MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
Commentaries like this are published thanks to the generous support of our readers. Help ensure Truthout and BuzzFlash can keep publishing: Sign up today to make a small donation each month and keep independent news alive!
During the Obama administration, the Republicans in Congress couldn't stop talking about the national deficit. They blamed Obama and the Democrats for allegedly putting the financial future of the nation at risk. The hue and cry from the Republican "deficit hawks" in the House and Senate was amplified by conservative think tanks that warned of dire consequences that would result from the debt of the United States.
In order to further enrich the wealthy, the tune has changed among the GOP's elected officials in DC. Now, there is little worry expressed about the deficit as the Trump tax cuts for the richest Americans are expected to add an addition trillion dollars to the deficit over 10 years. A July 25 New York Times article provides some background on the tax cut deficit backlash:
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.
The Times article notes that "corporate tax payments [to the federal government] fell by a third from the same period a year ago." That's a spectacular refutation of the promises Trump and the Republicans held out about the tax cuts resulting in increased revenue to the government through corporate expansion and increased spending by the wealthy.
In an op-ed in Bloomberg, Noah Smith notes the failure of another key sales point by the White House for the tax cuts. In specific, Trump boasted that the pay of workers would rise. According to Smith, that has not been the case:
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.
As opponents of the new tax cuts predicted, many corporations are using the extra cash on hand resulting from the cuts to buy back stock. This enhances the price of their stock and the asset value of the companies. However, it doesn't result in an increase in paychecks.
However, the most ominous news about the tax cuts involves the threat of their being used to justify a shredding of the social safety net. Trump and the Republicans are now dropping the other shoe. To reduce the deficit caused by the tax cuts, they are proposing draconian cuts in programs such as Medicare and Medicaid.
The Americans for Tax Fairness published a report, written with allied advocates of public services, that states the threat clearly:
Trump, who as a candidate promised never to cut Medicare or Medicaid, now is seeking a total of $1.3 trillion in cuts to Medicare, Medicaid and the ACA.
House Republicans propose slashing $2 trillion from Medicare, Medicaid and the ACA to reduce the debt and pay for the tax cuts.
Such massive cuts will likely delay Medicare for seniors until the age of 67, cause millions to lose their health care, jack up premiums and other out-of-pocket costs for millions more, make life-saving medicines costlier for seniors and families, restrict critical services for people with disabilities, limit the response to the devastating opioid crisis and eliminate key protections for people with pre-existing conditions....
The tax law lets drug companies pad their profits while raising healthcare costs for average Americans. The 10 biggest U.S. drug companies got a $76 billion tax cut on their offshore profits from the Trump - GOP tax law. In recent years, prices for the most widely used prescription drugs spiked at least 15% a year. No drug company has said it will use its tax cuts to reduce drug prices.
It is a loathsome but savvy strategic move: lower taxes for the super rich and corporations, and then pass laws that will require the nation's neediest to compensate for the loss in revenue. Indeed, individual costs for Medicare, Medicaid, etc., will increase to offset the deficit. It is another transfer of national income from those who need government health programs to those who have excessive incomes.
Trump is planning on introducing a second round of tax cuts in October, which would further lower corporate tax rates. Medicare and Medicaid recipients should be wary. The Republicans will also be looking to them to finance the resulting deficit from the second round of tax cuts, further padding the pockets of the top 1 percent.