trickle down economics

Trump’s ‘trickle down’ tax cuts weaken the Medicare Trust Fund

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President Donald Trump’s “trickle down” tax cuts for corporations and wealthy plutocrats is not meeting the GOP’s fiscal projections, and is now weakening the Social Security and Medicare Trust Funds. This is what happens to Medicare when you cut taxes but not spending:

On Tuesday, we learned what happens when Republicans trying to rein in government tackle the tax side of the equation but not the spending side.

The result: a Medicare program that is projected to run out of money just eight years from now, in 2026.

The latest annual report on the financial situation of Medicare’s hospital program (and Social Security), released yesterday by the programs’ trustees, led Democrats to slam the tax overhaul Republicans pushed through Congress mainly on their own last year.

That tax measure’s income tax cuts — combined with reduced payroll tax collections because of lowered wages last year — are the two main reasons for the worsening financial outlook for the part of Medicare that reimburses hospitals for caring for seniors and the disabled, per the report.

And there’s something else, too. The tax bill also ends the Affordable Care Act’s penalty for lacking health insurance (aka individual mandate). So hospitals will see more uninsured patients as some Americans presumably drop their coverage, in turn requiring the Medicare program to pay more for such uncompensated care, a senior government official told my colleague Amy Goldstein and other reporters yesterday.

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The lie of trickle-down economics that led to the #RedforEd teacher revolt

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Flagstaff’s the Arizona Daily Sun editorialized that the governor and the GOP cannot be trusted to negotiate in good faith when it comes to public school funding. Our View: Ignore Ducey and go for a dedicated school funding tax:

The first days of most strikes are easy.

Now comes the hard part.

Last week’s opening days of a statewide teacher walkout over pay and school funding were predictably high on energy and hope.

But as most labor leaders know, a walkout is about much more than just those walking the picket lines. It’s about winning the hearts and minds not only of community opinion leaders but of business owners and neighbors, too. There are bills on which to ask forgiveness, kids to ask the neighbors to care for and the sleepless nights that come with putting your career on the line. If it takes a village to raise a child, it will take an equally strong community to get their teachers through a work stoppage that is about all the right goals, even if the tactics turn out to be wrong.

The goals, of course, are to get every Arizona child the best education possible. That means giving students and teachers the best tools within the resources available. Better pay is thus a means to an end – it attracts the best teachers, stems rapid turnover and stabilizes a key sector of the local workforce. If other states with similar economic capacity have been able to do right by their teachers, why not Arizona?

The answer is more political and cultural than economic. Empty-nester retirees fleeing high-tax states and with little personal stake anymore in public education have encouraged conservative ideologues to pursue trickle-down tax cuts and privatized school choice, despite evidence that neither is working. Net corporate tax revenues on which public schools depend are off dramatically after a decade of tax cuts, and vouchers have served mainly to transfer public dollars to private and religious schools, regardless of educational outcome.

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The GOP tax bill is generational theft that steals from our future

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Republicans only care about the federal deficit and national debt when Democrats are in charge of Congress and the White House.

When Republicans are in charge, “Reagan proved that deficits don’t matter,” as Dick Cheney infamously once said.

Remember when Republicans used to say that the national debt was “generational theft” from future generations of taxpayers? Funny how we are not hearing this from Republicans now.

But here is a recent example from Neal Urwitz at the conservative Newsmax, regarding the current GOP tax bill that will add another 1.5 trillion dollars plus to the national debt in order to give tax cuts to corporations and Plutocrats. It’s Not a Tax Cut — It’s Generational Theft:

Hey Baby Boomers — if you could stop stealing from my generation, we’d really appreciate it.

To be clear, I’m referring to President Trump’s tax-cut proposal. His proposal, if enacted, would increase the federal government deficit by trillions of dollars. Sure, the administration claims it’ll be revenue neutral, but there’s no way that’s true.

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So it’s simple math: taxing less + spending the same amount = massive deficit.

Sure, some people argue that the increased economic growth from tax cuts will make up the resulting deficit — this theory is known as the Laffer Curve — but even Republicans don’t really believe that anymore. The theory has simply been tried and failed too many times for anyone to reasonably think it’ll work this time.

To state the obvious, if we accumulate massive debt as a nation, someone has to pay the piper. And that is going to be all the generations after the Baby Boomers …

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The upshot is my generation will have to pay much higher taxes and will have less money for the things we’ll need in the future — like sophisticated defense, functioning education, homeland security, or fixing our crumbling infrastructure. Oh, and we’ll have to do it with anemic economic growth.

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So how’s that trickle-down working out for Arizona?

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The Arizona Capitol Times (subscription required) reports that Arizona Legislature’s budget analysts predict 2018 shortfall:

The Arizona Legislature’s budget analysts last Thursday predicted a budget shortfall that could top $100 million in the current and coming year as the impact of corporate tax cuts continues to overwhelm increases in sales, insurance premium and personal income tax collections.

Whaaa? You mean tax cuts don’t pay for themselves and are revenue neutral? (sarcasm).

Chief budget analyst Richard Stavneak told economists and state officials who make up the Legislature’s Finance Advisory Committee that the shortfall will hit $104 million. That’s out of an expected $10 billion in spending for the budget year that begins next July 1. A panel of state lawmakers also attended the meeting.

Excluded from that projection is $90 million in current spending that is labeled one-time but appears to be an ongoing commitment by the Legislature and Gov. Doug Ducey, Stavneak said. That puts the expected shortfall next year close to $200 million if that spending isn’t cut. The revenue picture could also brighten, but signals are mixed, he said.

Phased-in corporate tax cuts enacted under former Gov. Jan Brewer in 2011 have cut more than $600 million in yearly revenue since 2014. Rep. Don Shooter, R-Yuma, said it may be time to revisit the corporate tax cuts and predicted a budget battle next year.

“It’s going to be a free-for-all. We’re back to the cutting, I don’t see any other way,” Shooter said. “It’s going to come down to who’s going to bleed the least, what’s going to be the least painful, I guess.”

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Pamela Powers Hannley, Ana Henderson

#LD9: Know Your Candidates before You Vote

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Pamela Powers Hannley, Ana Henderson

Residents of Legislative District 9 have a clear choice for Arizona House. Two Democrats Rep. Randy Friese and Pamela Powers Hannley are running against Tea Party candidate Ana Henderson.

The Clean Elections debate revealed major differences between Henderson’s extreme Tea Party positions and the two Democrats’ views.

To simplify your voting decision, I revised my ven diagram comparing where I stand on the issues and where Henderson stands.

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