Thursday, December 21, 2017

New tax bill tries something that’s already failed many times: lowering taxes on wealthy to spur economic growth. But it’s typical of GOP to propose programs that have proven not to work

By Marc Jampole
Much of science and engineering involves trial and error: You try something and it doesn’t work, or doesn’t work perfectly, so you modify it or try something else. You learn from experience and apply what you learn to future activities. Trial and error is a necessary part of the scientific method.
Perhaps it’s because learning from experience is part of the scientific method, and thus part of science, that the Republicans refuse to do it.
It’s clear that the GOP didn’t look at real-world experience in the passage of the tax overhaul which over time will transfer more than a trillion dollars of wealth from the middle class and the poor to the very wealthiest Americans. They say the new tax system will supercharge the economy, which will result in more tax revenues than before the cuts. But past efforts to cut taxes on the wealthy have never led to increased prosperity, nor to increased tax revenues, whereas raising taxes on the wealthy always does. The Reagan tax cuts didn’t lead to prosperity, which came only when taxes were raised again under Bush I and Bill Clinton. The Bush II tax cut led to the 2008 recession by giving rich folk additional money to create a real estate bubble which, upon bursting, sent the economy into a tailspin. Only after the tax increases under Obama did the economy start to purr again.
And what about Kansas? The Sam Brownback-led experiment in cutting-and-gutting has led to an economic disaster. The Kansas example is particularly on point: Under Brownback, the legislature entirely eliminated taxes on what are known as pass-through businesses, which account for about half of all business profits. Brownback made the same glowing predictions that Trumpty-Dumpty and Paul Ryan are now making for lowering the income tax on pass-throughs and the other benefits of the tax bill that only the rich will enjoy. But instead of an economic boom, Kansas has seen seven years of little if any economic growth and massive budget deficits. The tax base shriveled, forcing lawmakers to cut spending on public schoolscollegesMedicaid and other programs. Courts had to order the state to spend more on public schools. This year, after years of suffering, the Kansas legislature finally reversed the tax cuts, overriding Brownback’s veto in a refreshing if desperate bipartisan effort.
Anyone who follows the scientific method would conclude from the wealth of experience that cutting taxes on the wealthy is a bad idea. But Trump and the GOP live in a weird faith-based universe in which wishful thinking can somehow defeat reality.
Unfortunately, tax policy is not the only area in which the GOP—and sometimes many Democrats—ignore experience:
War on drugs
The premise of the war on drugs was to limit supply by punishing everyone involved in the illegal drug trade—suppliers, dealers and possessors, especially those whose skin was not white. Launched by the Nixon administration and pursued for decades by Nixon’s successors, but especially under Republican presidents, the war on drugs proved to be an abject failure that ended up filling our prisons with people who committed low level, victimless crimes. So what does the Trump’s Commission on Combating Drug Addiction and the Opioid Crisis propose? Program after program to limit supply and little to work on reducing demand. While not as Draconian in its proposals to punish users as the original war on drugs was—after all, opioid addicts are primarily white and heavily centered in white rural areas—the commission proposes only two programs to limit demand out of a total of 56 recommendations. Most of the rest of the commission’s report details various ways to limit supply. Trump and Sessions would add more criminalization and jail time to the mix.
The Soviet Union invaded Afghanistan in 1979 and it was a quagmire that drained the Soviet treasury and sowed discontent on the home front. Ten years later, the Soviets withdrew from Afghanistan, tail between their legs, unable to achieve any of their objectives, but leaving behind a wide and bloody trail of death and destruction. Many believe that the experience in Afghanistan contributed to the break-up of the Soviet Union. Did the Soviet disaster—and those of the Russians and British in the 19th century—stop the Bush II Administration from invading in 2001 after Afghanistan refused to relinquish Osama bin Laden, the mastermind behind the 9/11 attacks? Not a chance. After more than 10 years of futile fighting that cost the lives of more than 2,000 American soldiers and about 100,000 Afghanis, drained the U.S. and accomplished nothing, Obama began to draw down the American troop totals in Afghanistan. Lesson learned—that is until the Republicans took control of the White House again and the Trump Administration announced its intention to ratchet up the U.S. military presence in the war-torn country—more drone attacks and more troops.
 Private prisons
Private prisons have led to widespread abuse of prisoners and greater violence behind bars and they often cost more than public prisons. President Obama’s response to the pile of evidence against private prisons was to announce that the federal government would gradually end their use. Yet there is so much experience that shows that private prisons don’t work that of course the GOP under Trump are supporting them. One of the first things Attorney General Jeff Sessions did was to scrap the Obama order to phase out the federal government’s use of private prisons.
Encouraged by big business and electric power generators, those Republicans who admit that we have to address climate change propose cap-and-trade as the way to lower carbon emissions. In this case, they’re joined by many Democrats. With cap-and-trade, a market is created for trading what are called “pollution credits,” which essentially means that companies that pollute buy the right to do so from companies that don’t pollute or pollute less. The original cap-and-trade scheme to address acid rain lowered emissions of SOby 42% in the United States. Europe, by contrast, used regulations to fight acid rain and was able to remove 71% of all emissions. Yet the U.S. (under Clinton but Republican support) insisted that the 1997 Kyoto Protocol focus on cap-and-trade as the main way to reduce carbon emissions. I really shouldn’t blame the GOP for their preoccupation with this failed concept, since the rest of the world, including Democrats, have also been enamored of cap-and-trade. For example, despite the fact that every single cap-and-trade program in the U.S. and Europe has failed to lower emissions, China recently announced it is establishing what it says will be the largest cap-and-trade market in the world.
In all of these cases, the reason the GOP prefers to follow failed policies instead of learning from experience is that big contributors benefit from continuing to pursue the fallacies, even if most people suffer. Sometimes it’s defense contractors. Sometimes it’s slick GOP cronies who want to make a quick buck through privatization. Sometimes it’s large industry and electric power generators who seek to exploit a badly formed and loophole-filled policy to avoid their responsibility to clean up their industrial processes. But whenever the GOP ignores the lessons of experience, someone makes a lot of money.
When contemplating the inability for the GOP to apply the lessons of the past to solve today’s challenges, I can’t help but think of the refrain of the old Pete Seeger song, “Where Have All the Flowers Gone?” It keeps playing in my mind: “When will they ever learn? When will they ever learn?”
The answer for the GOP and Trump seems to be “Never.”

Wednesday, December 20, 2017

Final tax bill not as mean-spirited as earlier versions, but still gives virtually all benefits to rich folk, while screwing everyone else. And it will still lead to another great recession or worse

By Mark Jampole

In the days before Congress passed the so-called tax overhaul, better termed the “Reverse Robin Hood Plan,” some televisions news programs showed images of the protests, but for the most part the news media accepted as a fait accompli the passage and signing of one of the greatest transfers of wealth up the socioeconomic ladder in world history. Usually I would complain that the mainstream media is once again manifesting its bias towards covering conservative protests, ideas, intellectuals, primaries and candidates while ignoring the left, but in this case, it’s hard to blame the media. After all, if Republicans in Congress were ignoring all the experts saying the bill is a disaster for the economy and all the polls which show anywhere from 59% to 70% of all Americans opposed, why would they be moved by pickets and chants outside their door?

The final tax package is not as mean-spirited as the original House and Senate versions, but it’s still a bad bill that reflects the underlying greedy philosophy that has animated the Republican Party for years: government by the rich, of the rich and for the rich. True enough, gone are some of the more obnoxious aspects of the bill like making graduate students pay taxes on free tuition and ending the deduction for adoption programs and teachers’ classroom expenses. The cap (doubled!) on assets not subject to the estate tax remains.


The tax overhaul still gives an enormous permanent tax reduction to the wealthy, while giving smaller temporary tax breaks to everyone else.

It still favors investors over workers and business owners over employees.

It still gives a major shaft to taxpayers in the high-tax states that pay more to the federal government than they receive already and still have enough money to provide more social programs and healthcare to their citizens.

It still increases the deficit by more than a trillion dollars over the next ten years, and that’s using optimistic estimates of future economic growth and revenue collection.

It still requires the federal government to cut non-military spending, and the Republicans still intend to use the new deficits it creates to justify cutting social welfare and insurance programs even more.

And it still is a recipe for economic disaster. It will increase both income and wealth equality. The gutting of the individual mandate will throw 13 million people off healthcare insurance rolls and jack up costs 10% for everyone else. Because it makes less money available to government, it will hamstring federal and local efforts to improve our infrastructure, conduct essential research and development in basic science, educate children, address climate change and tend to the needs of the elderly and disadvantaged. It will still take money out of active circulation because rich folk already have enough money to buy what they want and will therefore put their money into dead assets like stocks that aren’t initial public offerings, bitcoins, artwork and other collectibles, bloating the value of these assets until some asset group forms a bubble.

A lot of the Republicans are brainwashed dumb asses or unthinking greed machines, but many must know of the economic disaster that the tax bill will likely engender. At the very least, they understand that their money grab for the wealthy will end up pissing off a lot of people who will lose their job or their healthcare insurance, immediately or eventually pay more in taxes, find college, healthcare and housing costs going up, drive on pothole-infested roads and drink dirty water.

The hope of Trump and the Republicans must be that those who will temporarily receive a fatter pay check starting January will be delighted and that the asset bubble won’t burst into another full-blown recession until after the 2018 election. The optimists among them may be predicting the crash won’t come until after the 2020 election, enabling the Electoral College again to give a majority of its votes to a dangerously unqualified, ignorant buffoon and giving the Republicans the right to gerrymander voting districts into victories for another 10 years. But the crash will come, and when it does, Democrats will sweep back into office and have to deal with all the messes the Republicans have created. They will have to reinstitute regulations, restock the talent of many departments, restart oversight programs, revise language on websites, return the voting rolls to full democracy, reverse short-sighted decisions based on nonsense that went against the best interests of our citizens, renew relationships with many other countries and rededicate the country to the ideals of an open, secular, democratic society. And yes, the Dems will have to raise taxes on the wealthy, but just as the tax increases after the Reagan and Bush II tax giveaways to rich folk, probably not to the current level. Thus the trend since the 1960’s of society expecting less of the wealthy and more of everyone else will continue.

By the time the Democrats get back in control (or reason returns to the Republican Party), a lot of damage will have been done to millions of people in the United States and in the countries where we have military operations, our economy, the environment and global stability. Our reputation in the world will be in tatters and its possible our allies and adversaries may have moved on without us in trade, peace, arms, development and environmental agreements.

Also by that time, however, the current stock of Republican congressional representatives and senators will have secured cozy and lucrative sinecures with lobbyists, law firms, businesses or rightwing think tanks. Of course, the possibility exists that large numbers of white people will continue to channel their rage and frustration at their personal hard times into racial tribalism and thus continue to vote for right-wing candidates who speak in code and pander to their worst instincts. As the Alabama special Senate election proved, the call of racism is still strong.

But Doug Jones’s upset of Roy Moore also proved the power of getting out the vote, which nowadays depends to a large extend on organized efforts to overcome the many barriers that Republican-controlled states have erected to voting since 2010. The Alabama turnout, while only 32%, was considered heavy for a special election, which is shameful but also points out how many potential voters are out there. Surveys almost always demonstrate that Americans are much more liberal on economic, foreign policy and social issues than our politicians are. We like to blame big money for the current gang of deplorables running Congress and the White House, but big money does not elect people. It only funds their campaigns. Voters elect, and for far too long, too few of them have made their voices known. The result is the abomination of a tax bill which will end up crippling the U.S. economy.