Thursday, January 18, 2018


The GOP Bet the “Tax” Farm.

December 22, 2017 by  
Filed under Money, News, Opinion, Politics, Weekly Columns

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(ThyBlackMan.com) President Trump, every Republican senator, and the GOP majority in Speaker Paul Ryan’s House just put the future of their party on the line.

By enacting the largest tax cut since the Reagan administration, the heart of which is cutting the corporate rate from 35 to 21 percent, Republicans have boldly bet the farm.

They have rewritten America’s tax code to reflect their belief that cutting taxes on the private sector will produce the prosperity they have promised. If it happens, the GOP will reap the rewards, if not by 2018, then in 2020.

Democrats, as the Party of Government, egalitarian and neo-socialist, have come to see their role as redistributing wealth from those who have too much — to those who have too little. For, as men (and women) are born unequal in ambition, ability, talent, energy, personality and drive, free markets must inevitably produce an inequality of results.

The mission of Democrats is to reduce those inequalities. And as the very rich are also the very few, in a one-man, one-vote democracy the Democratic Party will always have a following.

Winston Churchill called this the philosophy of failure and the gospel of envy.

Republicans see themselves as the party of free enterprise, of the private not the public sector. They believe that alleviating the burden of regulation and taxation on business will unleash that sector, growing the economy and producing broader prosperity.

By how they voted Wednesday, Republicans yet believe in “supply-side” economics. In the early ’80s, this was derided as “voodoo economics” and “trickle-down” economics, and pungently disparaged by John Kenneth Galbraith as an economic philosophy rooted in the belief that, if you wish to feed the sparrows, you must first feed the horses.

The problem for Democrats is that Reaganomics worked, and is seen historically to have been successful. In 1984, growth was near 6 percent and Reagan rode to a 49-state landslide over Fritz Mondale who, at his San Francisco convention, had declared he would raise taxes.

Thus the importance of what happened Tuesday and Wednesday on Capitol Hill should not be underestimated.

On their legislative agenda, Republicans broke out of a slump. Though they got not a single Democratic vote in either chamber, they showed they can govern alone. On the lead item on the GOP-Trump agenda — taxes — they delivered. They shifted policy dramatically toward Republican philosophy. They wagered their future on their convictions. And the splenetic rage among Democrat elites suggests that they know they have suffered a defeat difficult to reverse.

Moreover, though the bill that came out of Congress is unpopular, the nation will not vote on Trumpian management of the economy until November 2018, after the early returns from the tax cut have come in.

And the Democratic Party has also been put into a tight box.

As Democrats have denounced the tax bill for exploding the debt by $1.5 trillion, how do they propose to pay for all the free stuff, including free tuition and infrastructure, that they will have on offer?

There are only two options: borrowing and growing the national debt themselves or raising taxes, as Mondale promised to do.

Another problem for Democrats is the new $10,000 limit on the tax deduction for state and local income and property taxes.

In blue states like Oregon, Minnesota, New Jersey, Vermont, Hawaii, the top state income tax rate is 8 to 10 percent. In Jerry Brown’s California and Andrew Cuomo’s New York, it hits 13 percent — before adding property taxes on homes and condos in Manhattan and second homes out on Long Island.

Virtually eliminating state and local tax deductions is going to cause some of the rich to consider relocating to low-tax or no-tax red states in the Sun Belt like Florida. And it is going to put pressure on blue state pols to cease adding to the state and local tax burdens that Uncle Sam is not longer helping to carry.

Stepping back from all the Sturm und Drang of 2017, the Trump-Republican record of achievement, of meeting commitments made in the campaign of 2017, is not unimpressive.

The largest tax cuts in decades. Elevation of Neil Gorsuch to the Antonin Scalia seat on the Supreme Court. A record number of new U.S. appellate court judges approved by the Senate. The U.S. is out of the Paris climate accord and out of the Trans-Pacific Partnership.

NAFTA is being renegotiated. Alaska’s Arctic National Wildlife Refuge will be open for drilling. The U.S. is at full employment, with minority unemployment near record lows. The stock market has consistently broken records, with the Dow having added 5,000 points. The Obamacare individual mandate tax is gone. Obama-era regulations have been cut and some eliminated.

And one year deeper into Russiagate, and still there is no proven collusion between candidate Trump and the Russians.

Indeed, the Robert Mueller investigators appear now to be coming under as much scrutiny and suspicion for how they behaved during the election and transition as Vladimir Putin and the Russians.

Written by Pat Buchanan

Official website; http://buchanan.org


Comments

One Response to “The GOP Bet the “Tax” Farm.”
  1. James Davis says:

    The Wealthy and Corporations versus the Consumer – Which One Of These Spurs Demand Creating Jobs – We Are About To Find Out Due To This Tax Cut!

    Many Republicans refer to the Ronald Reagan era as a demonstration of what tax cuts for the very wealthy can accomplish, however when you look at the Reagan era in some detail, we can get a better picture of what specifically happened and it is not at all the picture painted by Republicans. When you look at the conversation President Jimmie Carter had with Paul Volcker who was at that time Chairman of the Federal Reserve (Fed), you begin to see what I am talking about.

    Volcker stated in an interview on the Federal Reserve Bank website under the subject titled “Commanding Heights,” that he asked President Carter if he had cost him the presidential election and Carter’s response, as he smiled, was “…there were a few other influences as well.” What Volcker was referring to was his raising the prime interest rate creating a recession, which pushed the national unemployment rate to 10.8 percent. The unemployment rate started rising during the Carter administration and would reach 10.8 percent in November, 1982.

    The appointment of Paul Volcker by President Carter as Federal Reserve Bank Chairman in August of 1979 was the major factor in the rise of interest rates. Volcker as Fed Chairman would push the prime rate to 21% by 1981 to bring inflation under control caused by the OPEC (Organization of Petroleum Exporting Countries) oil embargo just as Ronald Reagan was coming into office. Raising the prime rate to 21% brought inflation under control. Thus Reagan, not Carter; although Carter appointed Volcker, got the benefit of seeing the unemployment rate fall from 10.8 to 5.3%, as Volcker lowered interest rates from 21% during Reagan’s term in office, igniting an expansion of the economy.

    Additionally, President Ronald Reagan used the Social Security trust fund to cover any holes left in his budget as a result of extending a tax cut to the wealthy. So the bottom line was that the economy perked alone without experiencing any shortages due to the wealthy paying less taxes, while interest rates were coming down introducing cheap money into our economic system. Here is the simple truth and its just a fact, wealthy people do not spend as much money on every day goods and services as the bottom eighty percent of society does. So, pushing more money to the top is not going to expand the economy.

    Additionally, what the Trump administration is asking corporations and businesses to do is something that is just basically not a part of their DNA and that is hire workers and expand output in advance of a resurgence of American consumer demand. Even with a cut to an effective tax rate of 10 percent in the corporate tax rate, past behavior signals that that is not enough of a tax cut for corporations and businesses to take such a risk. He is essentially asking them to put the cart before the horse. Corporations and businesses usually respond to consumer demand by expanding, they don’t initiate it!

    (“Excerpts from the book titled, “The Fix This Time” @ amazon.com/dp/B00MI3PD2M)

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