STEVE BANNON'S PHONY POPULIST TRUMP'S TRICKLE UP ECONOMICS
"The sharply increased budget deficit and national debt will
be used to justify a frontal attack on the core social programs
remaining from the 1930s and 1960s: Medicare, Medicaid
and Social Security."
"The biggest windfalls will go, not to manufacturing or mining, but to real estate (the basis of the Trump empire) and finance. "
US Congress set for
Wednesday passage of multi-trillion-dollar tax cut for the rich
By
Barry Grey
20 December 2017
The mad dash of the Republican-controlled Congress to pass a
multi-trillion-dollar tax cut for corporations and the wealthy for President
Trump’s signature before the Christmas break, hit a speed bump on Tuesday.
After the House of Representatives passed the measure in a largely party-line
vote and the Senate began debate with the aim of securing passage late Tuesday
night, the Senate parliamentarian ruled that two minor provisions violated
Senate “budget reconciliation” rules.
As a result, the House will have to vote again Wednesday morning
on the bill, minus the two provisions that will have been stripped out by the
Senate. The end result, however, is a foregone conclusion.
Senate Republicans are using the expedited budget reconciliation
process, which enables them to prevent a Democratic filibuster and pass the
measure with a simple majority in the narrowly divided (52 to 48) chamber. This
is one aspect of the brazenly undemocratic
procedure being used to ram through a
massively unpopular windfall for America’s
corporate-financial elite, which will make the
United States, already the most unequal
advanced economy in the world, far more
unequal.
is one aspect of the brazenly undemocratic
procedure being used to ram through a
massively unpopular windfall for America’s
corporate-financial elite, which will make the
United States, already the most unequal
advanced economy in the world, far more
unequal.
Legislation that will transfer trillions of dollars from the
working class to the richest 10 percent of the population,
disproportionately to the richest 1 percent and 0.1 percent,
will be made the law of the land within less than two months
of its initial release and without a single congressional
hearing.
working class to the richest 10 percent of the population,
disproportionately to the richest 1 percent and 0.1 percent,
will be made the law of the land within less than two months
of its initial release and without a single congressional
hearing.
What is being exposed is the fraud of bourgeois democracy and the
reality of rule by an oligarchy that controls the political system and both
major parties. It wants the money and will stop at nothing to get it.
The Democrats are offering only token opposition. They themselves
fully support a sharp cut in the corporate tax rate, something proposed by the
Obama White House, and have done nothing to mobilize the widespread popular
opposition to the bill.
The giddy mood of Republicans and half-hearted posturing of
Democrats is, in no small measure, due to the personal benefits most of those
in Congress will receive from the legislation. A majority in Congress are
millionaires, including 66 percent of senators.
Senator Bob Corker of Tennessee, the lone Republican to vote
against the Senate version of the bill earlier this month, suddenly reversed
himself last Friday, after House and Senate conferees inserted a last-minute
provision in the final bill, adding commercial real estate firms to the list of
“pass through” companies entitled to a hefty tax cut. Corker is a former construction
executive with significant real estate income.
Enactment of the cynically named “Tax Cut and Jobs Act” will slash
federal tax revenues by between $1 trillion and $2 trillion over the next
decade. The sharply increased budget deficit and national debt will be used to
justify a frontal attack on the core social programs remaining from the 1930s
and 1960s: Medicare, Medicaid and Social Security.
Trump and the Republicans are accompanying enactment of the tax
overhaul with a barrage of lies. They are insisting that the measure is a boon
to the “hard-working middle class.” This continued Tuesday after the House
initially passed the measure by a vote of 227 to 203, with 12 Republicans,
mostly from the high-tax states of California, New York and New Jersey, joining
all 191 voting Democrats in opposition.
Despite multiple non-partisan analyses, which have shown that the
measure overwhelmingly benefits the rich and will actually increase taxes for a
majority of Americans, House Speaker Paul Ryan hailed passage of the bill
Tuesday as “a good day for workers.” It will “increase take-home pay,” he
added.
Kevin Hassett, the chairman of Trump’s Council of Economic
Advisers, told the cable news channel MSNBC, “Corporations are going to start
building plants here. People will open the want-ads page and find a lot more
jobs.”
In fact, America’s financial aristocracy will
use its newfound wealth to increase its
parasitic financial activities and reward itself
with more mansions, private islands, personal
jets and other means of flaunting its wealth.
use its newfound wealth to increase its
parasitic financial activities and reward itself
with more mansions, private islands, personal
jets and other means of flaunting its wealth.
As Reuters recently reported, “US corporations are saying they
would used a tax reform windfall to buy back shares, retired debt and other
shareholder-friendly moves, in recent calls with investors and securities
analysts.” These include job-destroying mergers and acquisitions, a number of
which have already been announced—CVS and Aetna, Disney and 21st Century Fox—in
anticipation of passage of the bill.
Despite the campaign of lies, opinion polls show growing popular
opposition to the tax bill. A new poll released this week by CNN and SSRS found
that 55 percent oppose the proposal and 33 percent support it. Opposition to
the bill has increased by 10 percent since early November.
The Democrats, for their part, are directing much of their
criticism at the bill’s budget and debt consequences, and attacking the
Republicans for being fiscally irresponsible. House Minority Leader Nancy
Pelosi (whose estimated net worth is nearly $200 million), while denouncing the
Republicans for “looting” the economy, stressed that their bill will “explode
the national debt.”
In Tuesday’s Senate debate, Jack Reed of Rhode Island, the senior
Democrat on the Armed Services Committee, cited Trump’s newly issued National
Security Strategy document, which calls US economic strength a key to national
security, and denounced the tax bill for raising the debt and thereby
undermining America’s international position. “Let’s give the $1.5 trillion tax
cut to the men and women in uniform” instead of Wall Street, he declared.
The heart of the bill is a massive cut in the corporate tax rate
from the current 35 percent to 21 percent. It is estimated that this alone will
increase corporate revenues by some $6 trillion over the next decade.
The effective US corporate rate, i.e., the rate corporations
actually pay after making use of tax loopholes and dodges of various kinds, is
presently between 19 and 21 percent, already below that paid by US rivals in
Europe and Asia. According to economists at the University of Pennsylvania,
under the new law the effective rate across all industries will fall to 9
percent next year.
The biggest windfalls will go, not to manufacturing or mining, but
to real estate (the basis of the Trump empire) and finance. Real estate firms
will see a 16 point reduction and financial companies will enjoy a 12 point
cut. Mining firms will see a cut of just under nine points, and manufacturers
will receive a seven point reduction.
The economists project that the bill will save
financial firms $250 billion in corporate taxes
over the next decade, a massive 35 percent
cut.
financial firms $250 billion in corporate taxes
over the next decade, a massive 35 percent
cut.
The bill also gives the owners of “pass through” businesses, which
are not publicly held corporations, such as partnerships and S corporations,
and who pay taxes at the individual rather than the corporate rate, a hefty 20
percent tax deduction.
It lowers the top individual tax rate from the current 39.6
percent to 37 percent, while raising the income threshold. It reduces the
alternative minimum tax rate for individuals and eliminates it for
corporations.
The bill goes a very long way in consolidating a dynastic
aristocracy of wealth in America by doubling the estate tax exemption for
couples to $22 million.
It includes two provisions that will modestly reduce taxes for
most middle-income households in 2018 and several years thereafter: a doubling
of both the standard deduction and the child tax credit. However, these are
largely offset by other provisions that eliminate or reduce current tax
deductions used by tens of millions of working Americans, including deductions
for mortgage interest and state and local taxes. The bill also pares back
deductions on losses from fires and floods, and repeals them for alimony
payments and moving expenses.
One critical provision that has been grossly under-reported is the
replacement of the Consumer Price Index (CPI) by the so-called “chained CPI” in
adjusting tax brackets and certain benefits. The new standard underestimates
inflation and will slow the speed at which tax brackets adjust to rising
prices. As a result, taxpayers will more quickly find themselves in higher tax
brackets.
Low income people who currently claim the earned income tax credit
will lose an estimated $19 billion over the coming decade, because of the
chained CPI. Moreover, in a vicious attack on immigrants, the new law requires
families claiming the earned income tax credit to show a Social Security
number. Undocumented parents will thereby be disqualified from collecting
benefits, even if their children were born in the US and are therefore US
citizens.
On top of all this, the bill terminates all provisions relating to
individual tax rates at the end of 2025, leaving low and middle-income people
facing a sudden, large tax increase for 2026 and beyond.
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