Tag: Trump’s Tax Plan

Monday Wake Up Call – December 3, 2018

The Daily Escape:

Boston Public Library – photo by joethommas

The NYT’s David Brooks:

We’re enjoying one of the best economies of our lifetime. The GDP is growing at about 3.5% a year, which is about a point faster than many experts thought possible. We’re in the middle of the second-longest recovery in American history, and if it lasts for another eight months it will be the longest ever.

So everything’s good, no? Not really. More from Brooks: (emphasis by Wrongo)

Researchers with the Gallup-Sharecare Well-Being Index interviewed 160,000 adults in 2017 to ask about their financial security, social relationships, sense of purpose and connectedness to community. Last year turned out to be the worst year for well-being of any since the study began 10 years ago.

And people’s faith in capitalism has declined, especially among the young. Only 45% of those between 18 and 29 see capitalism positively, a lower rate than in 2010.

Brooks’ conclusion? It’s not the economy, we all just need more community connections.

His is another attempt to dress up the now-failing neoliberal economics. Things look good today from some perspectives, but our economy is crushingly cruel from others. Brooks seems to think that millions of Americans are struggling to pay their rent or mortgage, education loans, health care insurance or buy groceries because they have failed to master the art of networking in their neighborhoods.

Alienation is behind the rise of Trumpism, and the rise of populism across the world. In that sense, Brooks is correct, but the leading cause of people’s alienation is economic inequality.

And the leading cause of economic inequality is corporate America’s free rein, supported by their helpmates in Washington. Last week, Wrongo wrote about the exceptional market concentration that has taken place in the US in the past few years. He suggested America needs a revitalized anti-trust initiative. In The Myth of Capitalism, authors Jonathan Tepper and Denise Hearns write:

Capitalism without competition is not capitalism.

For decades, most economists dismissed antitrust actions as superfluous, so long as consumers were not the victims of price-gouging. Monopoly capitalism is back, and it’s harmful, even if a company’s core product (like Google’s and Facebook’s) is free to consumers. As we wrote last week, there’s excessive corporate concentration in most industries, including air travel, banking, beer, health insurance, cell service, and even in the funeral industry.

All of this has led to a huge and growing inequality gap. That means there is little or no economic security for a large and growing section of the American population. People see their communities stagnating, or dying. They feel hopeless, angry, and yes, alienated.

One consequence is that we’ve seen three years of declining life expectancy, linked to growing drug use and suicides. We seem to be on the edge of a social catastrophe.

But our real worry has to be political. People could become so desperate for change that they are willing to do anything to get it. The worry then, is that few vote and a minority elects a strong man populist leader, simply because he/she tells them what they want to hear. That leader can then go out and wreak havoc on our Constitutional Republic.

After that, anything could happen.

Despite what Brooks thinks, we don’t have a crisis of connections. It’s a crisis of poorly paying jobs, job insecurity, and poverty. When people look at their economic prospects, they despair for their children. Doesn’t it matter that in America, health care, education, and transportation all lag behind other developed countries?

The unbridled ideology of free markets is the enemy. Our problem isn’t that individual entrepreneurs went out and took all the gains for themselves, leaving the rest of us holding the bag. It’s more about how neoliberal economics is used both by government and corporations to justify an anti-tax and anti-trust approach that has led to extreme wealth and income concentration in the top 1% of Americans.

The reality is that the nation’s wealth has become the exclusive property of the already prosperous.

We need to wake up America! We have to stop for a second, and think about how we can dig out of this mess. When America bought in to FDR’s New Deal programs 75 years ago, we entered an era we now think back on nostalgically as “great”.

And it isn’t enough to talk about how we can look to Sweden or Norway as economic models. Both have populations of under 10 million, and our society is far less homogeneous than theirs.

We need a uniquely American solution to this problem. It will involve reforming capitalism, starting with tax reform, and enforcing anti-trust legislation.

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It’s Past Time To Make Changes To Our Economic System

The Daily Escape:

2011 Art piece by Steven Lambert

Does capitalism work for you? Well, you certainly work for capitalists. The real question is whether capitalism still provides economic security to all of us.

Steve Lambert, the artist who designed the sign, engaged with people across America over a three-year period about whether capitalism was still working. He learned that people were split about 50/50 on the premise:

People usually first react to the piece by falling back on the comfort of abstractions and repeating popular myths. For example, the true/false dilemma is much easier to resolve when the only alternatives to capitalism are presumed to be failed communist dictatorships. It’s also much easier to pretend that the only “true” definition of capitalism is the kind of free-market extreme idolized by thinkers like Ayn Rand and Friedrich Hayek

Or thinkers like Paul Ryan, Mitch McConnell and Donald Trump. Lambert learned that people generally agreed with the concept, assuming “you are willing to work hard, or work smarter”:

I’ve always found the formulation “work hard, work smart” disturbing. When you invert the expression, it implies: if capitalism doesn’t work for you (that is, if you’re poor, out of work or have a demeaning job), it’s your fault. To put it more bluntly, you are lazy and stupid.

If we ignore the fact that until recently, wages have stagnated for decades, and that what most people earn in a lifetime is insufficient to cover a modestly comfortable retirement, maybe you can say that capitalism is working.

We have been told that federal budget deficits impair our ability to grow the economy, or to put food on our individual tables. In fact the opposite is true. This idea makes us believe that our ability to earn a living requires some degree of suffering by other Americans.

As Claire Connelly says: (emphasis by Wrongo)

“We can’t afford it” has been the proverbial comforter of opponents of the welfare state harking back to the Clinton / Blair days….This argument has been used as an emotional crutch for people who don’t want to admit that they’re comfortable with homelessness and unemployment….If their bottom line is stable.

This lie sets us against each other, implying that the well-being of everyone else is a direct threat to our own. And who wins? The beneficiaries of the newly lowered taxes, corporate America and its management teams. More from Connelly:

Do we really want to live in a world….Where most people will be lucky to earn minimum wage, or wait for months to get paid. If at all. A world where we are not entitled either to a job, or an education, or affordable health care or a social safety net?

We are likely to see a $1.3 Trillion budget pass both houses of Congress this week. It is deficit spending run wild. Wrongo knows that both parties believe that deficits don’t matter, and to a great extent, he agrees.

But these deficits are larger than they had to be, due to the massive corporate and wealthy individual tax cuts the Republican House and Senate just passed. And it’s not only the size of the deficits, it’s the mis-allocation of funds by our neo-con overlords.

This is what capitalism has delivered for America: More than 45 million of us (14.5%) live in poverty. In 2016, another 49.5 million Americans were age 65 and older, and half of them (24.75 million) had yearly income of less than $23,394.

That adds up to about 70 million (22%) of Americans.

One idea that is gaining attention is a Jobs Guarantee program. The Center on Budget and Policy Priorities (CBPP) recently released a paper arguing for a national jobs guarantee through a national infrastructure bank. The CBPP plan envisions an infrastructure bank that would fund vital projects and ensure that jobs are well-paid. The government would use this job-creating ability to expand jobs in sectors where the market won’t currently invest, like a national high-speed internet network.

Government guarantees of employment aren’t radical. They aren’t communism, or socialism. We did it before with the New Deal. It reinforces traditional American values around work, and it builds the tax base by taxation on the jobs created. Here’s a final quote from Steve Lambert:

My favorite response to the sign was from a 17-year-old high school student in Boston. She said: “Capitalism can’t work for everyone. If it did, it wouldn’t be capitalism.”

This is where the conversation needs to go: We have to change an economic system that fails so many.

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Monday Wake Up Call – December 4, 2017

The Daily Escape:

Old railroad tracks near Folsom, CA – December 2017 photo by Merrill Dodd

This will be Wrongo’s last column discussing the tax bill. Here is a chart describing the differences between the Senate and House tax bills:

Source: WSJ

The big question is will the tax bill really go through reconciliation, or can Paul Ryan convince House Republicans to vote for it essentially as is? The three factions Ryan has to deal with inside his own party might make a straight agreement a hard sell. Will a successful reconciliation happen? Odds seem to be in its favor. However, things could go sideways. There’s plenty in the bills to anger just enough of the three Republican House factions, and they’re more exposed to a potential 2018 wave election than the Senators. State and local tax deduction are a sticking point, and what about the deficit? It will be an interesting and stressful next few weeks.

Returning to yesterday’s David Stockman’s analysis: The standard deduction is doubled in both bills to $24,000 per household, costing $737 billion while changing the tax brackets from seven to four (in the House bill) costs $1.17 trillion.

When all the puts and takes are finished on the personal income tax side, what America gets from 2018-2027 is a $1.20 trillion net reduction in personal income taxes. But, as we showed in yesterday’s chart, dead people and rich people stand to benefit the most.

So, what’s left is a tiny $352 billion tax cut for rest of America’s 145 million tax filers over the entire next decade. On average, that’s about $242 per person per year!

Couldn’t $1.4 trillion been better spent on refurbishment of our infrastructure rather than in giveaways to corporations? Do corporations really need more government aid at a time when they are recording near-record profits, and hold huge cash reserves that they are not spending on hiring, wage increases or investment in the USA?

It’s long past time for America to wake up!! Whether you support the tax bill or hate it, it’s also past time to clean out the sewer that is Congress. It will take about six years of organizing, finding progressive candidates, and GETTING OUT THE VOTE, to deliver mostly new faces in DC.

We must break up the “old thugs club” that Congress has become. To help us wake up and start on political renewal, let’s listen to George Harrison’s “Taxman”. This was the Beatles’ musical complaint about how much they were paying in taxes in the UK. “Mr. Wilson” and “Mr. Heath” are mentioned in the lyrics. They are former British Prime Ministers Harold Wilson and Edward Heath, who contributed to writing English tax laws that at one point had a 95% marginal tax rate.

There are no high-def video recordings of the tune available online by the Beatles (it was released in 1966 on “Revolver”), so here is Joe Bonamassa performing “Taxman” live at Liverpool’s Cavern Club, in June 2016. It’s his bluesy take on the Beatles’ pop sensibilities:

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – December 2, 2017

The Daily Escape:

St Petersburg Russia’s Church of the Saviour – photo by Amos Chapple

As Wrongo writes this on Friday, it appears that the Senate Republicans have the votes to pass their version of the tax bill. The House passed their version on November 16th. The House Republican’s tax bill includes a major shift in tax policy that will mean a hidden tax increase on every American taxpayer over the coming decades. From the Washington Times:

Republican tax-writers have decided to shift the tax code’s inflation index from the Consumer Price Index, or CPI, to something known as chained CPI, which is a slower-growing method of calculating cost-of-living increases.

How would this work? The new tax proposal replaces the current CPI, which is based on changes in prices for urban consumers, with the chained CPI. Various estimates show that this method would lower reported inflation by as much as 0.30% a year.

This will create two pocketbook issues for taxpayers. First, using a lower rate of inflation to calculate future tax rates will mean that tax brackets will adjust more slowly than with regular CPI. Therefore, taxpayers will move into higher tax brackets if their income increases faster than chained CPI, paying more in taxes. More from the Washington Times: (emphasis by the Wrongologist)

It works out to taxpayers paying $128 billion more to Uncle Sam than they would otherwise over the next decade, and $500 billion more in the subsequent decade.

Second, chained CPI will change how the government calculates inflation for the purpose of adjusting Social Security payments. CPI is the basis for cost-of-living adjustments that affect many government benefits. If the measure of inflation is reduced, then the increases in Social Security payouts to the public would also be lowered.

This, despite the fact that CPI already tends to under-report price increases. If chained CPI is implemented, Barry Ritholtz says: (emphasis and brackets by the Wrongologist)

It would allow Congress to come up with about half of the funds needed to cover the proposed GOP tax cuts by pushing more people into higher tax brackets and [by]…creating a hidden tax on everyone who will ever get Social Security in the future.

This is based on the long-held Republican idea that “if only we could lower inflation as reported in the consumer price index, we could afford more tax cuts.”

And adopting chained CPI will reduce future Social Security payments without America having any sort of honest debate about it. You can compare the two measures of inflation side by side at this Bureau of Labor Statistics page: Chained consumer price index for all urban consumers (C-CPI-U) and the consumer price index.

When Trump was elected, the floodgates were opened. Any old, bad Republican idea is now legitimate.

Assuming that the House and Senate bills are reconciled and a tax bill is passed and signed by Trump, it may well be the worst piece of legislation in a century. It would finally undo the legacy of both FDR and Lyndon Johnson, something that has been a wet dream of the Right for generations. Emboldened by its passage, the GOP will follow it by taking a scythe to much of what remains of the social safety net.  Worse still, since the GOP is doing away with the inheritance tax, Republicans will have ensconced themselves as a permanent, hereditary financial and governing elite.

That will surely make America Great Again.

We have to get up off the couch, and fight for what remains of the New Deal and Great Society programs. This fight will be town-by-town, political office by political office, until progressives can compete in every red state for control of its legislature and governorship.

It’s another Saturday, the end of a long week in which it became clear that the country is approaching a cliff. We need some inspiration. So we turn to Meghan Markle.

Wrongo hadn’t heard of Meghan Markle until her engagement to the guy who is 6th in the line of succession to the throne in England, splashed across the news. But, it turns out she is an intelligent, independent person with agency. Markle was named the UN’s Woman’s Advocate for Political Participation and Leadership in 2015. Here she is speaking about advocacy at the 2015 UN Women conference. It’s a winning and inspiring performance, and, while it’s a sample of one, it shows that Millennials are gonna do a fine job with the planet:

Those who read the Wrongologist in email can view the video here.

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Sunday Cartoon Blogging – November 19, 2017

The week was dominated by two stories, the Republican tax cut efforts; and the variations on the sexual harassment theme by men in positions of power.

Let’s talk about sexual predation by men. We shouldn’t be pushing all predators to the front of the same firing squad. Without diminishing or excusing what any of these scumbag politicians have done (Al Franken, Bill Clinton) pedophiles are in a detestable class all by themselves. We are now in the middle of a teachable moment, where publicizing how badly men have treated women in our society might bring about real behavioral change. This is solely due to those many, if not most, women who are saying that they aren’t going to take it anymore. This tsunami of accusations and personal testimony will bring down some of the worst of the predators. In this case, sunlight is the best disinfectant.

The GOP wrote the bill. Now, we’ll see who votes for it:

The elephant will always protect his best constituents:

Using the Pot/Kettle meme brings risk:

Mitch has selective beliefs when women tell their truth:

The sexual predator issue focuses the thinking of Republicans:

Trump chose Jeff Sessions for Attorney General in part because Alabama would be a lock to elect another Republican. We’ll see in 3 weeks if that works out as planned.

Bonus Republican hypocrisy: Do these people ever hear themselves?

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Saturday Soother – May 13, 2017

The Daily Escape:

Bluebells, Brussels Belgium April 2017 photo by Francois Lenoir

In many ways, it is too easy to criticize Donald Trump. While we can have differing opinions on matters of policy, they only account for a few of the issues Wrongo has with Trump. Most are his unfathomable attempts to avoid telling the truth. Consider his interview with The Economist which posted the entire transcript on Thursday. Let’s focus on this excerpt:

The Economist: Another part of your overall plan, the tax reform plan. Is it OK if that tax plan increases the deficit? Ronald Reagan’s tax reform didn’t.
Trump: Well, it actually did. But, but it’s called priming the pump. You know, if you don’t do that, you’re never going to bring your taxes down.

[Snip]

Economist: But beyond that it’s OK if the tax plan increases the deficit?
Trump: It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

Yes.
We have to prime the pump.

It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Priming the pump?
Yeah, have you heard it?

Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

Ok, so how did the guy from the Economist keep a straight face? The reporter is thinking John Maynard Keynes, the great British Economist, who came up with the idea of “priming the pump” in the 1930’s. By the way, Keynesian pump-priming is temporary government spending to boost temporarily weak demand. It is designed to boost growth, (and jobs) during a downturn, but we can’t assume that it will boost the economy’s growth rate.

Trump’s idea for pump-priming is more tax cuts. He’s following classic trickle-down economics, and claims that his tax cuts will boost investment, productivity growth, and labor supply, and thus raise the long-term growth rate of the economy. In this regard, Trump conflates Keynes, who’s been proven right, with Arthur Laffer, who wasn’t.

But, didn’t Trump graduate from Wharton with a business degree? Nobody gets out of Wharton without knowing that Keynes was the “pump primer”. And his saying that he coined the phrase ‘prime the pump’ a few days ago? Unfortunately, there are only two explanations: first, Trump is 70 years old and his cognitive skills are starting to desert him. Or second, he is a pathological liar.

Wrongo wants to go with #2.

He just wants to sell America something with his name stamped on it. But since America isn’t buying a hotel, he’s trying to sell Trumponomics, Trumpcare, etc. He does not really care about the details, he just wants to pass it, and to claim it is a success. That’s America’s tragedy.

So with Comeygate, Trumpcare and pump-priming, we all need to unplug and try, just try to relax on Saturday. We had a full moon and clear skies over the fields of Wrong on Thursday, so today we listen to “Claire du Lune” by Claude Debussy. It is the third movement of “Suite bergamasque”. Its name comes from Verlaine’s poem Clair de Lune, “moonlight” in French. Here it is played by Dame Moura Lympany, British pianist, who died in 2005:

Those who read the Wrongologist in email can view the video here.

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Trump’s Tax Proposal Silences the GOP’s Deficit Hawks

The Daily Escape:

African Elephants – photo from Nature Photography

African Elephants clearly are not deficit hawks. But, neither are most Republicans in Congress, despite all their complaining about spending that adds to the deficit. Trump’s tax proposal is out. It’s interesting that the administration decided it was a good idea to put a vague blueprint laying out big tax cuts on a single sheet of paper.

It could take some time to process Trump’s “proposal”, but as the NYT says, it will bring a reckoning for Republican deficit hawks:

As President Trump’s top economic advisers faced a barrage of questions on Wednesday about the tax plan they had just unfurled, there was one that they struggled most to answer: how to keep the “massive tax cuts” they proposed from ballooning the federal deficit…Republican budget hawks will need to decide whether they want to stick to the arguments of fiscal responsibility that they used to bludgeon Democrats during the Obama era.

More from the NYT: (emphasis by the Wrongologist)

Mick Mulvaney, director of the Office of Management and Budget, who was a fierce critic of deficits when he was a member of Congress, offered a glimpse of the rationale his former colleagues might embrace. “As a conservative, that bothers me a little bit,” he said Tuesday on CNN of the possibility that Mr. Trump’s tax plan would increase the deficit. “But we also look at deficits through sort of a different lens.”

While we haven’t yet seen definitive estimates of the cost of Trump’s one-pager, it will certainly add to the deficit, and the negative numbers range up to an additional $6 Trillion over the next 10 years.

And when Treasury Secretary Mnuchin says that Trump’s tax plan “will pay for itself,” he isn’t credible. He also told ABC News that he couldn’t guarantee that middle-class families wouldn’t pay more under the proposal:

I can’t make any guarantees until this thing is done and it’s on the president’s desk. But I can tell you, that’s our number one objective in this…

Word salad. Helping the middle class is the furthest thing from their minds. Trump, Mnuchin, Ryan and the rest want to give a targeted stimulus to the rich and corporations.

They disguise tax cuts by calling them “tax reform”. Whatever they call it, they want the biggest tax cut for rich people that they can push through the House and Senate. Calling it “tax reform” is useful because “yuuge tax cuts for the rich” won’t be all that popular politically.

It’s inevitable that “middle class families” will end up paying more. Somebody’s got to pay for that massive military buildup. And the GOP cries of deficit piety are a shell game. Here is Kevin Drum:

When does this nonsense stop? Republicans aren’t deficit hawks. They haven’t been since the Reagan era. Republicans used to be deficit hawks, but the whole point of the Reagan Revolution was that tax cuts were more important than deficits. Their only concern about the deficit these days is as a handy excuse for opposing any increase to social welfare programs.

Trump’s tax plan is the same old Republican orthodoxy that has been around for decades.

Wrongo recommends this article from Fortune Magazine in 1955: “How Top Executives Live”. The GOP constantly says that if the 1% are forced to pay high taxes, they won’t work as hard to innovate and create jobs. This article, from the time when personal tax rates went from 40%-75%, shows they didn’t need low taxes back then to work hard:

The successful American executive, for example, gets up early–about 7:00 A.M.–eats a large breakfast, and rushes to his office by train or auto. It is not unusual for him, after spending from 9:00 A.M. until 6:00 P.M. in his office, to hurry home, eat dinner, and crawl into bed with a briefcase full of homework. He is constantly pressed for time…

Wrongo is cranky about the GOP’s desire to always shift the tax burden downward, and about their success in doing it. What Trump will get passed is another round of debt-financed upper-class tax cuts.

That will suit Trump and Ryan just fine.

Let’s go out with some music that references the life and times of Jonathan Demme, director of “Silence of the Lambs” and “Philadelphia”, who died on Wednesday. Demme also directed the best Rock movie ever made, “Stop Making Sense” featuring the Talking Heads. Here is “Life in Wartime” live, and that’s Parliament – Funkadelic’s Bernie Worrell on keyboards. This isn’t the first time Wrongo has posted this video:

https://www.youtube.com/watch?v=obAtn6I5rbY

Those who read the Wrongologist in email can view the video here.

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