In the pre-dawn hours of December 2, the United States Senate passed the Republican tax reform bill by a vote of 51 to 49, with only Senator Bob Corker (R-TN) breaking with his party, NBC News reported. With exceptional rapidity, Republican senators forced a vote on a revised bill which spanned nearly 500 pages complete with extensive and almost unintelligible handwritten alterations, as Business Insider noted.
Intentionally deprived of enough time for the Senate’s membership to actually read or debate the edited legislation much less complete a thorough economic analysis, a bill of magnificent complexity with far-reaching implications was passed by the Republican majority. As The Hill quickly reported, Senate Majority Leader Mitch McConnell heralded the bill’s passage.
“We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief for the middle class.”
While the Senate version has yet to be reconciled with its House counterpart, it seems all but inevitable that an equally appalling common ground incarnation of the tax reform bill will soon make its way to the White House for a warp speed signature. To be certain, Republicans from the president down to the lowliest of congressmen have been in a 10-month mad scramble to pass a major piece of legislation, undoubtedly fearing both the prospect of congressional paralysis inspired by an increasing number of lame duck incumbents in 2018 and the ire of a base that was sure to be baffled by the controlling party’s inability to actualize its core agenda.
We’ve heard proponents of this tax reform albatross clamor on about how these tax cuts will rejuvenate the American economy, which oddly enough, has been performing quite well for a period of time. Prominent advocates of this legislation have shouted from the rooftops that this systemic overhaul will spark a tidal wave of job creation in an economy marked by relatively low unemployment, despite minimal evidence that corporations intend to do anything more than pocket their newfound proceeds and pass them on to the investor class.
Analysts from the Washington Post have indicated that the Senate’s version of the tax reform bill will tack on an extra $1 trillion to the national debt over the course of the next decade, effectively killing the ability of the GOP to label itself as the party of fiscal conservatives. More interesting is that the gimmicky sales pitch used to sell the public on the bill obfuscated the painful reality that the individual tax cuts are not permanent, unlike the corporate tax cuts. Yet what makes this bill so insidious is not that congressional Republicans have over-hyped the benefits of this bill, which will likely result in a marginal and temporary increase in investment, but that it sets the stage for future economic calamity.
As it stands, federal human services spending accounts for 15.5 percent of GDP (expenditures which rest largely with Social Security, Medicaid, and Medicare), spending levels which have followed an upward trajectory for decades, according to the Pew Research Center. Already, approximately 78 percent of Americans live paycheck-to-paycheck, according to a report published by NBC News. Moreover, it’s economic dogma that those with lower incomes possess an inherently higher predisposition to spend, not save, a facet of particular importance given that personal consumption constitutes approximately 70 percent of GDP and is the primary driver of economic growth. Finally, and surprisingly, the Social Security Administration tabulated that over 85 percent of American wage-earners make less than $75,000 annually.
With all of that having been said, the issue we’ll inevitably face is that when the individual tax cuts expire in 2025, the federal government is still going to have to come up with a way to maintain the solvency of our nation’s entitlement programs. Politicians will ultimately find themselves backed into an uncomfortably tight corner. Do they attempt to hedge universally popular entitlement programs, which would spawn a uniquely ferocious backlash amongst the citizenry, or do they eventually raise taxes either directly or indirectly to fill the fiscal void?
Without an army of lobbyists and vaults of cash at their disposal, I strongly suspect that in the coming years we’ll see one-half of our national representatives throw the weight of their folly onto the backs of those least able to carry the cripplingly-heavy load, the lower and middle class. Perhaps they’ll quietly allow the individual tax cuts to expire and kick a larger share of Medicaid funding back to the states, which would undoubtedly see individual state governments levy additional taxes. Perhaps they’ll be audacious enough to eliminate critical deductions, or outright raise the lower-tiered rates under the nefarious cover of partisan misdirection.
However, one truth is glaring, they won’t bite the hand that feeds. Instead, they’ll bludgeon average Americans, those who have long tolerated duplicity, insincerity, and economic abuse. It won’t matter if federal belt-tightening leads to a contraction in personal consumption and sparks a recession that further devastates the majority of Americans. They simply don’t care, and such ramifications are of little consequence to the wealthy special interests whose influence clearly shapes policy, those in possession of an economic bulwark capable of withstanding the coming storm.
If you aren’t inclined to believe me, you need only look to some of the shadowy provisions slipped into the House and Senate bills for confirmation. The Senate version repeals the Affordable Care Act’s individual mandate, an action guaranteed to destabilize the health insurance markets and cause premium prices to spike, ultimately wrestling health insurance away from an estimated 13 million Americans. As the Washington Post reported, the House version eliminated deductions for large medical expenses, which could impact some 8.8 million Americans, many of them seniors on fixed incomes. The House bill also aims to not only scuttle student loan expense deductions but scrap certain student debt forgiveness programs, moves which bring the over $1.3 trillion student loan bubble ever closer to catastrophically bursting, moves which draw over 40 million young adults and their co-signers toward the precipice of financial ruin.
So tell me again that the current iterations of tax reform are public-spirited in nature and not an irresponsible vehicle for further robber baron engorgement.