The House is scheduled to vote on the GOP “tax cuts for corporations and Plutocrats” bill today. House Is Poised to Pass Tax Bill in Major Step Toward Overhaul:
The House tax bill, which passed in the Ways and Means Committee last week, would cut taxes more than $1.4 trillion over 10 years. It cuts the corporate tax rate to 20 percent from 35 percent, collapses the tax brackets to four from seven, switches the United States to an international tax system that is more in line with the rest of the world and scales back many popular deductions, including one for state and local taxes paid.
The House bill appeared on track for passage on Thursday, despite some Republican opposition. If all House members vote and every Democrat opposes the bill, Republican leaders can afford to lose no more than 22 of their members for it to pass.
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The House is expected to begin floor debate at 9 a.m. on Thursday for about two hours. Mr. Trump is expected to make a visit to the Capitol to speak to the Republican conference around 11:30 a.m., according to a congressional aide. A vote is then expected to take place in the early afternoon.
The House GOP tax bill does not include the repeal of the “Obamacare” individual mandate that is in the Senate bill to help ensure passage in the House. This is all just a ruse. There is an explicit understanding that if the Senate can pass its version of the tax bill with repeal of the Obamacare individual mandate, the House will follow suit. Paul Ryan: Senate will have to take lead on scrapping Obamacare individual mandate in the tax bill:
In an interview on CNBC’s “Squawk Box,” House Speaker Paul Ryan suggested that his members could get behind eliminating Obamacare’s individual mandate as part of a tax reform bill. However, he said the House will not do so in the bill it hopes to pass Thursday. Instead, it will wait to address it in a conference committee with the Senate, he said.
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Ryan did not outright say the House would back such a measure, but he noted that his members have voted to repeal the mandate in the past.
“We’ve had the House votes to do that. We passed our repeal of the individual mandate back in May,” the Wisconsin Republican said. “But we never had the votes in the Senate. So what we didn’t want to do is make tax reform harder than it already is.”
“But it really is whether or not the Senate has the votes for this or not. So, we’re seeing what the Senate can do. If the Senate can get it through committee, if they can get it through the floor, then we’ll meet them in conference and we’ll assess at that time,” Ryan added.
Without the individual mandate, more people would be uninsured and health insurance premiums would rise. Obamacare, Reliant on Insurance Requirement, Would Crumble Under Senate Tax Bill:
If the individual mandate is repealed, people with lower health costs would be less likely to buy insurance on the health law’s marketplaces. In fact, the Congressional Budget Office expects that 13 million more people would be uninsured in 10 years.
The Washington Post editorializes today, Republicans turn their irresponsible tax bill into monumentally unwise social policy:
[F]or Republicans, the coverage loss is not a regrettable side effect of an otherwise sensible policy. It is the point. Fewer people covered means that the federal government would save money that the treasury would have otherwise spent on their health care, such as by helping them buy health insurance or offering them Medicaid — $338 billion over a decade. Republicans want to use that cash to help finance their tax bill. They could have removed some of the bill’s expensive and unnecessary giveaways to the wealthy, such as its rollback of the estate tax. But they opted instead to raise money by ballooning the ranks of uninsured.
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If Republicans really believe that mandate repeal is good health-care policy, they should seek to pass it on its own, with hearings, markups and debate. But a fair process would only clarify further that the policy is ruinous. Republicans who in July recoiled at an attempt to ram through the Obamacare “skinny repeal” have even less reason to vote for this drastic, ill-considered and last-minute attempt to sneak repeal into a tax bill.
Let’s be clear: the Republican Tax Plans Put Corporations Over People:
There are tough choices at the heart of the Republican tax bills speeding through Congress, and they make clear what the party values most in economic policy right now: deep and lasting tax cuts for corporations.
The bill set to pass the House on Thursday chooses to take from high-tax Democratic states, particularly California and New York, and give to lower-tax Republican states that President Trump carried in 2016, particularly Florida and Texas. It allows for tax increases on millions of families several years from now, if a future Congress does not intervene, but not for similar increases on corporations.
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[E]liminating the state and local tax deduction, in the context of the House bill, would add up to a large geographic transfer of income, according to research by Carl Davis, the research director of the Institute on Taxation and Economic Policy in Washington.
The House bill would raise personal taxes on Californians and New Yorkers by a combined $16 billion in 2027, Mr. Davis found, while cutting personal taxes on Texans and Floridians by more than $30 billion in total.
His analysis finds only one state that Mr. Trump carried in 2016 — Utah — would receive lower personal tax benefits under the bill than would be expected, given its share of national income, compared with 11 states won by his Democratic rival, Hillary Clinton. The average Clinton state would receive 82 percent of its expected benefits, by share of national income, under the plan. The average Trump state would receive 181 percent.
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Curtailing state and local deductions helps finance a core feature of both the House and Senate bills, which happens to be one of the few provisions Mr. Trump has called nonnegotiable in tax discussions: cutting the corporate income tax to a flat 20 percent rate, down from a top rate of 35 percent today. Republicans have kept those cuts permanent, even as the Senate applied an expiration date to the individual cuts and to a key tax credit for families in the House bill. The Senate bill also sets an expiration date on breaks for so-called pass-through businesses, whose owners pay taxes on profits through the tax code for individuals.
In Washington, Republicans have stressed that cutting corporate taxes will supercharge economic growth, accelerating job creation and raising wages in the process.
This bullshit “trickle down” economic theory has been disproved and discredited over the past 36 years, and yet they continue to believe; it is an article of faith in a false religion.
Former Treasury Secretary Robert Rubin analyzes The Republican tax plan’s five worst dangers:
The deficit-funded tax cuts advancing through Congress are a fiscal tragedy for which our country will pay a huge price over time.
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To start, the tax cuts will not increase growth and, given their fiscal effects, would likely have a significant and increasingly negative impact. The nonpartisan Tax Policy Center’s latest report estimated that, over 10 years, the average increase in our growth rate would be roughly zero, counting the crowding out of private investment by increasing deficits but not counting other adverse effects of worsening our fiscal outlook. The Penn Wharton Budget Model, using the same approach, estimates virtually no increase in long-term growth. Goldman Sachs projects an increase of 0.1 percent to 0.2 percent in the first couple of years and an average increase over 10 years of just 0.05 percent per year, not counting any of the adverse fiscal effects.
These estimates reflect three underlying views held by mainstream economists. First, individual tax cuts will not materially induce people to work more. Second, corporate tax cuts will likely have limited effect on investment or decisions about where to locate business activity, given the many other variables at play. Third, deficit-funded tax cuts will have little short-term effect on growth, except perhaps for some temporary overheating, because we are at roughly full employment.
Adding $1.5 trillion or more to the federal debt would make an already bad situation worse.
Exacerbating our already unsustainable fiscal trajectory with these tax cuts would threaten growth in five respects. These are highly likely to be substantial and to increase over time.
First, business confidence would likely be negatively affected by creating uncertainty about future policy and heightening concern about our political system’s ability to meet our economic policy challenges.
Second, our country’s resilience to deal with inevitable future economic and geopolitical emergencies, including the effects of climate change, would continue to decline.
Third, funds available for public investment, national security and defense spending — a professed concern of many tax-cut proponents — would continue to decline as debt rises, because of rising interest costs and the increased risk of borrowing to fund government activities.
Fourth, Treasury bond interest rates would be highly likely to increase over time because of increased demand for the supply of savings and increased concern about future imbalances. That, in turn, would raise private-sector interest rates, which could also increase due to widening spreads vs. Treasuries, further reflecting increased concern about future conditions. And even a limited increase in the debt/GDP ratio could focus attention on our fiscal trajectory’s long-ignored risks and trigger outsize increases in Treasury and private-sector interest rates. The ability to borrow in our own currency, and to print it through the Federal Reserve, may diminish these risks for a while, as might capital inflows from abroad. But these mitigating factors have their limits; at some point, unsound fiscal conditions almost surely would undermine our currency and debt markets.
Finally, at some unpredictable point, fiscal conditions — and these market dynamics — would likely be seen as sufficiently serious to cause severe market and economic destabilization.
We have an imperative need to address our unsustainable longer-term fiscal trajectory with sound economic policies. Few elected officials want to face this fact, but, at the very least, they should not make matters worse. We can only hope that responsible elected officials will prevent this irresponsible tax plan from being adopted.
As for the GOP’s “repatriation” of U.S. corporate profits held overseas to be reinvested in the U.S. to create jobs — Note: we tried this in 2004 and it was a spectacular failure — economist Jared Bernstein explains, the Republican tax plan will lead to more offshoring of U.S. jobs and a larger trade deficit.
Creating an unsustainable debt through debt-financed tax cuts for corporations and Plutocrats is actually a designed plan by the GOP to Use Cuts in Entitlement Programs to Reduce Deficit:
Republican lawmakers have largely dismissed concerns about how their $1.5 trillion tax cut would add to the federal deficit. Now, some Democrats are warning that the tax rewrite would ultimately be financed by gutting entitlement programs like Social Security and Medicare.
The possibility of cuts to safety net programs appeared more likely on Tuesday, as the Congressional Budget Office warned that the tax bill could set off an arcane budget rule that would make deep cuts to Medicare over the next decade.
Republican lawmakers have turned a blind eye to the effect of the tax bill on the deficit, saying the tax cuts would essentially pay for themselves through increased economic growth.
The economy would have to grow 6 to 8 percent faster in the next decade to fully offset the costs of the bill, according to numerous respected economists, including those at the Tax Policy Center, the Tax Foundation, the Committee for a Responsible Fiscal Budget and the Penn Wharton Budget Model. The White House is estimating only 3 to 5 percent growth.
The most favorable model for the White House is from the Tax Foundation, a right-leaning think tank, which predicts 3.5 percent growth over the next decade.
The GDP Growth Rate in the United States averaged 3.22 percent from 1947 until 2017.
But the party of deficit hawks is beginning to once again complain about the ballooning federal deficit, suggesting that spending cuts must be enforced to reduce the national debt, which has surpassed $20 trillion.
At a town hall-style event in Virginia on Tuesday night, Paul D. Ryan, the House speaker, said the most important steps that could be taken to reduce the national debt were spurring economic growth and making changes to entitlement programs.
“You cannot get the national debt under control, you cannot get that deficit under control, if you don’t do both: grow the economy, cut spending,” said Mr. Ryan, Republican of Wisconsin.
The Republican tax plan, he said “grows the economy. We’ve got a lot of work to do in cutting spending.”
Says the “zombie-eyed granny starver from the state of Wisconsin” who has been “dreaming” of Medicaid cuts since he was “drinking out of kegs” in college.
Democrats said the tax bill was opening the door to the kind of entitlement cuts that Republicans had long wanted to pursue.
“This is a nasty, two-step strategy that has long been the holy grail for hard-right Republicans,” said Senator Chuck Schumer, Democrat of New York and the minority leader. “If this bill passes, you can bet the Republicans will immediately sharpen the knives for middle-class benefits.”
It is this second step, the planned GOP assault on Social Security, Medicare and Medicaid — something Donald Trump promised the MAGA rubes who voted for him that he would not do — which has not received nearly enough media attention.
Call your member of Congress today and tell him or her to vote no on the GOP “tax cuts for corporations and Plutocrats” bill, or you will be voting them out of office next year.