Republicans and the case of the curious tax cuts

It used to be that republicans were the adults. The grown ups had to make the hard decisions. “You can’t have everything you want, we have to pay for it,” they said.  Well, at least that’s what they said. We’re learning that the GOP will say pretty much anything plausible to defend their desired outcome.

This was the party that couldn’t give us fiscal stimulus to get us out of the great recession. Dems made the stimulus much smaller than economists said was necessary to get GOP votes, and they didn’t get a single GOP vote anyway. This was the party adamant that we had to jeopardize our very creditworthiness with the debt ceiling fights, refusing to pay for spending we already authorized, because spending was out of control. OUT OF CONTROL, I SAY!!! This is the party that couldn’t bring itself to support things like hurricane aid, children’s health insurance or a host of other obviously needed things without offsetting the funding somewhere else.

But now that they want to get something passed, all that piety about fiscal responsibility is out the window. The supposed deficit hawks either never were in the first place, or folded faster than cheap card table on Jello wrestling night at the Elk’s Lodge. Putting on his best hypnotic eyes prop, republican Steve Womack said:

“I believe that the biggest remedy for our fiscal situation is growth in the economy,” he added. “I am not averse to some deficit spending in order to create long-term sustained growth.”

For those of you versed in the art of bullshit, he’s saying “we were insincere in our past criticisms of deficit spending.” You also saw a key republican admit that he’s counting on the tax cuts to pay for themselves over time. It’s unreal they’re still trying to sell this shit as fertilizer.

Meanwhile on the left, liberals are screaming at the top of their lungs so that not a single dem steps out of line, calling this Trump’s waterloo.  This type of opposition is harmful and makes Americans cynical about government. They just want government to do the right thing. Putting aside republican hypocrisy and liberal schadenfreude, could good come out of this?

Three problems

First: The Mr. Moneybags problem

The biggest problem the GOP has is that their package benefits the wealthy. They are highly aware of this, as they dropped their demand to lower their highest tax bracket (though they did raise the income needed to hit it to a million bucks). But the biggest cuts to the wealthy come in the form of killing the Estate Tax and reducing corporate taxes.

Now, to be clear, corporate taxes do need to come down. The problem for the GOP is that in order to help large businesses with a genuinely useful tax cut, they can’t just screw smaller businesses and make a two level tax system. Unfortunately, we already have that as large corporations take advantage of extensive loopholes that smaller businesses can’t afford. But the GOP effort to even this out with a pass through business tax cut just makes things messy and complicated for small businesses. I think the GOP’s heart is mostly in the right place here, regardless of their corporate fundraising motivations, even if it doesn’t quite work.

The Estate Tax on the other hand, is another matter entirely. This is just a transparent giveaway to wealthy donors. You have to be so rich to get hit by this that even most congressmen will ever pay it. The “Death Tax” is sold as a penalty you have to pay for dying. If that were so, I would have no problem repealing this. They money you get from it is small enough that it would only pay for 8% or so of our non-defense discretionary budget. Ok, maybe not nothing.

But the real reason we need the Estate Tax, and the reason it was created in the first place, is to prevent an aristocratic society like colonial England, where wealth and power accumulated in the hands of an elite class…not unlike modern America. Think I’m joking? Watch republicans trip over themselves chasing a few dozen wealthy donors.

Candidates scrambling for donor help is nothing new. But the early efforts this year to secure big-name funders have further blurred the hazy lines between candidates and unlimited-money outside groups, while reshaping Senate races around the country — propelling unknown candidates to prominence, scaring off potential opponents and heralding millions of dollars of outside spending as Republicans prepare for tough campaigns against Democratic senators.

The really notable part of that quote is “scaring off potential opponents.” We’ve created a system where a handful of kingmakers decide which candidates even get to be in the race. Even at the presidential election level, a single donor can keep a primary candidate in the running for months.

And surely you need not look to actual legislation, where the most insidious bills pass almost unnoticed and clearly benefit only a handful of wealthy donors and corporations.

Second: The rationale problem

The second problem the GOP has is that their justifications are so flimsy that they barely pass as excuses at all. In one article, they tout how the economy is doing better than it has been in decades, but then say how this is needed to boost the economy. We’re already at 4.1% unemployment. What do they think is going to happen by juicing the economy even more? Sure, some people would like to have better jobs, but giving tax cuts isn’t going to fundamentally restructure our entire economy to give low skill workers better jobs.

Trump’s economists say the corporate tax cut will raise wages by a laughable $4,000. I mean literally laughable. I’m not sure how they stood on the podium, or keyboard or wherever they made these proclamations, and kept a straight face. The last tax cut for “job creators” that was supposed to help American workers ended up getting mostly invested overseas in emerging markets. True, this tax cut would help repatriate profits, but you know as well as I that it’s more likely to go to investors, or private jets, or just about anywhere that doesn’t involve paying workers a crisp dollar bill more than they have to to retain employees.

But perhaps most convincingly, tax cuts just don’t work to juice the economy. Sure, it can be stimulative. But even ignoring the offsetting deficit problems, the effect is swamped by larger economic factors.

Third: The GOP is desperate for a win, even if it’s a bad win

I actually don’t have a problem with some of the proposals. I don’t think the government should be subsidizing home buying (maybe once it was a good idea) or paying for up to a third of someone’s state taxes. But the current proposal accomplishes neither major and meaningful reform, nor does it effectively stimulate the economy at a time when it is needed.

Oh, and if you didn’t notice, despite the strongest economy in a long time, we still have a deficit so large that we have to borrow to pay for almost 100% of our non-defense discretionary spending. Think about that. Every non-defense government program you can think of outside of medicare, medicaid, social security, food stamps and welfare is unfunded.  That’s more remarkable when you consider the first two are self funded. Now you know why republicans are having such a hard time finding spending cuts. It’s already razor thin.

And the GOP thinks we need a tax cut.

Finally, the GOP is simultaneously a dog with a bone and a teenager fretting about getting laid. They’re the dog because they just don’t have any idea what they stand for without being a) against Obama and b) for tax cuts. It’s so ingrained in them that it’s honestly going to be fascinating what happens if they actually succeed here. Will they try to pass ANOTHER tax cut? It seems ridiculous, but the Laffer Curve was just as ridiculous when the GOP passed their last deficit-exploding tax cut under Bush. I thought back then, “what will they do now?” Will they eventually propose negative taxes?

And they’re also a fretting teenager because they’re so worked up about passing SOMETHING, ANYTHING so they can look like they can govern that they seem to have lost sight of whether they care if their bill is good or not. It’s as if when they pass this all the pressure to govern will be off, and they can just go back to gutting environmental and consumer protections and investigating Hillary.

But again, what happens if they succeed? Trump seems to think this will make him a republican hero and leader. Politico posed the potential opposite. With no agenda to pass anymore, will the GOP have no reason to make nice with a president that has been attacking them? It could actually leave him even more isolated and attacked by his own party.

And of course don’t forget that the tax cut has to actually do some good. What happens when the economy doesn’t get juiced? When workers don’t benefit? When the deficit explodes?  I suppose creating their own reality was never a problem before.

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