Passage of the House and Senate tax bills by a party-line vote has put Republicans in an impossible bind. The GOP is betting that this short-term political win will translate into keeping control of Congress after 2018 and the political clout to cut back New Deal and Great Society programs like Medicare, Medicaid and Social Security.
The dilemma is that the bills violate long-held Republican principles of deficit reduction, tax-code simplification and equality of opportunity for the middle class. They ignore the very real dangers of deficit expansion, the risk of recession and the near certainty of growing income inequality and grass-roots anger.
This GOP dilemma owes a lot to Speaker Paul Ryan, author of the 2012 “Path to Prosperity” budget proposal. This is an ideologically driven scheme to reduce the scope of the federal government. The aims are to transform Medicare to a voucher program; convert Medicaid to a state block grant; repeal the Affordable Care Act; and reduce other spending 50 percent.
Ryan, realizing his Path to Prosperity plan has little support, teamed up with President Trump to use the tax bills to kill two birds with one stone. First, the tax bills disproportionately reward big-money donors and multinational corporations with huge, permanent tax cuts. Second, by making the deficit worse, the bills pressure future lawmakers to enact many of the draconian Path to Prosperity cuts.
To sell the tax bills to the public, Republicans packaged them in deceitful bait-and-switch terms. Here’s how the sales pitch goes:
First, you raise the deficit by $1 trillion to $2 trillion. To explain this away, you perpetuate the myth that corporate tax cuts will increase mean family incomes 4 percent per year to pay for the debt. Never mind that, in the heyday of America’s post-WWII economic prosperity (1950 to 1970), the mean income of middle class families grew only 3.2 percent! The notion that growth will average 4 percent per year over the next decade is pure fantasy. But the likelihood that the federal debt will balloon to catastrophic levels is darn near a sure thing.
Second, you downplay the provisions that expand corporate profits, keep stock prices high, disproportionately enrich the top 1 percent, and exacerbate income inequality. Instead, you repeat the mantra that the tax bill will give tax relief to the low- and middle-income families and cause corporations to add jobs and increase wages. Never mind that independent analyses show that millions of middle-income families will see a tax increase and those seeing a tax reduction will be disappointed by the paltry sum. And you deny the compelling evidence that tax relief for corporations does not lead to job or wage growth.
Third, you fast track the bill through Congress with minimal hearings, no expert testimony, no space for bipartisan negotiation, no fact-based analysis and no public dialogue back home. In exchange for a perceived political win, you risk continued erosion of our democratic norms, further polarization of our already-divided nation, and the inevitable decline in America’s global economic strength.
The bottom line: The Republican tax bills stand among the most backward-thinking pieces of tax legislation since the 1920s. If either version passes, it will be because the public has fallen for the bait-and-switch sales pitch and our elected officials, especially Sen. Todd Young and the House Republicans, have betrayed their principles and put party above country.•
Zwirn is a retired health care executive.