“At The Top Of The To-Do List For 2017”: Here’s What Will Happen On Taxes If A Republican Is Elected President
The Tax Policy Center has released an analysis of Marco Rubio’s tax plan, which, like their analyses of Jeb Bush’s plan and Donald Trump’s plan, shows that it would result in a staggering increase in the deficit if it were implemented — $6.8 trillion in Rubio’s case, compared to an identical $6.8 trillion for Bush and $9.5 trillion for Trump.
The problem is that it’s awfully hard to wade through all these details and numbers, grasp the distinctions between them, and determine which one you find preferable.
The good news is, you don’t have to.
That’s in part because the differences between the various Republican candidates’ plans are overwhelmed by what they have in common. But more importantly, it’s because if one of them becomes president, the tax reform that results will reflect not so much his specific ideas as the party’s consensus on what should be done about taxes.
So to simplify things, here’s what you can expect if a Republican is elected president in November:
- Income tax rates will be cut
- Investment tax rates will be cut
- The inheritance tax will be eliminated
- Corporate income tax rates will be cut
- Corporations will be given some kind of tax holiday to “repatriate” money they’re holding overseas
And that’s basically it. Yes, there will be hundreds of provisions, many of which could be consequential, but those are the important things, and the things almost all Republicans agree on.
Let’s keep in mind that this is the policy area Republicans care more about than any other. There are pockets of conservatives for whom the details of defense policy are important, and others who care a lot about education, and even a few who care a lot about health care. But all of them want to cut taxes. They may get passionate talking about how much they want to repeal the Affordable Care Act, or how tough they’ll be on border security, or how they’ll totally destroy the Islamic State. But if a Republican is elected in 2016, it is a stone-cold guarantee that changes to the tax code will be at the top of the to-do list for 2017.
That doesn’t mean, however, that the tax reform we get will be exactly what that president promised during the campaign. For instance, Ted Cruz is proposing what’s essentially a Value Added Tax (VAT). But he won’t get that passed even with a Republican Congress, because it’s controversial within the party.
That’s critical to understand. It isn’t as though congressional Republicans, who have been waiting to do this for years, will just take the new president’s plan and hold a vote on it. Instead, they’re going to hammer out a complex bill that reflects their common priorities. It will be a product of the party’s consensus on what should be done about taxes, a consensus that has been forming since the last time they cut taxes, during the George W. Bush administration.
You can make an analogy with the ACA. By the time 2008 came around, Democrats had arrived on a basic agreement on what health care reform would look like. That isn’t to say there was no disagreement within the party. But the outlines had been agreed to by the most powerful people and the wonks within the party: expand Medicaid for those at the bottom, create exchanges for people to buy private insurance, offer subsidies to those in the middle. That’s why the plans offered by Barack Obama, Hillary Clinton, and John Edwards in that election all followed that outline, and that’s what the Democratic Congress eventually produced.
The things that I listed above are the essential tax consensus of the GOP at the moment. Some people would add or modify some elements — Rubio, for instance, would completely eliminate investment taxes while others would merely reduce them, but he would also expand the child tax credit. But the outline is the same, particularly in its effects. Here’s how we can summarize those:
- Poor and middle-class people will pay a little less in taxes
- Wealthy people will pay a lot less in taxes
- Corporations will pay a lot less in taxes
- The deficit will explode
Republicans, who profess to care deeply about deficits, will claim that their tax plan won’t actually cost anything (or will cost very little), because when you cut taxes, you create such a supernova of economic growth that the cost of the cuts is offset by all the new revenue coming in. This is sometimes referred to as a belief in the “Tax Fairy” because it has as much evidence to support it as a belief in the Tooth Fairy. It is a fantasy, but their continued insistence that it’s true requires us to address it.
You don’t need a Ph.D. in economics to remember the history of the last quarter-century. Bill Clinton raised taxes, and Republicans said the country would plunge into recession and the deficit would balloon; instead we had one of the best periods of growth in American history and we actually got to federal budget surplus. Then George W. Bush cut taxes, and Republicans said we’d enter economic nirvana; instead there was incredibly weak job growth culminating in the Great Recession. Barack Obama raised taxes, and Republicans said it would produce economic disaster; instead the deficit was slashed and millions of jobs were created.
So we don’t actually have to argue about whether the Republican tax plan will increase the deficit, because the theory behind it has been tested again and again, and the results are obvious. If they cut taxes as they’d like, maybe the deficit will go up by a trillion dollars, or five trillion, or eight trillion. We don’t know exactly how much it will go up, but we know it will go up.
As far as Republicans are concerned, dramatic increases in the deficit are a reasonable price to pay to obtain the moral good of tax cuts. If you think I’m being unfair, ask them whether they believe Bush’s tax cuts were a mistake. They don’t.
You can agree or disagree. But you don’t have to wonder what will happen if a Republican is elected. There may be other plans that president will be unable or unwilling to follow through on, but I promise you, cutting taxes is one thing he absolutely, positively will do. And we don’t have to wonder what it will look like. We already know.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, February 12, 2016
“Voodoo Never Dies”: Never Forget That What It’s Really About Is Top-Down Class Warfare
So Donald Trump has unveiled his tax plan. It would, it turns out, lavish huge cuts on the wealthy while blowing up the deficit.
This is in contrast to Jeb Bush’s plan, which would lavish huge cuts on the wealthy while blowing up the deficit, and Marco Rubio’s plan, which would lavish huge cuts on the wealthy while blowing up the deficit.
For what it’s worth, it looks as if Trump’s plan would make an even bigger hole in the budget than Jeb’s. Jeb justifies his plan by claiming that it would double America’s rate of growth; The Donald, ahem, trumps this by claiming that he would triple the rate of growth. But really, why sweat the details? It’s all voodoo. The interesting question is why every Republican candidate feels compelled to go down this path.
You might think that there was a defensible economic case for the obsession with cutting taxes on the rich. That is, you might think that if you’d spent the past 20 years in a cave (or a conservative think tank). Otherwise, you’d be aware that tax-cut enthusiasts have a remarkable track record: They’ve been wrong about everything, year after year.
Some readers may remember the forecasts of economic doom back in 1993, when Bill Clinton raised the top tax rate. What happened instead was a sustained boom, surpassing the Reagan years by every measure.
Undaunted, the same people predicted great things as a result of George W. Bush’s tax cuts. What happened instead was a sluggish recovery followed by a catastrophic economic crash.
Most recently, the usual suspects once again predicted doom in 2013, when taxes on the 1 percent rose sharply due to the expiration of some of the Bush tax cuts and new taxes that help pay for health reform. What happened instead was job growth at rates not seen since the 1990s.
Then there’s the recent state-level evidence. Kansas slashed taxes, in what its right-wing governor described as a “real live experiment” in economic policy; the state’s growth has lagged ever since. California moved in the opposite direction, raising taxes; it has recently led the nation in job growth.
True, you can find self-proclaimed economic experts claiming to find overall evidence that low tax rates spur economic growth, but such experts invariably turn out to be on the payroll of right-wing pressure groups (and have an interesting habit of getting their numbers wrong). Independent studies of the correlation between tax rates and economic growth, for example by the Congressional Research Service, consistently find no relationship at all. There is no serious economic case for the tax-cut obsession.
Still, tax cuts are politically popular, right? Actually, no, at least when it comes to tax cuts for the wealthy. According to Gallup, only 13 percent of Americans believe that upper-income individuals pay too much in taxes, while 61 percent believe that they pay too little. Even among self-identified Republicans, those who say that the rich should pay more outnumber those who say they should pay less by two to one.
Well, consider the trajectory of Marco Rubio, who may at this point be the most likely Republican nominee. Last year he supported a tax-cut plan devised by Senator Mike Lee that purported to be aimed at the poor and the middle class. In reality, its benefits were strongly tilted toward high incomes — but it still drew harsh criticism from the right for giving too much to ordinary families while not cutting taxes on top incomes enough.
So Mr. Rubio came back with a plan that eliminated taxes on dividends, capital gains, and inherited wealth, providing a huge windfall to the very wealthy. And suddenly he was gaining a lot of buzz among Republican donors. The new plan would add trillions to the deficit, which conservatives claim to care about, but never mind.
In other words, it’s straightforward and quite stark: Republicans support big tax cuts for the wealthy because that’s what wealthy donors want. No doubt most of those donors have managed to convince themselves that what’s good for them is good for America. But at root it’s about rich people supporting politicians who will make them richer. Everything else is just rationalization.
Of course, once the Republicans settle on a nominee, an army of hired guns will be mobilized to obscure this stark truth. We’ll see claims that it’s really a middle-class tax cut, that it will too do great things for economic growth, and look over there — emails! And given the conventions of he-said-she-said journalism, this campaign of obfuscation may work.
But never forget that what it’s really about is top-down class warfare. That may sound simplistic, but it’s the way the world works.
By: Paul Krugman, Op-Ed Columnist, The New York Times, October 2, 2015
“Obama Has Plenty Of Reasons To Smile”: A Useful Reminder That There Is No Such Thing As The “Twilight” Of A Presidency
Attention has been focused on who becomes our next president, but meanwhile the incumbent is on quite a roll.
Throughout his tour of Alaska, President Obama looked full of his old swagger. He took a photo of Denali — the former Mount McKinley — through a window of Air Force One and shared it via Instagram. He used melting glaciers as a backdrop to talk about climate change, posed with small children and large fish, and became the first sitting president to venture north of the Arctic Circle.
He seemed to smile throughout the trip, and why not? The nuclear agreement that Secretary of State John F. Kerry negotiated with Iran is now safe from congressional meddling. U.S. economic growth for the second quarter was a healthy 3.7 percent. Unemployment has fallen to 5.1 percent, according to figures released Friday. Saudi King Salman — portrayed by Obama’s critics as peeved with the president — dropped by the White House on Friday for a chat, reportedly renting an entire luxury hotel for his entourage. And this month, Chinese President Xi Jinping is scheduled to arrive for what promises to be the most important state visit of the year.
Obama gives the impression of having rediscovered the joy of being president. Maybe he really needed that Martha’s Vineyard vacation. Or maybe he is beginning to see some of his long-term policies finally bearing fruit — and his legacy being cemented.
Watching him now is a useful reminder that there is no such thing as the “twilight” of a presidency. Until the day his successor takes office, Obama will be the leading actor on the biggest and most important stage in the world.
It is useful to recall that George W. Bush practically had one foot out the door when the financial system threatened to collapse in 2008. It was Bush and his advisers who put together a massive $700 billion bank bailout and managed to sell it to Congress. Bush signed the rescue bill into law on Oct. 3 — barely a month before his successor would be chosen.
The banks were saved, but nothing could stop the economy from falling into its worst slump since the Great Depression. I believe historians will conclude that one of Obama’s greatest accomplishments was bringing the economy back to real growth and something close to full employment — more slowly than Americans may have wished, perhaps, but steadily.
The Iran deal, in my view, is another remarkable achievement. Beyond the fact that it definitively keeps Tehran from building a nuclear weapon for at least 15 years, the agreement offers Iran’s leaders a path toward renewed membership in the community of nations. The mullahs may decide to remain defiant and isolated, but at least they now have a choice.
Obama’s White House has often been clumsy at inside-the-Beltway politics, but the handling of the Iran deal has been adroit. The drip-drip-drip of announcements from Democratic senators who favor the agreement has created a sense of momentum and inevitability. Now Obama knows that if Congress passes a measure rejecting the deal, he can veto it without fear of being overridden. The question, in fact, is whether a resolution of disapproval can even make it through the Senate. If Obama convinces 41 senators to filibuster the measure, it dies.
All is not sweetness and light, of course. The Syrian civil war is a humanitarian disaster of enormous and tragic proportions, as evidenced by the heartbreaking refugee crisis in Europe. I don’t believe there is anything the United States could have done to prevent the war, but all nations bear a responsibility to help ease the suffering. The fact that some nations refuse to do their share does not absolve us from doing ours.
Domestically, the good economic numbers ignore the fact that middle-class incomes remain stagnant. Even without healthy wage growth, an economic recovery feels better than a slump — but only in relative terms. One doesn’t hear people breaking into “Happy Days Are Here Again.”
All in all, though, it looks like a good time to be President Obama. The Affordable Care Act, as he had hoped, is by now so well-established that no Republican successor could easily eliminate it. Industries are already making plans to accommodate new restrictions on carbon emissions. Oh, and despite what you hear from all the Republican candidates, the border with Mexico is more secure than ever before.
Obama’s legacy will have a few blemishes. But he has good reason to smile.
By: Eugene Robinson, Opinion Writer, The Washington Post, September 7, 2015
“Hey, Middle Class; Hillary Gets It”: Linking The Concepts Of Fairness And Growth
Here’s one thing I’m sure of about the economic speech Hillary Clinton gave Monday morning at the New School: If a relatively unknown Democratic governor of Illinois or Michigan were running for president, and he gave the speech Hillary Clinton gave Monday morning at the New School, rank-and-file liberals would be turning rapturous cartwheels. She correctly identified the central economic problem of our time; she talked very clearly about the kinds of solutions she’d pursue to address it; she even tossed a few threats in Wall Street’s direction.
The problem is the wages of middle-class workers. The solutions are varied but boil down to a range of policies that would do two things: one, give corporations incentives to share profits and think less about short-term profit-maximization; two, help middle-class families meet the life expenses (college tuition, day care, etc.) that have increased greatly over the last 20 years while wages have remained stagnant. And as to Wall Streeters who gamble with middle-class people’s money, she said, “We will prosecute individuals and firms” who do so. She used the word “criminal” in this context more than once.
My hypothetical governor giving exactly this speech would be showered with liberal praise. But Clinton says it, and it’s like so what. She faces too much distrust from liberals over her past centrism; and for the moment everybody’s all Bernie Bernie Bernie. And that’s all fine. Sanders is fun and sometimes exhilarating, and a primary contest needs a candidate who can speak the unvarnished truth.
But it’s the speakers of varnished truth who usually win presidential nominations, and Clinton is at least 90 percent likely to win this one. And as varnished truths go in Democratic presidential politics, Clinton’s are about as liberal as any liberal could reasonably hope for. There’s an art to taking it right up to line, but not an inch past, and she’s doing that.
One way of testing whether proposals have any ideological bite to them is to imagine whether anyone from the other party could put them forward. Everyone can and will say they want to help the middle class. But how? Jeb Bush says with 4 percent growth into infinity. First of all this is a big fat lie of a promise, and he’s surely smart enough to know he’s lying. From 1975 to 2014 (for 40 years), annual GDP growth in the United States averaged 2.79 percent, according to World Bank data (the stuff I used came in the form of an Excel spreadsheet, so there’s no URL, but Google something like “Real Historical Gross Domestic Product” and you’ll find it). So it doesn’t happen. The best years of sustained GDP growth we’ve ever had were under—yep—Bill Clinton, but even in the late 1990s, we had only four straight years of plus-4-percent growth, and that’s a modern record (there was a three-year run under Ronald Reagan from 1983-1985).
So it’s a lie, number one, but more importantly, it means nothing as a measure. No, actually, it means something, and what it means is toxic: It means that if we actually do experience growth at 4 percent but without taking any of the ameliorative measures Clinton is talking about, the main impact of that growth will be to give us more inequality, more wage stagnation, more corporate profit-hoarding, more stock buybacks, and more roulette-wheel banking. Bush’s is a flawed way of looking at the economy, and this is a very old point of contention between right and left; As Robert Kennedy once said, GDP “measures everything, in short, except that which makes life worthwhile.”
Clinton is talking about growth too, but she’s emphasizing equitable growth. And she puts forward numerous proposals that no Republican would touch, from raising the minimum wage—remember, Bush wants no federal minimum wage—to strengthening unions to offering paid family leave to cracking down on employers who misclassify workers as contractors to expanding on Dodd-Frank to endorsing the Buffett Rule, which applies a minimum effective tax rate of 30 percent on earners north of $1 million.
She left a lot of the details for later, and she was fuzzy here and there—she was noncommittal on trade, and it will be interesting to hear what “defending and enhancing” Social Security actually means.
But for now, it’s enough that she’s linking the concepts of fairness and growth and that she’s making that link the centerpiece of her economic agenda. This is important because until very recently, the economics profession hasn’t regarded fairness as anything it should care about. But that has begun to change. This was the big question in my mind last year as I contemplated Clinton’s candidacy last year. Believe me, I had no small amount of doubt about how aggressively she’d embrace the equitable growth proposition. I’d say she’s answered my questions. Last year, on her book tour, she pooh-poohed paid family leave. Now it’s a centerpiece of her platform.
It’s still going to take time for liberals to believe this, and of course some never will. This is where Clinton still has some work to do. When it comes to economics, liberals don’t really want to hear policy proposals. They want to hear FDR-style attacks on the economic royalists. This is not something Clinton is known for, to put it mildly. I don’t think anyone expects her to be Elizabeth Warren, but in her own way, she has to go there, especially when you consider that she might become the wealthiest president in modern times.
This, from the speech, started moving in that direction, and it’s the first time I recall her talking like this: “And while institutions have paid large fines and in some cases admitted guilt, too often it has seemed that the human beings responsible get off with limited consequences—or none at all, even when they’ve already pocketed the gains. This is wrong and, on my watch, it will change.”
Maybe if she keeps this up and the royalists start attacking her, and she stands her ground, the Warrenites will finally come around. In the meantime, liberals ought at least to recognize that the old cautious Hillary they have in their minds would never have gone this far this fast.
By: Michael Tomasky, The Daily Beast, July 14, 2015
“The Hypocrisy Is Really Just The Start”: Republicans Learn The Wrong Lessons From 2012
A few months ago, Politico published a piece about the Republican message machine settling on its preferred 2016 narrative. The headline said the GOP plan is to “turn Hillary into Mitt Romney.”
“A consensus is forming within the Republican Party that the plan of attack against Hillary Clinton should be of a more recent vintage, rooted in her accumulation of wealth and designed to frame her as removed from the concerns of average Americans,” the article explained.
Three months later, the New York Times reports that Republicans are spending “heavily” on focus groups, testing this message.
Inside an office park [in Orlando], about a dozen women gathered to watch a 30-second television spot that opened with Hillary Rodham Clinton looking well-coiffed and aristocratic, toasting champagne with her tuxedoed husband, the former president, against a golden-hued backdrop.
The ad then cut to Mrs. Clinton describing being “dead broke” when she and her husband left the White House, before a narrator intoned that Mrs. Clinton makes more money in a single speech, about $300,000, than an average family earns in five years.
The message hit a nerve. “She’s out of touch,” said one of the women, who works as a laundry attendant.
This gathering was organized by American Crossroads, a Republican super PAC created by Karl Rove, but the party broadly seems to have embraced this message.
And if Clinton is really lucky, they won’t change their minds.
As we talked about in April, there is a certain irony to the entire line of attack. In 2012, when Democrats rolled out the “out-of-touch plutocrat” message against Romney, Republicans spent months in fainting-couch apoplexy. Democrats are engaging in “class warfare,” they said. The divisive rhetoric was “un-American,” voters were told. How dare Democrats “condemn success”?
In 2015, those same Republicans have suddenly discovered they’re not so offended after all. Imagine that.
But the hypocrisy is really just the start. The real issue is the degree to which Republicans are confused about why the line of criticism against Romney was effective.
There’s an over-simplicity to the GOP’s thinking: Romney was rich; Democrats labeled him out of touch, voters believed it, so Romney lost. But that’s not what happened, at least not entirely. Once again, the problem was not that Romney was extremely wealthy; the problem was that Romney was extremely wealthy while pushing a policy agenda that would benefit people like him.
The Democratic pitch would have fallen flat if they’d simply mocked the candidate’s riches. It resonated, however, because Romney breathed life into the caricature – vowing to give tax breaks to the wealthy, promising to take health care and education benefits away from working families, and expressing contempt for the “47 percent” of Americans Romney saw as parasites.
When Democrats effectively told the American mainstream, “Romney isn’t on your side,” the GOP nominee made it easy for voters to believe it. The car elevators were simply gravy on top of an already effective narrative.
The point is, substance matters. Policy agendas matter. There’s a lengthy history of low-income voters in America voting for very wealthy candidates who are committed to fighting for those voters’ interests. Names like Roosevelt, Kennedy, and Rockefeller are familiar additions to the roster of politicians who’ve championed the needs of families far from their income bracket. Struggling voters didn’t reject them as “out of touch” because they couldn’t personally relate to poverty – rather, these voters rallied behind the wealthy candidates, without regard for their status, because of their policy agenda.
Indeed, as I type, Hillary Clinton is delivering a speech on her economic vision, much of which is focused on investing in working families as a recipe for economic growth.
Republicans are convinced what really matters isn’t the scope of Clinton’s policies, but rather, the size of her bank account. That’s ridiculous.
The Washington Post’s Greg Sargent talked to David Axelrod, a former top aide to President Obama, who said, “The Republicans may try and make a lifestyle case, but lifestyle is the least of it. It’s what you believe and where you propose to lead.”
It’s baffling that the GOP doesn’t understand this obvious and basic dynamic.
By: Steve Benen, The Maddow Blog, July 13, 2015
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