taxes

Trump tax cuts right-wing economics

At least, not according to what Republicans promised when they passed them. The Trump tax cuts didn’t work to grow the economy, increase revenues, alleviate the debt, or benefit ordinary Americans as alleged.

The Tax Cuts and Jobs Act (TCJA) was introduced by then-Speaker of the House (and fiscal hawk) Paul Ryan and signed into law by then-President Donald Trump on December 22, 2017. It permanently reduced the corporate tax rate from 35% to 21%, and lowered the overall tax for all brackets — seems fair, right? Except the wealthy walked away with 50 times the amount of tax benefit as the lower brackets.

Trump tax cuts add $1.5 trillion to the deficit

Not only did the tax cuts not raise revenue as promised — they became a liability on the balance sheet when almost immediately going into the red. The Joint Committee on Taxation (JCT) estimated the TCJA would add approximately $1.5 trillion to the federal deficit over 10 years, after accounting for any temporary growth effects. The national debt will rise to accommodate as we borrow money to make up the shortfall between earnings and expenditures.

The Trump tax cuts reduced federal tax revenue, with significant declines in corporate tax receipts (surprise, surprise!). They did the exact opposite of what they promised to do — leaving our economy in a more precarious position even before the pandemic hit.

Who benefited from Trump’s tax cuts?

Conservatives and right-wing economists claim that tax cuts will help ordinary people by raising wages. In reality, however, corporations instead used their tax windfalls to do other things: stock buybacks, dividends, and executive pay. In fact, this happens over and over again each cycle of empty promises from so-called “fiscal conservatives” who in large part know exactly what they do.

Billionaires love Trump tax cuts!

They seem to believe they are entitled to the lion’s share of America’s money (as they have been since at least Mudsill Theory in 1858 and even before) and by gum, nothing is going to stop them — not democracy, not a sense of decency, not a sense of institutional preservation as used to be the very core pillar of Conservatism. No longer. Now it’s a will to power and to plunder. It’s not so much trickle down as it is hoover up.

Reaganomics, Trickle down, Laffer curve, Supply-side economics — it’s all the same

The magical revenue-generating power of tax cuts has been long promised and never delivered by right-wing Republicans. Since the 1980s edition, Reaganomics — the economic “theory” drafted on the back of a cocktail napkin dubbed the Laffer Curve for the slightly drunken man who scribbled it — has moved immense amounts of wealth upwards into the hands and coffers of the 1% and 0.1% at the expense of the masses.

The argument is that rich people will take the extra billions in returned tax money and use it to innovate and grow the economy — except that never happens. And why would they? They don’t have to earn revenue the old-fashioned way, through free market competition — they can just sit back on their laurels, buy a Senator or two, and rake in a huge windfall every few years that a GOP officeholder is in the White House. It is rock solid orthodoxy for the right-wing now, that tax cuts are almost the only policy initiative they care about — along with a side of deregulation and the slashing of the social safety net.

We’ve seen this movie before. The rich guys take the money and run — in many ways literally, into the arms of tax-free havens like the Cayman Islands or Seychelles. They do not return it to the American economy — although they do inject it into American politics, to skew the playing field even further in their favor despite already extracting extraordinary privileges and benefits to themselves from all aspects of their coziness with the political elite and their direct capture of various institutions.

As LBJ once said:

“If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

President Lyndon Baines Johnson, 1960

The economic elites are dividing us over race and religion, in order to pick our pockets. This is why we can’t have nice things. We should boot them out and have nice things.

Related Reading:

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Or: How Milton Friedman destroyed Western civilization, the neolliberalism story.

An economic ideology first theorized in the 40s and 50s by scholars, it was brought to popular attention in the 1970s by the works of economist Milton Friedman and novelist Ayn Rand among others. It grew in popularity and became widely adopted in U.S. economic policy beginning with Ronald Reagan in the 80s.

The essential heart of neoliberalism is the idea of the rich as top performers and job creators, driving the economy forward through their achievements and innovations; and that societies work best with little government regulation and where citizens are shaped to work according to market principles. Its adoption as a major driver of policy effectively undid many of the gains to middle class opportunity created by the New Deal, FDR‘s ambitious public works project that pulled the nation out from the grips of the Great Depression following the 1929 crash on Wall Street.

Neoliberalism is the dominant economic orthodoxy in the modern era. It is both a political and a financial ideology, with the following extremist beliefs:

  • Antigovernment sentiment — Their pitch is that all governments, including democratic ones, threaten individual liberty and must be stopped (or “drowned in the bathtub,” in the words of anti-tax zealots and movement conservatives).
  • Free markets should conquer governments — They claim, absurdly, that the toppling of self-governance would improve both economies and individual liberties.
  • The victory of markets is inevitable and there is nothing you can do about it — The fall of the Soviet Union and Cold War Communism was deemed the “end of history” by neoliberals, who believed that laissez-faire free market capitalism would inevitably triumph over all other forms of economic and political systems.
  • Economies work best when governments don’t intervene — Neoliberals want to prevent the powers of government from interfering with their ability to cut corners, dump industrial waste, pay fair wages, offer benefits, adhere to safety standards, engage in deceptive advertising, commit tax evasion, and so on — while continuing to supply them a steady stream of the public’s money via unpaid for tax cuts that balloon holes in the deficit. They fight against regulation tooth and nail, and try to claim that markets operate “naturally” as if under something akin to laws of physics — while failing to mention that there are no markets without regulation, without standards of fairness, without a justice system to enforce contracts and do its best to ensure a relatively equal business playing field.
  • The alchemy of neoliberalism will transmute greed into gold for everyone — The neoliberal promise is about spreading wealth, freedom, and democracy around the world — at the barrel of a gun, missile, or drone if necessary. Neoliberals consider greed to be the essence of human nature, and have modeled an entire societal system around this most base of human instincts. They claim, improbably — and surely many are True Believers — that narcissism and the aggressive pursuit of power and wealth will somehow magically create peace, happiness, and riches for everyone.

The insistence that governments and self-rule should be subordinated to the ultra-rich, to the oligarchs — that, to me, is the core essence of why this framework is evil. The staggeringly dissonant conviction about transforming sociopathy into global peace is a very close second.

Since the 1970s and accelerating with Reagan years, wealthy elites in the right wing have been spending gobs of their ill-earned wealth on creating a conservative movement echo chamber of think tanks, talk radio, literature, televangelists, YouTube streamers, and more — it is the vast right-wing conspiracy Hillary Clinton warned us about. It most certainly exists, and it most certainly is aggressively pursuing its political aims to disenfranchise the American people as fully as possible, so as to better walk away with an absurdly unjust share of the mutually created wealth by the wealth of intelligent and diligent labor here in the United States.

Common whites

It appeals to the MAGA crowd because it allows them to vicariously tag along with the rich and powerful right-wing bigots who flaunt and dangle their wealth in front of the plebes by which to entice them to open up their wallets and send in a meagre donation for this or that white victimhood fund that does nothing but enrich the scam artists who run it as a hollow shell. It validates their hardcore white supremacy and casual racism alike, provides the sadistic satisfaction of attacking their enemies (symbolically and/or literally), gives them something to do and believe in, and keeps them entertained while their pockets are being fleeced in broad daylight.

Neoliberalism has succeeded in undermining some of the last shreds of democratic infrastructure and civic goodwill in society at this point in American political history. The defenses brilliantly architected by the Founders to ensure checks and balances would manage the power games in Washington to within workable levels have frayed even further under 4 years of Trump, and the vitriol of the January 6 coup attempt and insurrection that’s fueled further right-wing Big Lie entrenchment and domestic terrorist extremism.

Democracy is in crisis, and neoliberalism the culprit of this hostage story.

At least Joe Biden is correct in his analysis of the solution: we should tax the rich.

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In the 1930s and 40s we had the New Deal (thanks, FDR!). In 1938, Congress passed the Fair Labor Standards Act, setting legal limits on the maximum number of hours worked and the minimum wages allowed. Child labor was outlawed, and union laws allowed collective bargaining — resulting in much-needed wage growth and improved conditions for workers.

Republicans fought it then, claiming it was an essentially socialist program, and an economic enemy to business and growth. However, it was the very opposite of that — the war and post-war years were ones of productivity and prosperity, widely and broadly. A strong middle class was formed, changing the life and culture of America forever. The very image of the 1950s Average Family with a white picket fence (emphasis on the white) and 2.5 children the right-wing seems to have nostalgia for was made possible by massive government investments into the US economy and labor force — investments which paid off handsomely and broadly for all, with the notable exception (once again… sort of a theme around here…) of Black Americans, who were largely carved out of the GI bill and given the meagre leavings of the superior education and housing benefits doled out to white veterans.

In the mid-1970s this growth engine finally began to falter, and since the 80s, we’ve instead had the Raw Deal. An ever-escalating version of a Libertarian’s wet dream: deregulation of numerous industries including finance (leading to the housing crash of 2007-8) and energy (leading to the Enron scandal, where traders joked about frying grandmas in CA for fat bonuses), a steadily less progressive tax system (down from a whopping 94% in 1944 down to 28% under Reagan), and endless waves of cuts to social programs that had been designed to level the opportunity playing field after centuries of explicit discrimination.

The thing is, when people feel hopeful, they work harder.

When there is hopelessness, there is less urgency to work hard to maintain the conditions and systems that make one feel so hopeless. If you know the game is rigged, how futile does it seem to keep playing?

Libertarians lament about the size of the pie, which is as good a modern version of “let them eat cake” while the plebes swill McD’s and pay through the nose for health care as any.

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I’ve been reading John Stuart Mill’s “On Liberty” and am reminded of the quintessential liberal definition of the term:

The only freedom which deserves the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”

— John Stuart Mill, On Liberty
(emphasis mine)

It seems to me that Libertarian proponents tend to make a systematic error in portraying liberty as only commensurate with the first part of Mill’s description: essentially interpreting it as, “I should be able to do whatever I want, and have no constraints placed upon my person by the government whatsoever.” The idea of “cancel culture” is a reflection of this ideal, whereby the right wing complains that moral constraints that apply to everyone should not apply to them.

This mentality misses completely the essential boundary established by the second part of Mill’s quote: that doing what one wants has limits attached, and that those limits are a proscription on engaging in activities which either harm others, or deprive others of their own rights in pursuit of liberty. An essential part of the social contract, the concern for others’ rights naturally stems from concern for your own — as the collective will bands together to guarantee our rights in common, everyone has a stake in preserving the system.

Harm

Being fixated with avoiding taxation, the Libertarian will proclaim that the government is coercing him out of his hard-earned monies — but this fails to recognize the real harm being done to the lower classes by the deprivation of funds to support the basic level of public goods required to preserve life at a subsistence level as well as social mobility: the essence of the American dream.

In short, Libertarian dogma tends to be singularly focused on the self-interest of the upper classes without any attendant regard to the rights of others that may be trampled on by either class oppression or the capturing and consolidation of political power in the hands of the wealthy. It fails systematically to recognize the perspective of the “other side,” i.e. those who are harmed by the enactment of the Libertarian ideology — much as a narcissist lacks empathy — and with it, the capability of seeing others’ perspectives. You could in some ways consider it yet another form of denialism, as well as a cousin or perhaps even sibling to authoritarianism.

The Libertarian narcissist Venn Diagram is practically a circle.

Libertarianism sees itself in control

It believes its ideology should dominate others despite its extreme minority status. The Libertarian narcissist wants to get the benefits of the social contract and civil society, without having to pay back into the system in proportion to their usage of public resources at scale. The Libertarian political philosophy violates the fundamental, cross-cultural principle of reciprocity — exhibited in societies through the ages.

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