Democrats: Don't be shy about running against the Trump tax cuts
When the Republican “Tax Cuts and Jobs Act” (TCJA) was signed into law by President Donald Trump on Dec. 23, it was widely derided as poor tax policy and a “giveaway” to the wealthy. Public approval was reportedly less than 30 percent. Since the law has taken effect, as some corporations have awarded extra bonuses to their employees or as some workers have seen small increases in their weekly paychecks, public attitudes toward the TCJA have modestly improved.
Nevertheless, it is apparent from different approaches being taken in the early stages of several 2018 congressional races that Republican strategists and candidates are as yet undecided about how aggressively to sell the TCJA in their campaign messaging. Are the small benefits to lower-income workers sufficient to offset voter concern that higher -income taxpayers are receiving much larger benefits? And what about concerns that deficit financed tax cuts will only further increase our national debt, the burden of which passes on to our children and grandchildren?
On the other side of the aisle, Democrats, especially in battleground states, appear to be concerned lest their Republican opponents accuse them of not voting for a law that gave small, but nonetheless tangible, tax cuts to working families.
In fact, there is no need for Democrats to be hesitant or defensive. Both taken alone and in the context of other Trump administration actions, the new law is clearly and demonstrably harmful both to the country overall and to individual voters, except the wealthy. Facts supporting the Democrats in this regard are as follows:
The new law will make our tax system more unfair. Lower-income taxpayers will receive a benefit of less than 0.3 percent of their income, whereas top taxpayers will receive a benefit of 3.5 percent, more than 10 times the benefit given to lower income levels.
Rising interest rates: the higher cost of goods and services and widespread inflation due to Mr. Trump's tariff wars with other countries, including some of our closest allies, will wipe out the minor tax cuts to lower-income taxpayers.
Corporations will receive a 60 percent reduction in their rate of taxation (from 35 percent to 21 percent), which will shower some $200 billion annually into corporate profits, fueling higher stock buybacks, dividends and other benefits to management and wealthy shareholders.
The individual tax cuts in the TCJA will expire in 2025, whereas the corporate and business tax provisions are permanent.
Under the TCJA, by 2027 the bottom 60 percent of taxpayers will experience overall tax while the top 1 percent of taxpayers will receive 83 percent of all tax benefits of the law.
Various independent, nonpartisan experts have estimated that the TCJA will increase our federal budget deficits by $1.5 trillion to $2 trillion over the next 10 years. Coupled with already rising budget deficits to cover increased costs of entitlements such as Social Security, Medicare, Medicaid, etc., it is estimated that our national debt will grow from a current level of $20.7 trillion to between $33 trillion and $34 trillion by 2027.
A national debt of that magnitude, which would exceed the GDP of our economy by 20 percent, would threaten the solvency of the country, requiring a scaling back of our entitlements, which are so vital to the elderly and those at the lower income levels. (GOP House Speaker Paul Ryan has already spoken of the need for “entitlement reform” in the face of soaring deficits, which, insidiously, his own party is creating.)
Peter G. Peterson, the former secretary of commerce, distinguished business leader, and author of the book “Running on Empty,” has spent the last 20 years warning, again and again, of the dangers of accumulating too much public debt. Thomas Picketty, the celebrated French economist, and many others have warned against the societal impact of widening income and wealth inequality. Nonetheless, in a few short weeks, with no expert testimony or public hearings, Republicans enacted a piece of legislation that exacerbates both income inequality and our national debt.
In the words of journalist Fareed Zakaria, “Those who voted for the tax bill — possibly the worst piece of major legislation in a generation — will live in infamy as the country breaks down.”
It is clear that the recently passed Tax Cuts and Jobs Act is a reckless and irresponsible gamble on the financial security and economic well-being of the country. Democratic candidates running for office in the upcoming November elections should aggressively make it completely clear to their voters, particularly those in the lower income brackets, that this law will ultimately harm them and the country rather than help. If the Democrats fail to get this message across, they have only themselves to blame.