­er, high­light some remark­able polit­i­cal oppor­tu­ni­ties for the US head­ing into the 2020 elec­tion cycle:

The first arti­cle is about the total­ly unsur­pris­ing 77 per­cent spike in the US fed­er­al bud­get deficit as a con­se­quence of the GOP tax cut. Despite this surge in the deficit, the arti­cle indi­cates that the White House is plan­ning on mak­ing eco­nom­ic pol­i­cy one of the areas of focus for the Trump 2020 reelec­tion capaign. The Trump team will pre­sum­ably argue that the US econ­o­my is bet­ter than ever (because they say that regard­less of the real­i­ty) while simul­ta­ne­ous­ly assert­ing that the spike in the deficit is just tem­po­rary as we wait for the ‘sup­ply-side’ mag­ic of the tax cuts to take effect and at the same time blam­ing the ris­ing deficits on too much gov­ern­ment spend­ing.

The sec­ond arti­cle is about the Repub­li­can Par­ty’s new focus on demo­niz­ing the “Green New Deal” (GND) — the vague slew of pol­i­cy pro­pos­als put for­ward by Alexan­dria Oca­sio-Cortez that com­bines an over­haul of the US econ­o­my towards an envi­ron­men­tal­ly sus­tain­able mod­el with an expan­sion of the safe­ty-net into areas like uni­ver­sal basic incomes and job guar­an­tees — by mak­ing up a com­plete­ly fab­ri­cat­ed $93 tril­lion price tag for the GND in the first ten years. That’s the num­ber that Amer­i­can Action Forum (AAF), a right-wing think tank, came up with. Except that $93 tril­lion over a decade num­ber does­n’t actu­al­ly show up any­where in the AAF’s report on the Green New Deal and it turns out the AFF can’t real­ly explain how it arrived at the num­ber. But that $93 tril­lion num­ber has been used over and over by the GOP in recent weeks.

Now here’s where that made-up $93 tril­lion GND price tag cre­ates an inter­est­ing polit­i­cal oppor­tu­ni­ty in rela­tion to the GOP’s already-dis­as­trous tax cut: the sec­ond arti­cle notes that, of the $93 tril­lion price tag that AAF con­coct­ed as a GND cost esti­mate, about $80.6 tril­lion of that was the (fake) esti­ma­tion of the cost of all of the jobs guar­an­tee and uni­ver­sal health­care that were part of the GND pro­pos­al. That leaves a $12–13 tril­lion esti­mat­ed cost for the actu­al envi­ron­men­tal over­haul for the GND over the first decade.

The AAF study actu­al­ly gives a range of $51 tril­lion to $93 tril­lion for the Green New Deal. The GOP just focus­es on the $93 tril­lion num­ber. But if we look at that range, it implies a $43–80 tril­lion esti­mat­ed cost of the social pro­grams and $7–13 tril­lion in esti­mat­ed costs of the ‘green’ parts of the Green New Deal over 10 years. And that starts putting the GOP’s fake exag­ger­at­ed cost of the envi­ron­men­tal part of Green New Deal in a sim­i­lar price range to the costs of the GOP tax cuts. Recall that the offi­cial 10 year cost of the GOP tax cuts was $1.5 tril­lion but those were always joke esti­mates based on unre­al­is­tic assump­tions about +3 per­cent eco­nom­ic growth over the next decade and pow­er­ful sup­ply-side effects. As the 77 spike in the deficit and the lack of any sig­nif­i­cant boost in busi­ness invest­ments makes clear, the real cost of the GOP tax cut over the next 10 years is going to be much high­er than $1.5 tril­lion. How much high­er? $2.5 tril­lion? $3 tril­lion? $3.5 per­haps if there’s a nasty reces­sion?

So let’s say we are look­ing at a $2–3 tril­lion real 10 year cost for the Trump/GOP tax cuts. Now let’s com­pare that to the $7–13 tril­lion esti­mate 10 price tag for the ‘green’ part of the Green New Deal and fac­tor in that the cost esti­mates are wild­ly inflat­ed num­bers gen­er­at­ed by a right-wing think-tank that can’t even back up its num­bers. In oth­er words, that $7–13 tril­lion range should prob­a­bly be cut in half at min­i­mum just to account for the fact that the AAF num­bers of made up pro­pa­gan­da garbage num­bers, giv­ing a much more rea­son­able range for the ‘green’ part of the Green New Deal over 10 years at some­where around $3.5–6.5 tril­lion. In oth­er words, when you account for the decep­tive under­es­ti­ma­tion of the costs of the Trump/GOP tax cut with the decep­tive over­es­ti­ma­tion of the cost of the Green New Deal, the cost esti­mates of the two poli­cies start over­lap­ping, cre­at­ing the polit­i­cal choice for US vot­ers: do they want the Green New Deal or the Trump/GOP tax cut. The price tags are com­pa­ra­ble.

And, again, we’re talk­ing about cost esti­mates for the GND that have been wild­ly inflat­ed by AAF in the first place. The pres­i­dent of AAF, Dou­glas Holtz-Eakin, actu­al­ly con­fess­es that he has no idea how much the GND would actu­al­ly cost, say­ing, “Is it bil­lions or trillions?...Any pre­ci­sion past that is illu­so­ry.” Yes, the head of the think-tank that came up with the $93 tril­lion esti­mate admit­ted that it was impos­si­ble to get more pre­cise in the esti­mate than ask­ing the ques­tion of whether it would cost bil­lions or tril­lions. In oth­er words, the real AAF cost esti­mate of the GND is some­where between less than $1 tril­lion and $93 tril­lion.

Now, in fair­ness, Holtz-Eakin is cor­rect that it is extreme­ly dif­fi­cult to esti­mate the actu­al cost of the GND because it’s sim­ply a vague col­lec­tion of con­cepts and not an actu­al sol­id pol­i­cy pro­pos­al. Still, if it’s so vague that the most pre­cise you can get is to ask whether or not it will cost bil­lions or tril­lions of dol­lars it’s clear­ly pret­ty absurd to arrive at a $93 tril­lion price tag. And it’s even more absurd for the GOP to latch onto that num­ber. But sell­ing absur­di­ties with a straight face is a GOP spe­cial­ty so this is also exact­ly what we should have expect­ed. And why we should­n’t be sur­prised to learn that the White House is plan­ning on treat­ing 2020 as a ref­er­en­dum on Trump’s eco­nom­ic poli­cies despite a 77 per­cent surge in the deficit:

The Wash­ing­ton Post

The fed­er­al deficit bal­looned at start of new fis­cal year, up 77 per­cent from a year before

By Dami­an Palet­ta
March 5, 2019

The fed­er­al bud­get deficit bal­looned rapid­ly in the first four months of the fis­cal year amid falling tax rev­enue and high­er spend­ing, the Trea­sury Depart­ment said Tues­day, pos­ing a new chal­lenge for the White House and Con­gress as they pre­pare for a num­ber of bud­get bat­tles.

The deficit grew 77 per­cent in the first four months of fis­cal 2019 com­pared with the same peri­od one year before, Trea­sury said.

The total deficit for the four-month peri­od was $310 bil­lion, Trea­sury said, up from $176 bil­lion for the same peri­od one year ear­li­er.

“It’s big tax cuts com­bined with big increas­es in spend­ing when they already had big deficits,” said for­mer Sen­ate Bud­get Com­mit­tee chair­man Kent Con­rad (D‑N.D.). “So guess what, it’s crazi­ness!”

When Repub­li­cans seized con­trol of the House of Rep­re­sen­ta­tives dur­ing the Oba­ma admin­is­tra­tion, law­mak­ers and White House offi­cials embarked on a num­ber of strained nego­ti­a­tions to try to reduce the gap between spend­ing and tax rev­enue. Dur­ing the Trump admin­is­tra­tion, there have not been any sim­i­lar dis­cus­sions, and Pres­i­dent Trump has large­ly enact­ed an agen­da of tax cuts and spend­ing increas­es that had grown the deficit marked­ly.

Tax rev­enue for Octo­ber 2018 through Jan­u­ary 2019 fell $19 bil­lion, or 2 per­cent, Trea­sury said. It not­ed a major reduc­tion in cor­po­rate tax pay­ments over the first four months of the fis­cal year, falling close to 25 per­cent, or $17 bil­lion.

As part of the 2017 tax cut law, the tax rate paid by cor­po­ra­tions was low­ered from 35 per­cent to 21 per­cent.

Spend­ing, mean­while, increased 9 per­cent over the same peri­od.

The biggest increas­es were for defense mil­i­tary pro­grams, which saw a 12 per­cent increase, and Medicare, which saw a 16 per­cent increase.

The Con­gres­sion­al Bud­get Office has pro­ject­ed that the deficit this year will reach close to $900 bil­lion, because the gov­ern­ment spends so much more mon­ey than it brings in through rev­enue.

The White House next week is expect­ed to pro­pose a new bud­get plan for the fis­cal year that begins in Octo­ber, and Democ­rats are work­ing on spend­ing plans of their own. So far, there has been lit­tle effort to rec­on­cile dif­fer­ences between both par­ties, and nei­ther has shown much inter­est in address­ing the widen­ing bud­get deficit.

White House eco­nom­ic advis­er Lar­ry Kud­low on Tues­day acknowl­edged that nation­al debt as a share of GDP has “inched up a bit,” but added in an inter­view on Fox News: “We are mak­ing an invest­ment in America’s future … and if that means we incur some addi­tion­al debt in the short run, so be it.”

Kud­low said “Growth solves the prob­lem,” and pre­dict­ed that the deficit-to-GDP ratio will come down with growth. “That will solve all of these prob­lems and peo­ple will be very pros­per­ous.”

The White House plan will pro­pose cut­ting a num­ber of domes­tic pro­grams by at least 5 per­cent, includ­ing things like envi­ron­men­tal pro­tec­tion, edu­ca­tion and for­eign aid, accord­ing to Trump admin­is­tra­tion offi­cials who have pre­viewed some of the plans. It will also pro­pose adher­ing to caps on mil­i­tary and non­mil­i­tary pro­grams put in place sev­er­al years ago, but it will simul­ta­ne­ous­ly pro­pose boost­ing defense spend­ing in an uncapped pro­gram as a way to divert more mon­ey to the mil­i­tary.

Fis­cal con­ser­v­a­tives have crit­i­cized this type of maneu­ver in past years, but White House act­ing bud­get direc­tor Russ Vought wrote in an edi­to­r­i­al last week that it was the best option for divert­ing more mon­ey to the mil­i­tary.

The bal­loon­ing deficit comes as inter­est rates are expect­ed to begin ris­ing, dri­ving up the cost of bor­row­ing mon­ey. The gov­ern­ment is pro­ject­ed to spend $383 bil­lion on inter­est pay­ments for its debt this year, and that will rise to $581 bil­lion in 2022, accord­ing to the CBO.

There has been a total break­down in Wash­ing­ton, how­ev­er, over how to address the bud­get deficit. The White House has walled off pop­u­lar pro­grams Medicare and Social Secu­ri­ty from any pro­posed cuts, with Trump say­ing it would be too polit­i­cal­ly unpop­u­lar to pur­sue changes to pro­grams used by tens of mil­lions of Amer­i­cans.

Democ­rats are also split over how to pro­ceed. The ranks of fis­cal hawks have dwin­dled, and a new­er, vocal wing of the par­ty has called for more deficit spend­ing to finance social pro­grams. Some in that wing argue the debt is less press­ing than oth­er social mal­adies, such as pover­ty or inad­e­quate health cov­er­age, while oth­ers argue the debt is of lit­tle con­se­quence at all.

Instead of try­ing to resolve their dif­fer­ences, the White House and some Democ­rats are seek­ing to make the 2020 elec­tions a ref­er­en­dum on eco­nom­ic pol­i­cy, sug­gest­ing nei­ther side is look­ing to reach a com­pro­mise in the com­ing months.

But the White House and Con­gress must reach an agree­ment on a new spend­ing pack­age by Sept. 30, 2019, or they could face anoth­er gov­ern­ment shut­down.

Pol­i­cy­mak­ers must also reach an agree­ment by this fall on rais­ing or sus­pend­ing the debt ceil­ing, as the gov­ern­ment will no longer be able to bor­row mon­ey to cov­er many pay­ments if Con­gress doesn’t act.

Law­mak­ers have not begun debat­ing how to deal with the debt ceil­ing at all, even though the last tem­po­rary sus­pen­sion end­ed March 1. The Trea­sury Depart­ment is now sus­pend­ing cer­tain pay­ments and enact­ing delay tac­tics to allow it to con­tin­ue fund­ing oper­a­tions to buy pol­i­cy­mak­ers more time.

Dur­ing the tax cut debate in 2017, the White House promised that slash­ing tax rates would end up cre­at­ing more rev­enue because it would allow the econ­o­my to grow at a faster clip. Eco­nom­ic growth did pick up in 2018, but Democ­rats have said the growth will be short-lived. So far, the growth has not come close to the lev­els need­ed to off­set the $1.5 tril­lion in tax reduc­tions that were part of the leg­is­la­tion.

The fed­er­al gov­ern­ment is now more than $22 tril­lion in debt, large­ly rep­re­sent­ing an accu­mu­la­tion of all the mon­ey it has bor­rowed to finance pro­grams in past years. A deficit is the one-year gap between spend­ing and rev­enue, and the debt is the total amount of mon­ey owed by the gov­ern­ment.

The U.S. econ­o­my is still the strongest in the world, and investors have retained a healthy appetite for U.S. gov­ern­ment debt because the coun­try has nev­er default­ed on its oblig­a­tions. But large debt lev­els have caused finan­cial crises in a num­ber of oth­er coun­tries and forced major eco­nom­ic changes that have led to reces­sions, a phe­nom­e­non that some have warned could hap­pen in the Unit­ed States if steps aren’t tak­en.

...

———-

“The fed­er­al deficit bal­looned at start of new fis­cal year, up 77 per­cent from a year before” by Dami­an Palet­ta; The Wash­ing­ton Post; 03/05/2019

“The deficit grew 77 per­cent in the first four months of fis­cal 2019 com­pared with the same peri­od one year before, Trea­sury said.”

Behold! That mag­ic of sup­ply-side eco­nom­ics. You sim­ply slash tax­es on the wealthy and big cor­po­ra­tions and the deficit mag­i­cal­ly spikes. That was­n’t exact­ly part of the GOP’s sales pitch but it’s what US vot­ers got: A giant tax cut direct­ed at the wealth­i­est seg­ments of Amer­i­can soci­ety (and for­eign cor­po­ra­tions) that’s act­ed as a short-term mini-stim­u­lus at best but done noth­ing demon­stra­ble in terms of sow­ing the seeds of future eco­nom­ic growth and under­mined the long-term finances of the US. And at just one year into this new tax regime we’re already at the point where the short-term ben­e­fits have peaked while the long-term costs are surg­ing.

And note how, despite the short-term eco­nom­ic stim­u­lus that tax cuts of this mag­ni­tude would inevitably pro­vide, there’s still been a 25 per­cent drop off in cor­po­rate tax receipts. Which is not at all sur­pris­ing giv­en that cor­po­rate tax rates were slashed from 35 per­cent to 21 per­cent:

...
When Repub­li­cans seized con­trol of the House of Rep­re­sen­ta­tives dur­ing the Oba­ma admin­is­tra­tion, law­mak­ers and White House offi­cials embarked on a num­ber of strained nego­ti­a­tions to try to reduce the gap between spend­ing and tax rev­enue. Dur­ing the Trump admin­is­tra­tion, there have not been any sim­i­lar dis­cus­sions, and Pres­i­dent Trump has large­ly enact­ed an agen­da of tax cuts and spend­ing increas­es that had grown the deficit marked­ly.

Tax rev­enue for Octo­ber 2018 through Jan­u­ary 2019 fell $19 bil­lion, or 2 per­cent, Trea­sury said. It not­ed a major reduc­tion in cor­po­rate tax pay­ments over the first four months of the fis­cal year, falling close to 25 per­cent, or $17 bil­lion.

As part of the 2017 tax cut law, the tax rate paid by cor­po­ra­tions was low­ered from 35 per­cent to 21 per­cent.
...

It’s also both note­wor­thy and utter­ly unsur­pris­ing that the White House is com­ing out with this year’s bud­get pro­pos­al. The White House bud­get pro­pos­als are always inter­est­ing polit­i­cal doc­u­ments giv­en that they are pure­ly sug­gest­ed bud­gets (Con­gress writes the bud­get) that the pub­lic does­n’t pay close atten­tion to, so they tend to be extra insane even by GOP stan­dards. Typ­i­cal­ly, GOP White House bud­get pro­pos­als are far­ci­cal call for mas­sive across the board spend­ing cuts for every­thing but Social Secu­ri­ty, Medicare, and the mil­i­tary, which the promise that it would bal­ance the bud­get if it was fol­lowed for a decade. And this year’s White House bud­get pro­pos­al is no excep­tion, except that it does­n’t promise to bal­ance the bud­get for 15 years instead of 10 years. That’s how bad the bud­get sit­u­a­tion is as a result of the GOP tax cut: even the far­ci­cal GOP bud­get pro­pos­als that are always filled with wild-eyed opti­mism about the mag­ic of sup­ply-side eco­nom­ics had to to become a lit­tle opti­mistic as the dis­as­trous con­se­quences of the GOP’s 2017 tax cut rapid­ly unfolds:

...
Spend­ing, mean­while, increased 9 per­cent over the same peri­od.

The biggest increas­es were for defense mil­i­tary pro­grams, which saw a 12 per­cent increase, and Medicare, which saw a 16 per­cent increase.

The White House next week is expect­ed to pro­pose a new bud­get plan for the fis­cal year that begins in Octo­ber, and Democ­rats are work­ing on spend­ing plans of their own. So far, there has been lit­tle effort to rec­on­cile dif­fer­ences between both par­ties, and nei­ther has shown much inter­est in address­ing the widen­ing bud­get deficit.

...

The White House plan will pro­pose cut­ting a num­ber of domes­tic pro­grams by at least 5 per­cent, includ­ing things like envi­ron­men­tal pro­tec­tion, edu­ca­tion and for­eign aid, accord­ing to Trump admin­is­tra­tion offi­cials who have pre­viewed some of the plans. It will also pro­pose adher­ing to caps on mil­i­tary and non­mil­i­tary pro­grams put in place sev­er­al years ago, but it will simul­ta­ne­ous­ly pro­pose boost­ing defense spend­ing in an uncapped pro­gram as a way to divert more mon­ey to the mil­i­tary.

Fis­cal con­ser­v­a­tives have crit­i­cized this type of maneu­ver in past years, but White House act­ing bud­get direc­tor Russ Vought wrote in an edi­to­r­i­al last week that it was the best option for divert­ing more mon­ey to the mil­i­tary.
...

And yet the White House is sig­nal­ing that it’s plan­ning on mak­ing 2020 a ref­er­en­dum on eco­nom­ic pol­i­cy. This is sur­pris­ing in the sense that the you would think eco­nom­ic pol­i­cy is some­thing the GOP would­n’t want to talk about giv­en that the out­ra­geous pol­i­cy mal­prac­tice of the GOP tax cuts are already becom­ing unde­ni­able. But deny­ing the unde­ni­able is a GOP spe­cial­ty so it’s still no sur­prise that the White House is sig­nal­ing that it wants to run on the lega­cy of these tax cuts. Of course it does:

...
Democ­rats are also split over how to pro­ceed. The ranks of fis­cal hawks have dwin­dled, and a new­er, vocal wing of the par­ty has called for more deficit spend­ing to finance social pro­grams. Some in that wing argue the debt is less press­ing than oth­er social mal­adies, such as pover­ty or inad­e­quate health cov­er­age, while oth­ers argue the debt is of lit­tle con­se­quence at all.

Instead of try­ing to resolve their dif­fer­ences, the White House and some Democ­rats are seek­ing to make the 2020 elec­tions a ref­er­en­dum on eco­nom­ic pol­i­cy, sug­gest­ing nei­ther side is look­ing to reach a com­pro­mise in the com­ing months.
...

Ok, so that’s a look at how the GOP’s 2017 tax cut dis­as­ter is already open­ly dis­as­trous. In a way it’s refresh­ing­ly trans­par­ent giv­en the GOP’s long-stand­ing tac­tic of tax cuts that result in bud­get dis­as­ter years down the line. This time it result­ed in an imme­di­ate bud­get dis­as­ter. Which is anoth­er rea­son why it’s still a lit­tle sur­pris­ing the White House is plan­ning on mak­ing 2020 a ref­er­en­dum on eco­nom­ic pol­i­cy. Even if the econ­o­my is still doing ok in the short-run in 2020 there’s still a clear and present dan­ger to the long-term eco­nom­ic health giv­en the imme­di­ate dis­as­trous impact this tax cut has had on the bud­get.

And that bring us to the next GOP agen­da item that pos­es a mas­sive long-term threat to the health of the US econ­o­my: the col­lapse of the envi­ron­ment. It’s a top­ic that should be at the cen­ter of the 2020 elec­tion, and pret­ty much every elec­tion. The col­lapse of the bios­phere is a pret­ty vital issue whether we treat it as one or not.

So, of course, the GOP is com­plete­ly fix­at­ed on demo­niz­ing the ‘Green New Deal’ and cast­ing the cost of tran­si­tion­ing to a sus­tain­able econ­o­my as wild­ly unnaf­ford­able. And as the fol­low­ing Politi­co arti­cle describes, a big part of the GOP’s strat­e­gy for cast­ing the Green New Deal as wild­ly unaf­ford­able is by rely­ing on a $51-$93 tril­lion 10 year cost esti­mate arrived at by the right-wing think tank Amer­i­can Action Forum (AFF). Of the $93 tril­lion, $80 tril­lion was the esti­mat­ed costs for social pro­grams like uni­ver­sal basic income and Medicare for All, leav­ing about $13 tril­lion as the esti­mat­ed high end of the costs for the ‘green’ part of the Green New Deal accord­ing to this far­ci­cal right-wing study that’s becomes cen­tral to the GOP’s attack on the envi­ron­ment:

Politi­co

The bogus num­ber at the cen­ter of the GOP’s Green New Deal attacks

Repub­li­cans’ esti­mates that the cli­mate plan would cost $93 tril­lion are based on a think tank study that does­n’t endorse that total.

By ZACK COLMAN

03/10/2019 07:02 AM EDT

Repub­li­cans claim the Green New Deal would cost $93 tril­lion — a num­ber that would dwarf the eco­nom­ic out­put of every nation on Earth.

The fig­ure is bogus.

But that isn’t stop­ping the eye-pop­ping total from turn­ing up on the Sen­ate floor, the Con­ser­v­a­tive Polit­i­cal Action Con­fer­ence and even “Sat­ur­day Night Live” as the pro­gres­sive Democ­rats’ sweep­ing-yet-vague vision state­ment amps up the polit­i­cal con­ver­sa­tion around cli­mate change.

The num­ber orig­i­nat­ed with a report by a con­ser­v­a­tive think tank, Amer­i­can Action Forum, that made huge assump­tions about how exact­ly Democ­rats would go about imple­ment­ing their plan. But the $93 tril­lion fig­ure does not appear any­where in the think tank’s report — and AAF Pres­i­dent Dou­glas Holtz-Eakin con­fessed he has no idea how much exact­ly the Green New Deal would cost.

“Is it bil­lions or tril­lions?” asked Holtz-Eakin, a for­mer direc­tor of the Con­gres­sion­al Bud­get Office. “Any pre­ci­sion past that is illu­so­ry.”

The Green New Deal isn’t even a plan yet — at the moment it’s a non-bind­ing res­o­lu­tion that calls for major action to stop green­house gas pol­lu­tion while reduc­ing income inequal­i­ty and cre­at­ing “mil­lions of good, high-wage jobs.” But top Repub­li­cans have embraced the $93 tril­lion price tag, using it to argue that the cli­mate plan would bank­rupt the Unit­ed States.

Democ­rats say Repub­li­cans are using the num­ber to try to dodge respon­si­bil­i­ty for decades of deny­ing cli­mate sci­ence, while the White House con­tin­ues to dis­re­gard the evi­dence link­ing human activ­i­ty to ris­ing tem­per­a­tures and extreme weath­er.

To come up with the $93 mil­lion total, Repub­li­cans added togeth­er the cost esti­mates that the AAF report’s authors had placed on var­i­ous aspects of a Green New Deal plat­form. Most of those were based on assump­tions about uni­ver­sal health­care and jobs pro­grams rather than the costs of tran­si­tion­ing to car­bon-free elec­tric­i­ty and trans­porta­tion.

“There’s a race for think-tankers, ana­lysts and acad­e­mia to be the first to come up with a num­ber, and you can see why — look at how many peo­ple latched onto that $93 tril­lion num­ber,” said Nick Loris, an econ­o­mist at the con­ser­v­a­tive Her­itage Foun­da­tion. “A lot of times you just see the num­ber and you don’t get a lot of the back­sto­ry behind the num­ber.”

Holtz-Eakin told POLITICO that he was inter­est­ed only in “ball­parks,” adding that the study is best viewed as “a sin­cere but a hero­ic esti­mate of a not very well-spec­i­fied pro­pos­al.” When asked whether he had a prob­lem with the way Repub­li­cans had char­ac­ter­ized his study and the $93 tril­lion fig­ure, Holtz-Eakin said: “We did try to play it straight here. We nev­er added it up.”

Green New Deal sup­port­ers acknowl­edge that their pre­ferred polices won’t be free, but they say Repub­li­cans are act­ing in bad faith by try­ing to paint the res­o­lu­tion with a spe­cif­ic brush so ear­ly and refus­ing to acknowl­edge that unchecked cli­mate change pos­es its own eco­nom­ic risks. For instance, a Unit­ed Nations report last fall esti­mat­ed a glob­al cost of as much as $69 tril­lion from even a mod­est rise in glob­al tem­per­a­tures.

“We all knew this vac­u­um was here, but you can’t put a price on it until you have a piece of leg­is­la­tion that you can score,” said Greg Car­lock, Green New Deal research direc­tor with the pro­gres­sive think tank Data for Progress. He said the AAF study “was an attempt to fill that vac­u­um, but it does it in a mean-spir­it­ed way.”

Yet the fig­ure is already a fix­ture of GOP talk­ing points about the Green New Deal — echo­ing attacks the par­ty has made on envi­ron­men­tal reg­u­la­tions going back decades.

“That’s always been the crux of the Repub­li­can argu­ment against mak­ing all these changes,” said Rory Coop­er, a Repub­li­can strate­gist and man­ag­ing direc­tor at Pur­ple Strate­gies, a bipar­ti­san con­sult­ing firm. “It’s sig­nif­i­cant lifestyle changes in exchange for an unde­fined ben­e­fit.”

The GOP’s eager­ness to wield the price esti­mate under­scores the promi­nence that cli­mate change has achieved in Wash­ing­ton for the first time in near­ly a decade.

When they set out to put a price tag on the Green New Deal last month, Holtz-Eakin and his asso­ciates had no real pol­i­cy or plan to eval­u­ate, so they made one up to per­form back-of-the-enve­lope cal­cu­la­tions. AAF’s analy­sis extrap­o­lat­ed from the var­i­ous ideas laid out in the non-bind­ing res­o­lu­tion from Rep. Alexan­dria Oca­sio-Cortez (D‑N.Y.) and Sen. Ed Markey (D‑Mass.) — such as switch­ing the elec­tric grid entire­ly off fos­sil fuels and pro­vid­ing jobs and health care for every­one.

Democ­rats dis­miss the AAF study as a fab­ri­ca­tion. And on Wednes­day, as Repub­li­can sen­a­tors railed on the floor about the $93 tril­lion esti­mate and the dan­gers of social­ism, sev­er­al Democ­rats inter­rupt­ed them to demand that the GOP acknowl­edge the real­i­ty of cli­mate change.

“That is a com­plete­ly made up num­ber by the Koch broth­ers,” Markey, who also co-spon­sored the 2009 cap-and-trade bill, said on the Sen­ate floor.

Markey inter­rupt­ed a speech by Sen. Thom Tillis (R‑N.C.), who is expect­ed to be among Democ­rats’ top tar­gets in next year’s elec­tions.

“I don’t care if it is $93 tril­lion, $43 tril­lion or $10 tril­lion — it is unsus­tain­able,” Tillis shot back. “We can sit here and ques­tion the sources, but at the end of the day, we all know that this was the­ater.”

Sen­ate Major­i­ty Leader Mitch McConnell also kept push­ing the talk­ing point, not­ing that $93 tril­lion is “more than the com­bined annu­al GDP of every nation on Earth” — as well as more than enough to “buy every Amer­i­can a Fer­rari.”

The fig­ure has been a fix­ture of GOP mes­sag­ing since AAF released its report on Feb. 25.

Sen. David Per­due (R‑Ga.) wield­ed the $93 tril­lion fig­ure at the recent Con­ser­v­a­tive Polit­i­cal Action Con­fer­ence. Sen­ate Envi­ron­ment and Pub­lic Works Chair­man John Bar­ras­so (R‑Wyo.) took to a USA Today op-ed with the price esti­mate. Sen. John Cornyn (R‑Texas) proud­ly dis­played it on a poster from the Sen­ate floor. It worked its way into an online skit from “Sat­ur­day Night Live” that par­o­died Sen. Dianne Feinstein’s (D‑Calif.) inter­ac­tion with a group of young cli­mate activists.

The num­ber is so large as to be near­ly incom­pre­hen­si­ble, but it dwarfs oth­er mas­sive endeav­ors such as build­ing the Inter­state High­way Sys­tem, which cost $241 bil­lion in today’s dol­lars, for exam­ple. And the AAF study does not dis­tin­guish between gov­ern­ment and pri­vate-sec­tor spend­ing, nor does it attempt to quan­ti­fy the ben­e­fits of reduc­ing pol­lu­tion or oth­er poli­cies. For exam­ple, Stan­ford Uni­ver­si­ty’s Mark Jacob­son esti­mat­ed that elim­i­nat­ing the elec­tric­i­ty sector’s car­bon emis­sions would avoid $265 bil­lion in annu­al U.S. dam­ages begin­ning in 2050.

“A cen­tral chal­lenge to cli­mate pol­i­cy-mak­ing is there are costs right away and the ben­e­fits emerge over time,” said Michael Green­stone, an econ­o­mist and direc­tor of the Ener­gy Pol­i­cy Insti­tute at the Uni­ver­si­ty of Chica­go. “But just because the ben­e­fits hap­pen over time doesn’t mean it’s not real.”

In fact, $80.6 tril­lion of the costs in AAF’s study come from a jobs guar­an­tee and uni­ver­sal health­care. The Green New Deal res­o­lu­tion calls for “guar­an­tee­ing a job” and pro­vid­ing “high-qual­i­ty health care” to every­one, but it is pri­mar­i­ly focused on out­lin­ing a set of goals to get the U.S. econ­o­my to net-zero car­bon emis­sions by mid-cen­tu­ry. While lib­er­al activists say eco­nom­ic jus­tice must be a part of any even­tu­al pol­i­cy based on the res­o­lu­tion, most see the Green New Deal itself as a vehi­cle for an ener­gy tran­si­tion and indus­tri­al eco­nom­ic pol­i­cy, rather than some­thing more sweep­ing, like “Medicare for All.”

“Giv­en that the [Green New Deal] is at this point sim­ply a set of long-term goals, with­out any spec­i­fi­ca­tion of how those goals would be achieved, any esti­mate of cost is itself like­ly to be excep­tion­al­ly spec­u­la­tive,” Robert Stavins, an envi­ron­men­tal econ­o­mist at Har­vard Uni­ver­si­ty, said in an email.

Many stud­ies that warn of dire eco­nom­ic effects over­state the poten­tial harm, accord­ing to a Pew Char­i­ta­ble Trusts review of envi­ron­men­tal poli­cies.

Nev­er­the­less, hav­ing a spe­cif­ic fig­ure to cite can define the con­tours of pol­i­cy con­ver­sa­tion, said Mar­go Thorn­ing, a senior eco­nom­ic pol­i­cy advis­er with the Amer­i­can Coun­cil for Cap­i­tal For­ma­tion. Thorn­ing was a fre­quent Capi­tol Hill wit­ness when Con­gress debat­ed cap-and-trade leg­is­la­tion in the ear­ly years of the Oba­ma admin­is­tra­tion. She was cov­et­ed part­ly because her orga­ni­za­tion pub­lished an influ­en­tial study that used U.S. Ener­gy Infor­ma­tion Admin­is­tra­tion sta­tis­tics to show that the pol­i­cy would curb eco­nom­ic growth $3.1 tril­lion between 2012 and 2030.

Sim­i­lar­ly, a Nation­al Asso­ci­a­tion of Man­u­fac­tur­ers-backed study on the poten­tial effects of tight­en­ing stan­dards for ozone said the mea­sure would cost $1.1 tril­lion and sur­ren­der $1.7 tril­lion in eco­nom­ic growth between 2017 and 2040.

“I think it helped shape the debate because if peo­ple real­ized we were going to be los­ing 2 to 3 per­cent of GDP or more and oth­er coun­tries weren’t, we were going to be los­ing a lot,” Thorn­ing said of her organization’s study on cap-and-trade.

Cli­mate hawks say Repub­li­cans dis­miss­ing the Green New Deal as unaf­ford­able are ignor­ing the cost of doing noth­ing, such as prop­er­ty dam­age from extreme weath­er and pub­lic health effects from con­tin­ued fos­sil fuel pol­lu­tion. The AAF study makes no attempt to address poten­tial ben­e­fits of avoid­ing those con­se­quences.

“Not talk­ing about the cost of inac­tion is incred­i­bly mis­lead­ing,” said Rhi­ana Gunn-Wright, pol­i­cy direc­tor with New Con­sen­sus, one of the groups work­ing on the Green New Deal. “It’s about how, when and where you want to spend your mon­ey, because you’re going to spend it.”

The Unit­ed Nations’ Inter­gov­ern­men­tal Pan­el on Cli­mate Change said in Octo­ber that the glob­al cost of tem­per­a­tures ris­ing 1.5 degrees Cel­sius — the tar­get the Green New Deal aims to avoid — would be $54 tril­lion in 2100. That would rise to $69 tril­lion in a 2‑degree sce­nario. Those tar­gets also served as the basis of the 2015 Paris cli­mate change agree­ment, which Trump has announced plans to aban­don.

Glob­al tem­per­a­tures are on track to rise by at least 4 degrees by the end of the cen­tu­ry, accord­ing to pro­jec­tions from the Trump admin­is­tra­tion. That would lead to even greater eco­nom­ic dev­as­ta­tion — for exam­ple, dam­ag­ing $3.6 tril­lion of coastal prop­er­ty by 2100 with­out mea­sures to adapt to cli­mate change, accord­ing to the Nation­al Cli­mate Assess­ment pub­lished last Novem­ber.

...

———–

“The bogus num­ber at the cen­ter of the GOP’s Green New Deal attacks” by ZACK COLMAN; Politi­co; 03/10/2019

“The num­ber orig­i­nat­ed with a report by a con­ser­v­a­tive think tank, Amer­i­can Action Forum, that made huge assump­tions about how exact­ly Democ­rats would go about imple­ment­ing their plan. But the $93 tril­lion fig­ure does not appear any­where in the think tank’s report — and AAF Pres­i­dent Dou­glas Holtz-Eakin con­fessed he has no idea how much exact­ly the Green New Deal would cost.”

Is it bil­lions or tril­lions? That’s what AAF Pres­i­dent Dou­glas Holtz-Eakin asked almost rhetor­i­cal­ly when asked to jus­ti­fy the AAF’s $93 tril­lion high end cost esti­mate of the Green New Deal. But of that $93 tril­lion cost esti­mate, $80.6 tril­lion of the costs in AAF’s study come from the jobs guar­an­tee and uni­ver­sal health­care cost esti­mates, leav­ing less than a $13 tril­lion esti­mat­ed price tag for the ‘green’ parts of the Green New Deal like upgrad­ing the pow­er grid or tran­si­tion­ing to elec­tric cars:

...
“Is it bil­lions or tril­lions?” asked Holtz-Eakin, a for­mer direc­tor of the Con­gres­sion­al Bud­get Office. “Any pre­ci­sion past that is illu­so­ry.”

...

To come up with the $93 mil­lion total, Repub­li­cans added togeth­er the cost esti­mates that the AAF report’s authors had placed on var­i­ous aspects of a Green New Deal plat­form. Most of those were based on assump­tions about uni­ver­sal health­care and jobs pro­grams rather than the costs of tran­si­tion­ing to car­bon-free elec­tric­i­ty and trans­porta­tion.

“There’s a race for think-tankers, ana­lysts and acad­e­mia to be the first to come up with a num­ber, and you can see why — look at how many peo­ple latched onto that $93 tril­lion num­ber,” said Nick Loris, an econ­o­mist at the con­ser­v­a­tive Her­itage Foun­da­tion. “A lot of times you just see the num­ber and you don’t get a lot of the back­sto­ry behind the num­ber.”

Holtz-Eakin told POLITICO that he was inter­est­ed only in “ball­parks,” adding that the study is best viewed as “a sin­cere but a hero­ic esti­mate of a not very well-spec­i­fied pro­pos­al.” When asked whether he had a prob­lem with the way Repub­li­cans had char­ac­ter­ized his study and the $93 tril­lion fig­ure, Holtz-Eakin said: “We did try to play it straight here. We nev­er added it up.”

...

In fact, $80.6 tril­lion of the costs in AAF’s study come from a jobs guar­an­tee and uni­ver­sal health­care. The Green New Deal res­o­lu­tion calls for “guar­an­tee­ing a job” and pro­vid­ing “high-qual­i­ty health care” to every­one, but it is pri­mar­i­ly focused on out­lin­ing a set of goals to get the U.S. econ­o­my to net-zero car­bon emis­sions by mid-cen­tu­ry. While lib­er­al activists say eco­nom­ic jus­tice must be a part of any even­tu­al pol­i­cy based on the res­o­lu­tion, most see the Green New Deal itself as a vehi­cle for an ener­gy tran­si­tion and indus­tri­al eco­nom­ic pol­i­cy, rather than some­thing more sweep­ing, like “Medicare for All.”
...

And despite that extreme uncer­tain­ty, the GOP has turned the $93 tril­lion into a cen­tral talk­ing point dur­ing its recent fix­a­tion on all things relat­ed to Alexan­dria Oca­sio-Cortez and the Green New Deal:

...
Yet the fig­ure is already a fix­ture of GOP talk­ing points about the Green New Deal — echo­ing attacks the par­ty has made on envi­ron­men­tal reg­u­la­tions going back decades.

“That’s always been the crux of the Repub­li­can argu­ment against mak­ing all these changes,” said Rory Coop­er, a Repub­li­can strate­gist and man­ag­ing direc­tor at Pur­ple Strate­gies, a bipar­ti­san con­sult­ing firm. “It’s sig­nif­i­cant lifestyle changes in exchange for an unde­fined ben­e­fit.”

The GOP’s eager­ness to wield the price esti­mate under­scores the promi­nence that cli­mate change has achieved in Wash­ing­ton for the first time in near­ly a decade.

When they set out to put a price tag on the Green New Deal last month, Holtz-Eakin and his asso­ciates had no real pol­i­cy or plan to eval­u­ate, so they made one up to per­form back-of-the-enve­lope cal­cu­la­tions. AAF’s analy­sis extrap­o­lat­ed from the var­i­ous ideas laid out in the non-bind­ing res­o­lu­tion from Rep. Alexan­dria Oca­sio-Cortez (D‑N.Y.) and Sen. Ed Markey (D‑Mass.) — such as switch­ing the elec­tric grid entire­ly off fos­sil fuels and pro­vid­ing jobs and health care for every­one.

...

Sen­ate Major­i­ty Leader Mitch McConnell also kept push­ing the talk­ing point, not­ing that $93 tril­lion is “more than the com­bined annu­al GDP of every nation on Earth” — as well as more than enough to “buy every Amer­i­can a Fer­rari.”

The fig­ure has been a fix­ture of GOP mes­sag­ing since AAF released its report on Feb. 25.

Sen. David Per­due (R‑Ga.) wield­ed the $93 tril­lion fig­ure at the recent Con­ser­v­a­tive Polit­i­cal Action Con­fer­ence. Sen­ate Envi­ron­ment and Pub­lic Works Chair­man John Bar­ras­so (R‑Wyo.) took to a USA Today op-ed with the price esti­mate. Sen. John Cornyn (R‑Texas) proud­ly dis­played it on a poster from the Sen­ate floor. It worked its way into an online skit from “Sat­ur­day Night Live” that par­o­died Sen. Dianne Feinstein’s (D‑Calif.) inter­ac­tion with a group of young cli­mate activists.
...

So as we can see, the GOP’s inten­si­fy­ing attacks on the Green New Deal are reliant on a set of garbage esti­mates as part of a broad­er strat­e­gy to paint the Democ­rats as extrem­ists and ‘social­ism’ as some­how impos­si­bly unaf­ford­able. But it’s not out­ra­geous to imag­ine the ‘green’ part of a the Green New Deal cost­ing tril­lions of dol­lars over the first 10 years if it’s appro­pri­ate­ly ambi­tious. And that’s what cre­ates such a fas­ci­nat­ing polit­i­cal oppor­tu­ni­ty giv­en the unfold­ing polit­i­cal boon­dog­gle of the Trump/GOP tax cuts: what’s a bet­ter way to spent a few tril­lion dol­lars over 10 years? A Green New Deal that invests in a sus­tain­able econ­o­my that does­n’t col­lapse the envi­ron­ment? Or more tax cuts for the rich and big cor­po­ra­tions? With the cost of the Trump/GOP tax cut and the cost of not doing any­thing about the envi­ron­ment both con­tin­u­al­ly surg­ing, the answer seems obvi­ous, hence the GOP’s Green New Dis­in­for­ma­tion cam­paign.

When Pres­i­dent Trump decid­ed to decry the “inva­sion” of ille­gal immi­grants “rush­ing our bor­der” dur­ing the very same Oval Office con­fer­ence Fri­day where he once again refused to acknowl­edge the grow­ing threat of white nation­al­ism in the wake of the neo-Nazi attack on a mosque in New Zealand we were all remind­ed of the grim real­i­ty that stok­ing white nation­al­ist sen­ti­ments is almost cer­tain­ly going to be cen­tral to the Trump 2020 reelec­tion cam­paign. There’s nev­er real­ly been a ques­tion of whether or not nativism was going to be a big ele­ment of Trump’s 2020 cam­paign, but when the Pres­i­dent chose that moment to dou­ble down on ‘inva­sion’ rhetoric the grow­ing like­li­hood of white nation­al­ism tak­ing a cen­tral role in his reelec­tion strat­e­gy becomes clear. “We’ll Final­ly Get to Build­ing that Wall!” is basi­cal­ly going to be the 2020 cam­paign.

So with that grim 2020 cam­paign dynam­ic of Trump lead­ing a strate­gic anti-immi­grant fear-mon­ger­ing cam­paign in mind, it’s worth anoth­er sto­ry from Fri­day that has a strong tan­gen­tial tie to the role white nation­al­ism and nativism is going to place in the Trump/GOP 2020 cam­paign: Fri­day also gave us a report on a Reuters/Ipsos poll that found that only 1 in 5 (21 per­cent) Amer­i­cans expect their tax­es to go down as a result of the Trump/GOP tax cut. And 29 per­cent of respon­dees actu­al­ly expect their tax­es to rise.

Of course, this isn’t the first time we’ve seen signs of a lack of pub­lic enthu­si­asm for tax cuts. Don’t for­get that the 2018 mid-terms just hap­pened and tax cuts were bare­ly men­tioned by the entire GOP. It was all ‘car­a­vans’ and ‘ille­gals’ all the time in the clos­ing months of the cam­paign. But this new polls was tak­en on March 6–11, just five weeks before the tax fil­ing dead­line which implies that a num­ber of these respon­dents already filed and know whether or not their tax­es went down. So if only 1 in 5 actu­al­ly expect to see any drop in their tax­es and almost 1 in 3 expect their tax­es to rise this close to the tax fil­ing dead­line that implies that the vast major­i­ty of Amer­i­cans real­ly aren’t going to see any per­ceiv­able drop in their tax­es as a result of the Trump/GOP tax cut.

Grant­ed, as the fol­low­ing arti­cle notes, the US Trea­sury is esti­mat­ing that 80 per­cent of Amer­i­cans will actu­al­ly see a tax cut, with anoth­er 17 per­cent see­ing their tax­es stay rough­ly the same. So it’s pos­si­ble that the vast major­i­ty of Amer­i­cans real­ly will see some sort of tax cut. But it’s also pos­si­ble those cuts will be so minis­cule that most Amer­i­cans won’t even per­ceive them when they get them. We’ll see soon. But if the Amer­i­can pub­lic is this unen­thu­si­as­tic about the only sig­nif­i­cant leg­isla­tive accom­plish­ment that Trump can point to going into the 2020 elec­tion sea­son that effec­tive­ly means he has no leg­isla­tive accom­plish­ments and a giant leg­isla­tive alba­tross instead.

And this isn’t the kind of polls with a sharp par­ti­san divide with a major­i­ty of Democ­rats giv­ing one response and a major­i­ty of Repub­li­cans giv­ing anoth­er response. An over­whelm­ing major­i­ty of Democ­rats and Repub­li­cans aren’t expect­ing to pay less in tax­es. Only 33 per­cent of Repub­li­cans and 8 per­cent of Democ­rats expect to pay less. The fact that the tax bill capped the abil­i­ty to deduct state and local tax­es (to pay for big­ger cuts for the Kochs and bil­lion­aires and big cor­po­ra­tions), which dis­pro­por­tion­ate­ly impacts the high­er-tax Demo­c­ra­t­ic ‘blue’ states, par­tial­ly explains the fact that only 8 per­cent of Democ­rats expect a real cut. But a lot of Repub­li­cans live in those ‘blue’ states so that might par­tial­ly explain why so few Repub­li­cans are expect­ing a cut.

And the sad­dest part for Trump and the GOP is that if they invest the media time and ener­gy into ensur­ing the pub­lic know they got a cut in order to counter the pub­lic per­cep­tions of the tax cut revealed in this poll that’s only going to encour­age the Amer­i­can pub­lic to find out what their cut was and dis­cov­er it was actu­al­ly quite small. So the GOP is kind of stuck. The more the pub­lic thinks about the tax cut the worse pub­lic per­cep­tion gets.

Now, in fair­ness, some of the tax cut was already dis­pensed through­out the year in low­er amounts tak­en out from month­ly pay­checks. So a low tax return won’t reflect the whole tax impact that indi­vid­u­als get. But, again, if the GOP invests the time to explain this to the pub­lic they risk remind­ing peo­ple of the fact that the tax cut exists. Because it’s always been unpop­u­lar. It just appears to be get­ting more unpop­u­lar as time goes by.

That’s all part of why white nation­al­ism and ‘inva­sion’ rhetoric are almost cer­tain­ly going to be cen­tral to the Trump 2020 cam­paign: Trump and the GOP need to ensure no one is talk­ing about how dis­as­trous the tax cut turned out to be and that’s going to require a mas­sive dis­trac­tion. Like nativist fear­mon­ger­ing.

It’s also why it’s going to be impor­tant for the Democ­rats to make it clear to the pub­lic how the tax cut and the inevitable GOP cam­paign of immi­grant ‘oth­er­ing’ and fear-mon­ger­ing are deeply and trag­i­cal­ly inter­twined issues. Inter­twined in part because fear-mon­ger­ing of ‘ille­gals’ is a great dis­trac­tion from the tax cut that is absolute­ly nec­es­sar­i­ly for Trump and the GOP right now. But also inter­twined because this is a major exam­ple of that age old tech­nique of the pow­er­ful of exploit­ing every­one else by pit­ting us against each oth­er and qui­et­ly rob­bing every­one blind. Fear-mon­ger­ing about immi­gra­tion and echo­ing white nation­al­ist memes is just fine for right-wing bil­lion­aires and big cor­po­ra­tion who would rather not have you talk­ing about how they just robbed the US trea­sury blind for a use­less tax cut. Get work­ing class whites pissed at the poor­er immi­grants while the pow­er­ful loot the place. Hys­ter­ics about ‘the Car­a­van’ are a great dis­trac­tion from all the oth­er GOP pol­i­cy dis­as­ters.

But while pret­ty much every GOP law in the 2017–2018 peri­od when they com­plete con­trol was a pol­i­cy a dis­as­ter, the tax cut was a par­tic­u­lar­ly promi­nent GOP pol­i­cy dis­as­ter. It was a his­toric loot­ing sold on a bed of lies that’s going to play out for decades to come. And it was a loot­ing that hap­pened to throw a few tax cut crumbs to the pub­lic so Trump and the GOP could declare that almost every­one got a cut. And now 33 per­cent of Repub­li­cans and 8 per­cent of Democ­rats think they’ll actu­al­ly get a cut. Which is quite a GOP polit­i­cal emer­gency. Which will require even more hys­ter­ics about immi­grants so the GOP and Trump can win in 2020 so they can loot the place one more time. Because Trump and the GOP def­i­nite­ly aren’t going to want to be talk­ing about the tax cuts:

Reuters

Few Amer­i­cans see sav­ings from Trump’s tax reform: Reuters/Ipsos poll

Maria Cas­pani
March 15, 2019 / 5:09 AM

NEW YORK (Reuters) — Only one in five U.S. tax­pay­ers expects to pay less income tax this year as a result of the tax reform law passed in 2017 by Repub­li­cans who promised big sav­ings for every­day Amer­i­cans, accord­ing to a Reuters/Ipsos opin­ion poll released on Fri­day.

The poll sug­gest­ed that the tax over­haul, most­ly geared to help­ing busi­ness­es, may not be as strong a 2020 cam­paign talk­ing point as Repub­li­cans and Pres­i­dent Don­ald Trump had hoped. The U.S. Trea­sury Depart­ment insist­ed that most Amer­i­cans were pay­ing low­er tax­es under the new law.

Just pri­or to approval of the tax reform by the Repub­li­can-con­trolled Con­gress, Trump said, “This is going to be one of the great gifts to the mid­dle-income peo­ple of this coun­try that they’ve ever got­ten for Christ­mas.”

The tax over­haul tem­porar­i­ly low­ered fed­er­al income tax rates for indi­vid­u­als and raised the stan­dard deduc­tion that peo­ple can use to reduce their tax­able income.

But it also capped cer­tain deduc­tions, such as for state and local tax­es, that can be claimed by tax­pay­ers who opt to item­ize instead of tak­ing the stan­dard deduc­tion. His­tor­i­cal­ly, a major­i­ty of U.S. tax­pay­ers have claimed the stan­dard deduc­tion on their fed­er­al tax bills.

The March 6–11 sur­vey found about 21 per­cent of adults who had either filed their tax­es or planned to said “the new tax plan that Con­gress recent­ly passed” would let them pay less this year; about 29 per­cent said they would pay more; 27 per­cent said there would be no impact; 24 per­cent said they were not sure.

The respons­es dif­fered along par­ty lines, with Repub­li­can tax­pay­ers more like­ly than oth­ers to expect a tax ben­e­fit.

Accord­ing to the poll, about 33 per­cent of Repub­li­cans said they would pay less tax; 17 per­cent said they would pay more.

Among Democ­rats, about 8 per­cent said they would pay less; about 45 per­cent said they would pay more.

The $10,000 cap imposed on the deduc­tion of state and local tax­es, which was pre­vi­ous­ly unlim­it­ed, has been seen hav­ing the great­est effect on tax­pay­ers in high-tax states, includ­ing New York, New Jer­sey, Illi­nois and Cal­i­for­nia, which are all large­ly Demo­c­ra­t­ic.

The U.S. Trea­sury Depart­ment said in a state­ment that the Tax Cuts and Jobs Act (TCJA) “cut tax­es across the board, par­tic­u­lar­ly for mid­dle-income Amer­i­cans, as well as dou­bled the stan­dard deduc­tion, dou­bled the Child Tax Cred­it for fam­i­lies, and altered oth­er deduc­tions and cred­its. As a result, 80 per­cent of Amer­i­cans are pay­ing low­er tax­es ... and 15 per­cent of fil­ers will pay about the same amount.”

...

————

“Few Amer­i­cans see sav­ings from Trump’s tax reform: Reuters/Ipsos poll” by Maria Cas­pani; Reuters; 03/15/2019

“The poll sug­gest­ed that the tax over­haul, most­ly geared to help­ing busi­ness­es, may not be as strong a 2020 cam­paign talk­ing point as Repub­li­cans and Pres­i­dent Don­ald Trump had hoped. The U.S. Trea­sury Depart­ment insist­ed that most Amer­i­cans were pay­ing low­er tax­es under the new law.”

Yep, tax cuts may not be what the pub­lic hoped for. Although they were nev­er par­tic­u­lar­ly pop­u­lar. Don’t for­get that polls were show­ing large majori­ties of the pub­lic being opposed to the tax bill when the GOP was push­ing it through Con­gress in Decem­ber 2017. The pub­lic has always hat­ed the tax cuts. Loot­ing isn’t pop­u­lar. Nei­ther are crumbs:

...
The March 6–11 sur­vey found about 21 per­cent of adults who had either filed their tax­es or planned to said “the new tax plan that Con­gress recent­ly passed” would let them pay less this year; about 29 per­cent said they would pay more; 27 per­cent said there would be no impact; 24 per­cent said they were not sure.
...

And high­er-tax states and local­i­ties got extra screwed and many upper mid­dle-class house­holds might see and effec­tive tax hike. And, again, this effec­tive upper mid­dle-class ‘blue state’ tax hike was done to pay for the cuts for the bil­lion­aires and big cor­po­ra­tions. Recall how the cost pro­jec­tions for the tax bill had to be about a $1.5 tril­lion cost over the first decade for the GOP to pass the bill through the Sen­ate with­out fac­ing he threat of a Demo­c­ra­t­ic fil­i­buster. The cap of the state and local tax deduc­tions was added to get the funds to keep the project cost at $1.5 tril­lion to allow the GOP to use that loop­hole. Also, recall how the tax cuts for the vast major­i­ty of Amer­i­cans are tem­po­rary and start expir­ing in 2025. But not the tax cuts tar­get­ing the wealthy and cor­po­ra­tions which were gen­er­al­ly per­ma­nent. That’s why a whole bunch of house­holds are pay­ing more. Espe­cial­ly in ‘blue’ states. Which makes these polls both unsur­pris­ing and a polit­i­cal emer­gency for the GOP that requires a big dis­trac­tion:

...
Just pri­or to approval of the tax reform by the Repub­li­can-con­trolled Con­gress, Trump said, “This is going to be one of the great gifts to the mid­dle-income peo­ple of this coun­try that they’ve ever got­ten for Christ­mas.”

The tax over­haul tem­porar­i­ly low­ered fed­er­al income tax rates for indi­vid­u­als and raised the stan­dard deduc­tion that peo­ple can use to reduce their tax­able income.

But it also capped cer­tain deduc­tions, such as for state and local tax­es, that can be claimed by tax­pay­ers who opt to item­ize instead of tak­ing the stan­dard deduc­tion. His­tor­i­cal­ly, a major­i­ty of U.S. tax­pay­ers have claimed the stan­dard deduc­tion on their fed­er­al tax bills.

...

The $10,000 cap imposed on the deduc­tion of state and local tax­es, which was pre­vi­ous­ly unlim­it­ed, has been seen hav­ing the great­est effect on tax­pay­ers in high-tax states, includ­ing New York, New Jer­sey, Illi­nois and Cal­i­for­nia, which are all large­ly Demo­c­ra­t­ic.

...

And even the Amer­i­can par­ti­san divide is unit­ed in this case with a bipar­ti­san gen­er­al expec­ta­tion of no per­son­al help by the tax cuts. Only 33 per­cent of Repub­li­cans and 8 per­cent of Democ­rats expect a cut. Many expect to pay more. The US Trea­sury has deter­mined that 80 per­cent of Amer­i­cans got a cut. And that might be true. But it does­n’t feel like a to cut most Amer­i­cans across the board based on this poll:

...
The respons­es dif­fered along par­ty lines, with Repub­li­can tax­pay­ers more like­ly than oth­ers to expect a tax ben­e­fit.

Accord­ing to the poll, about 33 per­cent of Repub­li­cans said they would pay less tax; 17 per­cent said they would pay more.

Among Democ­rats, about 8 per­cent said they would pay less; about 45 per­cent said they would pay more.

...

The U.S. Trea­sury Depart­ment said in a state­ment that the Tax Cuts and Jobs Act (TCJA) “cut tax­es across the board, par­tic­u­lar­ly for mid­dle-income Amer­i­cans, as well as dou­bled the stan­dard deduc­tion, dou­bled the Child Tax Cred­it for fam­i­lies, and altered oth­er deduc­tions and cred­its. As a result, 80 per­cent of Amer­i­cans are pay­ing low­er tax­es ... and 15 per­cent of fil­ers will pay about the same amount.”
...

It’s a remark­able polit­i­cal devel­op­ment for the GOP. Every­one still hates the tax cut. And as we get clos­er to 2020 this is going to require a remark­able response by the GOP in antic­i­pa­tion of the inevitable Demo­c­ra­t­ic attacks. Which will prob­a­bly involve Trump lead­ing a remark­ably hor­ri­ble GOP/right-wing media fear-mon­ger­ing cam­paign about ille­gal immi­grants.

Pret­ty much every­one that isn’t insane rec­og­nizes the dire need for human­i­ty to address the grow­ing cli­mate cat­a­stro­phe. So when fresh­man rep­re­sen­ta­tive Alexan­dria Oca­sio-Cortez’s (AOC) con­gres­sion­al office released a fact sheet out­lin­ing the broad vision of the ‘Green New Deal’ it was hard to crit­i­cize the over­ar­ch­ing goal of cre­at­ing a green Amer­i­can econ­o­my of the future. It’s good pol­i­tics and vital pol­i­cy.

The fact that AOC’s office retract­ed the ini­tial fact sheet and claimed that it was an ear­li­er draft not intend­ed for the pub­lic, how­ev­er, under­scores the fact that while the goals Green New Deal are both admirable and, frankly, vital, the pol­i­tics of the Green New Deal are poten­tial­ly quite pre­car­i­ous. But as we’re going to see, it actu­al­ly turns out that the 6 page FAQ doc­u­ment that AOC’s staff wrote over the course of a week­end that became known as the ‘Green New Deal’ actu­al­ly did a dis­ser­vice to the full ‘Green New Deal’ pro­pos­al that’s been devel­oped by a num­ber of rel­a­tive­ly main­stream econ­o­mists. These econ­o­mists, who include pret­ty main­stream voic­es like Brad Delong and Mar­i­ana Maz­zu­ca­to, recent­ly put togeth­er the New Con­sen­sus think tank, and pret­ty much the only thing New Con­sen­sus has been work­ing on since its incep­tion has been to put togeth­er the Green New Deal.

It’s also the case that the 6 page fact sheet ini­tial­ly put out by AOC’s office was cre­at­ed with the input of some mem­bers of New Con­sen­sus (it was a week­end col­lab­o­ra­tion of AOC’s staff, New Con­sen­sus, and the Sun­rise Move­ment). So New Con­sen­sus did play a direct role in the cre­ation of that fact sheet but that fact sheet was more of a hybrid between the ver­sion of the Green New Deal that AOC’s office came up with in col­lab­o­ra­tion with New Con­sen­sus. And as we’re going to see, while AOC’s office framed the Green New Deal in the lan­guage of social and racial jus­tice and empha­sized pro­grams like “eco­nom­ic secu­ri­ty” for those “unwill­ing to work” that got pre­dictably lam­bast­ed in the media, the actu­al full Green New Deal pro­pos­al craft­ed by these main­stream econ­o­mists was large­ly focused on a large-scale retool­ing of US indus­tri­al pol­i­cy to pro­mote the indus­tries that cre­ate the green ener­gy and infra­struc­ture of the future. And that’s some­thing that’s going to be real­ly pop­u­lar. Because it’s prac­ti­cal and cre­ates jobs. And does some­thing about the impend­ing cli­mate doom. Doing things about cli­mate doom is poten­tial­ly quite pop­u­lar.

Crit­i­cal­ly, the Green New Deal cre­at­ed by the New Con­sen­sus team is large­ly a call by main­stream econ­o­mists to return the Unit­ed States to the kind of indus­tri­al poli­cies that the US gov­ern­ment has often held from its very begin­ning until the ‘Rea­gan Rev­o­lu­tion’ of the 1980’s led to the ide­o­log­i­cal embrace of neolib­er­al­ism. A return to indus­tri­al poli­cies where the fed­er­al gov­ern­ment sets out ambi­tious goals and encour­ages indus­tries to devel­op to meet those goals. In oth­er words, the real Green New Deal put for­ward by these main­stream econ­o­mists is cer­tain­ly ambi­tious but it’s hard­ly rad­i­cal by his­tor­i­cal US stan­dards and actu­al­ly a return to the his­toric norm.

And as the fol­low­ing arti­cle also points out, when you strip away all of the empha­sis on social pro­grams, uni­ver­sal health care, and racial and social jus­tice that were a big part of the Green New Deal out­line put for­ward by AOC’s office, the eco­nom­ic over­haul agen­da of the New Con­sen­sus ver­sion of the Green New Deal is actu­al­ly a remark­ably com­pelling coun­ter­point to the kinds of pro­tec­tion­ist indus­tri­al rhetoric rou­tine­ly cham­pi­oned by Pres­i­dent Trump. So while it remains to be seen whether or not that Green New Deal will end up being good pol­i­tics, it’s going to be impor­tant to keep in mind that the New Con­sen­sus think tank’s ver­sion of the Green New Deal has to poten­tial to be great pol­i­tics. On top of being vital pol­i­cy that might actu­al­ly pre­vent future cat­a­stro­phes:

The Atlantic

A Cen­turies-Old Idea Could Rev­o­lu­tion­ize Cli­mate Pol­i­cy

The Green New Deal’s mas­ter­mind is a pre­co­cious New York­er with big ambi­tions. Sound famil­iar?

Robin­son Mey­er
Feb 19, 2019

The eco­nom­ic thinker who most influ­enced the Green New Deal isn’t Marx or Lenin. No, if you want to under­stand Alexan­dria Ocasio-Cortez’s bid to remake the econ­o­my to fight cli­mate change, you need to read Hamil­ton.

Yes, Alexan­der Hamil­ton. Long before he was asso­ci­at­ed with the­atri­cal hip-hop, for­mer Trea­sury Sec­re­tary Hamil­ton called for poli­cies that sound famil­iar to us today. Like Rep­re­sen­ta­tive Oca­sio-Cortez, he want­ed mas­sive fed­er­al spend­ing on new infra­struc­ture. Like Don­ald Trump, he believed that very high tar­iffs can nur­ture Amer­i­can man­u­fac­tur­ing. And like Eliz­a­beth War­ren, he was will­ing to bend the Con­sti­tu­tion to reform the finan­cial sys­tem.

Hamil­ton, in short, suc­cess­ful­ly used the pow­er of the fed­er­al gov­ern­ment to boost man­u­fac­tur­ing, to pick win­ners and losers, and to shape the fate of the U.S. econ­o­my. He is the father of Amer­i­can indus­tri­al pol­i­cy: the set of laws and reg­u­la­tions that say the fed­er­al gov­ern­ment can guide eco­nom­ic growth with­out micro­manag­ing it. And the Green New Deal, for all its social­ist regalia, only makes sense in light of his cap­i­tal­is­tic work.

In the days since Oca­sio-Cortez debuted the Green New Deal, con­sen­sus has hard­ened: It is leg­is­la­tion by lis­ti­cle. “An aspi­ra­tional cli­mate pol­i­cy wish list,” writes the demo­c­ra­t­ic social­ist Ryan Coop­er. “A need­less­ly long wish list,” says The New York Times’ David Leon­hardt. “An untram­meled Dear San­ta let­ter with­out form, pur­pose, bor­ders, or basis in real­i­ty,” adds Nation­al Review’s Charles C. W. Cooke, in Buck­leyan rever­ie.

Even its sup­port­ers seem to con­cede that the Green New Deal is a binder of cli­mate poli­cies duct-taped to an East­er bas­ket of social­ist good­ies: Its indi­vid­ual parts may be great, but you have to admit that it looks like it might teeter over. Its crit­ics, mean­while, omi­nous­ly sug­gest that it prizes ide­ol­o­gy above sci­ence—some­thing I have also warned of.

But both views are, on the whole, incor­rect. Ocasio-Cortez’s pro­pos­al is not only a set of pro­gres­sive nice-to-haves, nor is it a full-on assault on cap­i­tal­ism. The Green New Deal has a coher­ent eco­nom­ic phi­los­o­phy and a com­pelling the­o­ry of change—and pun­dits don’t have to like them to both­er under­stand­ing them.

Above all, the Green New Deal is a left­ist res­ur­rec­tion of fed­er­al indus­tri­al pol­i­cy. It is not an attempt to con­trol the pri­vate sec­tor, accord­ing to its authors; it is a bid to col­lab­o­rate with it. And it draws on a set of ideas with a rich Amer­i­can his­to­ry, extend­ing long before the great World War II mobi­liza­tion to which the Green New Deal is reg­u­lar­ly com­pared.

“This goes back to Hamil­ton, the dad­dy of it all,” says Stephen Cohen, a pro­fes­sor of city and region­al plan­ning at UC Berke­ley. He argues that indus­tri­al pol­i­cy has birthed the transcon­ti­nen­tal rail­road, the cook­ie-cut­ter sub­urb, the home appli­ance, and the computer—nearly every major Amer­i­can eco­nom­ic tran­si­tion since 1776.

In short, the Green New Deal’s sup­port­ers hope that indus­tri­al pol­i­cy can now bring forth anoth­er transition—to cheap­er ener­gy, faster trains, and an alto­geth­er more cli­mate-friend­ly econ­o­my. “The core of the Green New Deal, if you just look at the projects, is just like indus­tri­al pol­i­cy, indus­tri­al pol­i­cy, indus­tri­al pol­i­cy,” says Rhi­ana Gunn-Wright, a pol­i­cy researcher at the think tank New Con­sen­sus who helped draft Ocasio-Cortez’s pro­pos­al. “It’s very, very, very cen­tral. The Green New Deal is one of the largest inter­ven­tions in U.S. indus­tri­al pol­i­cy in a long time.”

Ocasio-Cortez’s love of indus­tri­al pol­i­cy did not come from nowhere. In the past few years, a group of schol­ars has revived an old school of eco­nom­ic thought that says a strong man­u­fac­tur­ing pol­i­cy is an absolute neces­si­ty for large, devel­oped nations. They argue that the Unit­ed States has neglect­ed its domes­tic man­u­fac­tur­ing sec­tor since the 1980s, a move that risks nation­al fail­ure.

This new school is cen­tral to the Green New Deal. Omit­ting it is like ignor­ing Mil­ton Fried­man when dis­cussing Pres­i­dent Ronald Reagan’s poli­cies. And dis­card­ing it is throw­ing out what makes the Green New Deal so inter­est­ing. For more than a decade, the biggest pro­gres­sive ideas about curb­ing cli­mate change have relied on tech­ni­cal or nar­row mar­ket mech­a­nisms. They have required reg­u­la­tors to make emit­ting car­bon diox­ide cost­ly. By pre­scrib­ing indus­tri­al pol­i­cy, the Green New Deal goes in a dif­fer­ent direc­tion: It throws all of Amer­i­can gov­ern­ment and indus­try behind an attempt to make renew­able ener­gy cheap.

This move could rev­o­lu­tion­ize U.S. cli­mate pol­i­tics. Oca­sio-Cortez has a chance to recast one of Trump’s eco­nom­ic intuitions—that the decline of indus­try has bro­ken some­thing fun­da­men­tal in the U.S. economy—as cli­mate pol­i­cy. She may be squan­der­ing it.

******

Last fall, a num­ber of activists and pol­i­cy schol­ars from the same net­work of left­ist groups as Oca­sio-Cortez found­ed a new think tank. They called it New Con­sen­sus. Since then, the group has done lit­tle pub­lic work beyond help­ing to for­mu­late the Green New Deal. Its web­site has only four pages. But it has pub­lished a read­ing list writ­ten by Demond Drum­mer, its founder, that func­tions as a man­i­festo of sorts.

The list does not cite a sin­gle angry issue of Dis­sent or post­mod­ern rant by Slavoj Žižek. Instead, it con­tains a bunch of self-described prag­ma­tists: Vaclav Smil, a sci­en­tist who Bill Gates says is his favorite author; Brad DeLong, a UC Berke­ley eco­nom­ics pro­fes­sor who served in Bill Clinton’s admin­is­tra­tion; Car­lota Perez, a schol­ar who calls her­self a “rad­i­cal cen­trist”; and Mar­i­ana Maz­zu­ca­to, an econ­o­mist so main­stream that the Finan­cial Times recent­ly pro­filed her love of swim­ming.

Drum­mer says that the books lay out a new and coher­ent view of “how eco­nom­ic progress real­ly hap­pens.” Many of the books argue that wealthy coun­tries became wealthy in the first place by sup­port­ing, pro­tect­ing, and invest­ing in strate­gic indus­tries. A nation’s oth­er policies—around trade, infra­struc­ture, even education—were ulti­mate­ly designed to serve these cho­sen indus­tries. “A nation must delib­er­ate­ly and con­stant­ly invest in its means of mak­ing a liv­ing,” Drum­mer writes. “Nations that ‘[let] the free mar­ket decide’ what they should do for a liv­ing decline to the bot­tom of the eco­nom­ic food chain.”

...

“From its very begin­ning, the Unit­ed States again and again enact­ed poli­cies to shift its econ­o­my onto a new growth direction—toward a new eco­nom­ic space of oppor­tu­ni­ty,” argues Con­crete Eco­nom­ics, a book by Cohen and DeLong that appears on the read­ing list. “Yes, there was an ‘invis­i­ble hand’ … But the invis­i­ble hand was repeat­ed­ly lift­ed at the elbow by the gov­ern­ment, and re-placed in a new posi­tion from where it could go on to per­form its mag­ic.”

Speak­ing from his office in New York, Cohen walked me through this retelling of Amer­i­can his­to­ry. Hamil­ton sought to move the coun­try away from its agrar­i­an econ­o­my, so he fought for infra­struc­ture, high tar­iffs, and a mus­cu­lar finan­cial sys­tem. After he died, his suc­ces­sors empha­sized an “Amer­i­can sys­tem” of infra­struc­ture projects such as the Erie Canal and the man­u­fac­tur­ing of prod­ucts from stan­dard­ized parts. Dur­ing and after the Civ­il War, the U.S. gov­ern­ment freely gave away huge tracts of west­ern land to spur spe­cif­ic types of eco­nom­ic devel­op­ment. In par­tic­u­lar, rail com­pa­nies got land to form the transcon­ti­nen­tal rail­road.

This indus­tri­al fer­vor extend­ed well into the 20th cen­tu­ry. When we think of large-scale indus­tri­al pol­i­cy today, we think of the New Deal and World War II. But Pres­i­dent Dwight D. Eisen­how­er, who built the inter­state-high­way sys­tem, encour­aged mass pro­duc­tion and sub­ur­ban­iza­tion, and he pre­served an enor­mous defense R&D bud­get. “Almost all of the tech­nol­o­gy we think of in terms of Sil­i­con Val­ley and the like—computers, telecom­mu­ni­ca­tions, semiconductors—came direct­ly out of that gov­ern­ment R&D bud­get,” Cohen says.

Cohen and DeLong argue that our indus­tri­al prag­ma­tism ceased in most sec­tors around 1980. They claim that pol­i­cy mak­ers grew too ide­o­log­i­cal: They read too much Fried­man, dereg­u­lat­ed the finan­cial sec­tor, and adopt­ed a gospel of free trade. These actions allowed East Asian coun­tries to over­whelm Amer­i­can man­u­fac­tur­ing. In 1979, man­u­fac­tur­ing made up 21 per­cent of U.S. GDP; by 2007, it had fall­en to 12 per­cent.

The Green New Deal’s authors see their pro­pos­al as a rem­e­dy to this cri­sis. It is an attempt to bring back both U.S. man­u­fac­tur­ing and the com­mon­sense indus­tri­al pol­i­cy that orig­i­nal­ly made that sec­tor strong. “The econ­o­my, as it’s struc­tured right now, is not work­ing … and that’s not just because of the 1 per­cent, not just because of Wall Street,” Gunn-Wright told me. “We’ve stopped mak­ing things. We’ve stopped invest­ing in the real econ­o­my.”

Saikat Chakrabar­ti, Ocasio-Cortez’s 33-year-old chief of staff and for­mer cam­paign chair, has endorsed both the read­ing list and the think­ing behind it. “Eco­nom­ics is a social sys­tem. It is not a sci­ence,” he tweet­ed in Jan­u­ary, before link­ing to the New Con­sen­sus page. “To under­stand ‘basic eco­nom­ics,’ … you need to read eco­nom­ic his­to­ry.” (Both Chakrabar­ti and Ocasio-Cortez’s office did not respond to an inter­view request before pub­li­ca­tion.)

Some main­stream econ­o­mists aren’t as con­vinced that indus­tri­al pol­i­cy could trans­form the future of the Unit­ed States. Many of the ideas in the books have not been “close­ly vet­ted” the­o­ret­i­cal­ly and may lack empir­i­cal evi­dence, accord­ing to Michael Green­stone, an eco­nom­ics pro­fes­sor at the Uni­ver­si­ty of Chica­go who pre­vi­ous­ly worked in Barack Obama’s White House. And he wor­ries that many of the books dis­tract too much from a cen­tral les­son of labor eco­nom­ics: that peo­ple basi­cal­ly get paid for their skills. While grant­i­ng that some recent data sug­gest that work­ers’ share of GDP is declin­ing in devel­oped coun­tries, com­pared with that tak­en by investors and cap­i­tal own­ers, he argues that unem­ploy­ment and wage stag­na­tion have been con­cen­trat­ed among those with few­er skills. In this view, edu­ca­tion policy—not indus­tri­al policy—is pri­mar­i­ly fail­ing Amer­i­cans.

Oca­sio-Cortez has tak­en to say­ing that the Green New Deal is our generation’s moon­shot, and this is usu­al­ly under­stood as an invo­ca­tion of John F. Kennedy–esque vig­or: When Amer­i­ca sets its mind to it, it can do any­thing. But in the con­text of New Con­sen­sus’ read­ing list, the moon­shot ref­er­ence reads as an allu­sion to anoth­er eco­nom­ic thinker—Mar­i­ana Maz­zu­ca­to, the direc­tor of the Uni­ver­si­ty Col­lege Lon­don Insti­tute for Inno­va­tion and Pub­lic Pur­pose.

Maz­zu­ca­to argues that the pri­vate sec­tor can­not inno­vate with­out the pub­lic sec­tor giv­ing it pur­pose and direc­tion. In fact, inno­va­tion depends on the state. First, the pub­lic sec­tor defines a chal­lenge. Then it asks—or demands—that the pri­vate sec­tor address itself to that chal­lenge. She cites the Apol­lo pro­gram as a per­fect exam­ple.

“How to get to the moon was a result of 300 dif­fer­ent home­work prob­lems that had to be solved, and most of them failed,” Maz­zu­ca­to told me recent­ly. The sheer dif­fi­cul­ty of the Apol­lo pro­gram gen­er­at­ed those prob­lems, which ranged wide­ly across sec­tors, touch­ing even nutri­tion and fash­ion. After the chal­lenge was set, the gov­ern­ment used the inspi­ra­tional pow­er of its lead­er­ship and the exten­sive pow­er of its purse to nudge com­pa­nies, uni­ver­si­ties, and labs into iden­ti­fy­ing those prob­lems and solv­ing them.

Maz­zu­ca­to asserts that the state should yoke the mis­sion of fight­ing cli­mate change to every aspect of its pur­chas­ing pow­er. Whether the gov­ern­ment buys a company’s prod­uct, offers it a research grant, or loans it mon­ey should depend on its will­ing­ness to adopt cer­tain Green New Deal goals. “You don’t pick the win­ners; you pick the will­ing,” she said. “The ques­tion should be: Who’s will­ing to engage across any sector—big firms, small firms, any size—to engage with Green New Deal strate­gies?” These strate­gies might include a renew­able-ener­gy require­ment or a reduc­tion in the phys­i­cal amount of mate­r­i­al need­ed to make a prod­uct.

Mazzucato’s ideas are all over the Green New Deal. She has met with Oca­sio-Cortez in per­son more than once; their staffs have con­sult­ed; they even Skyped togeth­er. Maz­zu­ca­to has a fact page about the Green New Deal on her web­site. Yet Maz­zu­ca­to is no rad­i­cal. When we talked, she had just returned from Davos, and her books are more like­ly to be fet­ed by the Finan­cial Times than by Jacobin. “Maz­zu­ca­to is a pret­ty main­stream, mar­ket-fail­ure-cor­rect­ing econ­o­mist, in terms of indus­tri­al pol­i­cy,” says Con­stan­tine Sama­ras, a pro­fes­sor of engi­neer­ing at Carnegie Mel­lon Uni­ver­si­ty. So why has the Green New Deal been cast as such a rad­i­cal pro­pos­al?

******

Look, and you’ll find Hamil­ton­ian ideas served thick­ly through­out the Green New Deal res­o­lu­tion—even if they some­times appear between slabs of pro­gres­sive talk­ing points. When the pro­pos­al lists “sev­er­al relat­ed crises” that endan­ger the Unit­ed States, it men­tions “dein­dus­tri­al­iza­tion” as well as income inequal­i­ty. It demands a “mas­sive growth in clean man­u­fac­tur­ing.” It calls for invest­ment in “local and region­al economies.” And it calls for “enact­ing and enforc­ing trade rules … and bor­der adjust­ments” that will “grow domes­tic man­u­fac­tur­ing in the Unit­ed States.”

The Green New Deal’s wide-rang­ing vision faces down a polit­i­cal­ly incon­ve­nient real­i­ty: Fight­ing cli­mate change will mean remak­ing the econ­o­my. In the Unit­ed States, most cli­mate poli­cies have focused on only the elec­tric­i­ty or trans­porta­tion sec­tor. But those two sec­tors account for only 56 per­cent of U.S. green­house-gas emis­sions. Heavy indus­try accounts for almost a quar­ter of the country’s car­bon pol­lu­tion, and we still have lit­tle idea how to deal with that. There’s still no way to make steel with­out fos­sil fuels. The Green New Deal states as a goal—and lit­tle more than a goal—the need for “remov­ing pol­lu­tion and green­house gas emis­sions from man­u­fac­tur­ing and indus­try as much as is tech­no­log­i­cal­ly fea­si­ble.”

In fact, the entire doc­u­ment is just a list of goals. “What the res­o­lu­tion did is out­line some chal­lenges,” Sama­ras told me. “There’s no pol­i­cy yet. These are just prin­ci­ples. I think that’s get­ting lost.”

Into that pol­i­cy vac­u­um, many com­men­ta­tors have hal­lu­ci­nat­ed an entire regime. “The gov­ern­ment would put sec­tor after sec­tor under par­tial or com­plete fed­er­al con­trol,” asserts David Brooks. He begs, “Exact­ly which agency would inspect and over­see the ren­o­va­tion of every build­ing in Amer­i­ca? Exact­ly which agency would hire every work­er?”

This does not match what Oca­sio-Cortez has actu­al­ly said. Speak­ing with Chuck Todd ear­li­er this month, she spec­u­lat­ed about dif­fer­ent ways to get the Green New Deal done. “It could be Ten­nessee Val­ley Authority–style pub­lic pro­grams, but it could also be pub­lic-pri­vate part­ner­ships,” she said. “It can work down on a munic­i­pal lev­el. There could be some poten­tial con­tract­ing involved … It’s not as though the fed­er­al government’s going to wave a wand and say, ‘We’re going to do it all our­selves.’ ”

A spike in gov­ern­ment con­tract­ing? Pub­lic-pri­vate part­ner­ships? What kind of fiat gov­ern­ment takeover is this?

“Oca­sio-Cortez is a social­ist, and she wants work­er col­lec­tives. But that dis­tracts us from the core of the plan,” says Daniel Aldana Cohen, a soci­ol­o­gist at the Uni­ver­si­ty of Penn­syl­va­nia who helped edit cov­er­age of the Green New Deal for Jacobin, a left­ist mag­a­zine. “The orig­i­nal New Deal, when you read about it, is super prac­ti­cal. The biggest mis­take is to see activist gov­ern­ment … as ide­o­log­i­cal. It’s just a super prac­ti­cal approach to prob­lem-solv­ing. If you want to solve prob­lems on a huge scale, then let’s actu­al­ly put some pub­lic insti­tu­tions to work.”

And argu­ments for the Green New Deal can even feel a lit­tle … Trumpy. When Gunn-Wright talks to peo­ple about the Green New Deal, “they get real­ly excit­ed about the thought of mak­ing stuff again,” she says. “That they’ll not just be a cashier, but that they’ll make wind tur­bines.” Gunn-Wright also riffed on the need to make wind tur­bines domes­ti­cal­ly (they’re too big to ship over­seas), and why bor­der adjust­ments may be required to pro­tect some nascent U.S. green indus­tries. (Trump actu­al­ly imposed a tar­iff on solar pan­els in 2017.)

Viewed in a cer­tain light, you can start to see the poten­tial for a cer­tain kind of play here: an attempt to inte­grate Trump’s work­ing-class nos­tal­gia with the urgency of remak­ing the econ­o­my to fight cli­mate change. “Skilled crafts­men, and trades­people, and fac­to­ry work­ers have seen the jobs they loved shipped thou­sands of miles away,” the pres­i­dent has said. “This wave of globaliz­tion has wiped out our mid­dle class. It doesn’t have to be this way. We can turn it all around—and we can turn it around fast.” Would Green New Deal­ers real­ly dis­agree with any of this?

Yet Oca­sio-Cortez only ever approach­es that rhetoric at a slant. “Today is a big day for peo­ple who have been left behind,” she said when announc­ing the Green New Deal. “Today is a big day for work­ers in Appalachia. Today is a big day for chil­dren that have been breath­ing dirty air in the South Bronx.” She referred to her pro­pos­al not as a plan to resus­ci­tate Amer­i­can indus­try, but as a “com­pre­hen­sive agen­da of eco­nom­ic, social, and racial jus­tice.”

“This is an invest­ment,” she said. “For every dol­lar we spend on infra­struc­ture, we get more than a dol­lar back for that invest­ment.”

That’s weak, com­pared with the ambi­tion wound up inside her own pro­pos­al. Invest­ment and infra­struc­ture are such Nor­mal Demo­c­rat Words that they lose the spe­cial nos­tal­gic charge of indus­tri­al pol­i­cy. No won­der the Green New Deal was under­stood as a wish list, even by its sup­port­ers. Not that Oca­sio-Cortez helped her case here either: On the day of the announce­ment, her office pub­lished, then retract­ed, a some­times juve­nile FAQ doc­u­ment that talked about fart­ing cows and sup­port­ing peo­ple “unwill­ing to work.”

Gunn-Wright told me that her team doesn’t talk about the Green New Deal as indus­tri­al pol­i­cy first, because peo­ple mis­un­der­stand it. Trump’s eco­nom­ic mes­sage is linked to his racist rhetoric, per­haps irre­triev­ably so. Say the word man­u­fac­tur­ing, and peo­ple hear a paean to the white work­ing class. “We haven’t talked about the decline of man­u­fac­tur­ing out­side of cul­tur­al terms,” she said. “It’s real­ly weaponized in terms of race. That also makes peo­ple back away from it.”

And it is legit­i­mate­ly tricky to talk about the his­to­ry of U.S. indus­tri­al pol­i­cy, espe­cial­ly on the left. Sure, the gov­ern­ment has guid­ed the invis­i­ble hand through­out Amer­i­can eco­nom­ic history—but it has also guid­ed the bay­o­net and the lash. In the 1790s, Hamilton’s prized finan­cial sys­tem count­ed enslaved bod­ies as a type of com­mod­i­ty, along­side cot­ton and wheat. In the 1860s, the gov­ern­ment had west­ern land to “freely” give away because it vio­lent­ly seized it from indige­nous peo­ple first. In the 1950s, sub­ur­ban­iza­tion enriched Amer­i­ca, but it did not enrich black Amer­i­cans, who were sys­tem­at­i­cal­ly pre­vent­ed from obtain­ing fed­er­al-backed mort­gages. Much of the Green New Deal’s racial-jus­tice agen­da reads as an attempt to deal with this legacy—and to ensure that peo­ple of col­or are not left out of the next great redi­rec­tion of the Amer­i­can econ­o­my. Hence the poli­cies aimed at spread­ing the wealth: the paid med­ical leave, the job guar­an­tee, the promise to hon­or trib­al treaties.

But the sum effect has been that Oca­sio-Cortez and her team shout about equi­ty while whis­per­ing about the econ­o­my. If the word man­u­fac­tur­ing is now a racial dog whis­tle, who bet­ter than a pop­u­lar left­ist con­gress­woman to reclaim its whine? It may be too much to hope for a cross-par­ti­san cli­mate pol­i­cy in the Unit­ed States, but every cli­mate pol­i­cy must have some kind of crossover appeal. The U.S. econ­o­my will even­tu­al­ly be remade to fight cli­mate change. Oca­sio-Cortez and her team must decide whether they will lean into their policy’s promise or make it seem like more of the same.

———-

“A Cen­turies-Old Idea Could Rev­o­lu­tion­ize Cli­mate Pol­i­cy” by Robin­son Mey­er; The Atlantic; 02/19/2019

“Above all, the Green New Deal is a left­ist res­ur­rec­tion of fed­er­al indus­tri­al pol­i­cy. It is not an attempt to con­trol the pri­vate sec­tor, accord­ing to its authors; it is a bid to col­lab­o­rate with it. And it draws on a set of ideas with a rich Amer­i­can his­to­ry, extend­ing long before the great World War II mobi­liza­tion to which the Green New Deal is reg­u­lar­ly com­pared.”

That’s right, in con­trast to its por­tray­al as a far left fever dream gov­ern­ment take over the US econ­o­my, the actu­al Green New Deal that was con­ceived by the New Con­sen­sus think tank is essen­tial­ly just a call for much more gov­ern­ment col­lab­o­ra­tion with the pri­vate sec­tor for the pur­pose of achiev­ing the pub­lic good. That’s the grand over­haul envi­sioned in the econ­o­my. There’s so a large pri­vate sec­tor, but it’s a pri­vate sec­tor that’s accom­plish­ing the pub­lic good (of a green, sus­tain­able econ­o­my) achieved under the guid­ance of fed­er­al indus­tri­al pol­i­cy. As Rhi­ana Gunn-Wright, one of the pol­i­cy researchers who devel­oped it, described it, the core of the Green New Deal, if you just look at the projects, “is just like indus­tri­al pol­i­cy, indus­tri­al pol­i­cy, indus­tri­al pol­i­cy.” And that’s exact­ly why the Green New Deal has the poten­tial to be such a com­pelling counter-point to Trump’s rhetoric of bring­ing back man­u­fac­tur­ing jobs to Amer­i­ca:

...
In short, the Green New Deal’s sup­port­ers hope that indus­tri­al pol­i­cy can now bring forth anoth­er transition—to cheap­er ener­gy, faster trains, and an alto­geth­er more cli­mate-friend­ly econ­o­my. “The core of the Green New Deal, if you just look at the projects, is just like indus­tri­al pol­i­cy, indus­tri­al pol­i­cy, indus­tri­al pol­i­cy,” says Rhi­ana Gunn-Wright, a pol­i­cy researcher at the think tank New Con­sen­sus who helped draft Ocasio-Cortez’s pro­pos­al. “It’s very, very, very cen­tral. The Green New Deal is one of the largest inter­ven­tions in U.S. indus­tri­al pol­i­cy in a long time.”

Ocasio-Cortez’s love of indus­tri­al pol­i­cy did not come from nowhere. In the past few years, a group of schol­ars has revived an old school of eco­nom­ic thought that says a strong man­u­fac­tur­ing pol­i­cy is an absolute neces­si­ty for large, devel­oped nations. They argue that the Unit­ed States has neglect­ed its domes­tic man­u­fac­tur­ing sec­tor since the 1980s, a move that risks nation­al fail­ure.

This new school is cen­tral to the Green New Deal. Omit­ting it is like ignor­ing Mil­ton Fried­man when dis­cussing Pres­i­dent Ronald Reagan’s poli­cies. And dis­card­ing it is throw­ing out what makes the Green New Deal so inter­est­ing. For more than a decade, the biggest pro­gres­sive ideas about curb­ing cli­mate change have relied on tech­ni­cal or nar­row mar­ket mech­a­nisms. They have required reg­u­la­tors to make emit­ting car­bon diox­ide cost­ly. By pre­scrib­ing indus­tri­al pol­i­cy, the Green New Deal goes in a dif­fer­ent direc­tion: It throws all of Amer­i­can gov­ern­ment and indus­try behind an attempt to make renew­able ener­gy cheap.

This move could rev­o­lu­tion­ize U.S. cli­mate pol­i­tics. Oca­sio-Cortez has a chance to recast one of Trump’s eco­nom­ic intuitions—that the decline of indus­try has bro­ken some­thing fun­da­men­tal in the U.S. economy—as cli­mate pol­i­cy. She may be squan­der­ing it.
...

Adding to the polit­i­cal poten­tial of the Green New Deal is the fact that its authors are rel­a­tive­ly main­stream econ­o­mists. You can’t call Brad DeLong and Mar­i­ana Maz­zu­ca­to wild eyed social­ists. And as these main­stream econ­o­mists see it, the US’s his­to­ry of indus­tri­al poli­cies designed to facil­i­tate new sec­tors of the econ­o­my was basi­cal­ly aban­doned with Rea­gan in 1980 and US work­ers and indus­try has been feel­ing the impact ever since:

...
Last fall, a num­ber of activists and pol­i­cy schol­ars from the same net­work of left­ist groups as Oca­sio-Cortez found­ed a new think tank. They called it New Con­sen­sus. Since then, the group has done lit­tle pub­lic work beyond help­ing to for­mu­late the Green New Deal. Its web­site has only four pages. But it has pub­lished a read­ing list writ­ten by Demond Drum­mer, its founder, that func­tions as a man­i­festo of sorts.

The list does not cite a sin­gle angry issue of Dis­sent or post­mod­ern rant by Slavoj Žižek. Instead, it con­tains a bunch of self-described prag­ma­tists: Vaclav Smil, a sci­en­tist who Bill Gates says is his favorite author; Brad DeLong, a UC Berke­ley eco­nom­ics pro­fes­sor who served in Bill Clinton’s admin­is­tra­tion; Car­lota Perez, a schol­ar who calls her­self a “rad­i­cal cen­trist”; and Mar­i­ana Maz­zu­ca­to, an econ­o­mist so main­stream that the Finan­cial Times recent­ly pro­filed her love of swim­ming.

Drum­mer says that the books lay out a new and coher­ent view of “how eco­nom­ic progress real­ly hap­pens.” Many of the books argue that wealthy coun­tries became wealthy in the first place by sup­port­ing, pro­tect­ing, and invest­ing in strate­gic indus­tries. A nation’s oth­er policies—around trade, infra­struc­ture, even education—were ulti­mate­ly designed to serve these cho­sen indus­tries. “A nation must delib­er­ate­ly and con­stant­ly invest in its means of mak­ing a liv­ing,” Drum­mer writes. “Nations that ‘[let] the free mar­ket decide’ what they should do for a liv­ing decline to the bot­tom of the eco­nom­ic food chain.”

...

Cohen and DeLong argue that our indus­tri­al prag­ma­tism ceased in most sec­tors around 1980. They claim that pol­i­cy mak­ers grew too ide­o­log­i­cal: They read too much Fried­man, dereg­u­lat­ed the finan­cial sec­tor, and adopt­ed a gospel of free trade. These actions allowed East Asian coun­tries to over­whelm Amer­i­can man­u­fac­tur­ing. In 1979, man­u­fac­tur­ing made up 21 per­cent of U.S. GDP; by 2007, it had fall­en to 12 per­cent.

...

Oca­sio-Cortez has tak­en to say­ing that the Green New Deal is our generation’s moon­shot, and this is usu­al­ly under­stood as an invo­ca­tion of John F. Kennedy–esque vig­or: When Amer­i­ca sets its mind to it, it can do any­thing. But in the con­text of New Con­sen­sus’ read­ing list, the moon­shot ref­er­ence reads as an allu­sion to anoth­er eco­nom­ic thinker—Mar­i­ana Maz­zu­ca­to, the direc­tor of the Uni­ver­si­ty Col­lege Lon­don Insti­tute for Inno­va­tion and Pub­lic Pur­pose.

Maz­zu­ca­to argues that the pri­vate sec­tor can­not inno­vate with­out the pub­lic sec­tor giv­ing it pur­pose and direc­tion. In fact, inno­va­tion depends on the state. First, the pub­lic sec­tor defines a chal­lenge. Then it asks—or demands—that the pri­vate sec­tor address itself to that chal­lenge. She cites the Apol­lo pro­gram as a per­fect exam­ple.

...

Mazzucato’s ideas are all over the Green New Deal. She has met with Oca­sio-Cortez in per­son more than once; their staffs have con­sult­ed; they even Skyped togeth­er. Maz­zu­ca­to has a fact page about the Green New Deal on her web­site. Yet Maz­zu­ca­to is no rad­i­cal. When we talked, she had just returned from Davos, and her books are more like­ly to be fet­ed by the Finan­cial Times than by Jacobin. “Maz­zu­ca­to is a pret­ty main­stream, mar­ket-fail­ure-cor­rect­ing econ­o­mist, in terms of indus­tri­al pol­i­cy,” says Con­stan­tine Sama­ras, a pro­fes­sor of engi­neer­ing at Carnegie Mel­lon Uni­ver­si­ty. So why has the Green New Deal been cast as such a rad­i­cal pro­pos­al?
...