Daily Archives: December 22nd, 2017

The Tax Cut Bill — Part 1 of a 2-Part Punch


If Trump’s presidency signaled the end of a reasonable Democratic process in terms of legislative responsibility to the will of the people, the Republican’s Tax Bill signals the end of the economic compromise that was formed with our ruling class under Franklin Delano Roosevelt 75 years ago.

The broad outlines of that compromise are still in place in Europe and many other industrialized nations. It goes something like this: capitalism is allowed to drive primary parts of the nation’s economy with the understanding that a certain level of social order and cohesion is necessary for the benefit of all. To ensure that social order and cohesion, a social safety net is provided to those who may be the losers in the capitalist marketplace. In Europe, this broadly takes the form of unemployment insurance (the dole), nationalized healthcare, and sometimes nationalized pensions and education. In the United States this took the form of a patchwork of social safety net programs: Aid to Families With Dependent Children (AFDC), Supplemental Nutrition Assistance Program, (SNAP), Children’s Health Insurance Program (CHIP), Medicare, Medicaid, Social Security, various grants for higher education and so forth.

The US was never as monolithic in its implementation of the social safety net, and never as generous. Reasons for that vary, but on the healthcare front, one large part of that was a tendency among Southern Democrats to be unwilling to have healthcare provided for blacks on an equal footing with whites. So any form of nationalized healthcare was voted down. There was also the Red scare, which effectively made both major parties ‘pro capitalist’ to a fault. This really hasn’t changed in the last 50+ years. As recently as last year, during a CNN town hall, when House Minority Leader Nancy Pelosi was asked if the Democratic party could move more left on economics, she replied, bluntly, “We’re capitalist,” or, in other words, no, we cannot move further left. She tried to nuance that blunt assertion with a few feel good statements about the need to look out for those less fortunate, but the bottom line is a disavowal of the initial compromise made 75 years earlier. This should probably be expected from the party which– back in 1992– made a deal with the devil and ushered in the era of ‘triangulation.’ –or third way politics, essentially arguing against– and then legislating against– the compromise Franklin Delano Roosevelt had made with the ruling class to provide for a social safety net. Instead, the Democratic party, under the Clinton administration worked through the legislative nuts and bolts of a transition to a purer form of capitalism that we now know as neoliberalism.

How did this happen? Since its inception, the social safety net in the United States had been fiercely attacked by Republicans. If you go back to the initial legislative battles over simple concepts like Social Security Insurance, Republicans at that time warned that the program would “impose a crushing burden on industry and labor” and “establish a bureaucracy in the field of insurance in competition with private business.”

“Never in the history of the world has any measure been brought here so insidiously designed as to prevent business recovery, to enslave workers and to prevent any possibility of the employers providing work for the people,” Rep. John Taber (R-NY) said, arguing against the program.

This was nonsense, of course.

One of my favorite quotes from that era belongs to Republican Daniel Hastings of Delaware who worried feverishly that Social Security would “end the progress of a great country and bring its people to the level of the average European.”

Yes, irony abounds. One wishes sorely now that our people could be brought to the level of the average European.

Being Republicans, the fact that their arguments were floating free of any tangible mooring with reality didn’t bother them at the time, and hasn’t to this day.

Throughout the Reagan and Bush eras, there were Republican efforts at privatizing social security that failed, but that didn’t stop them from using scare tactics, suggesting that Social Security was insolvent, which is gibberish since social security is a trust fund. People pay into it, “contribute” throughout their working lives. The only way it can be ‘insolvent’ is if another entity (like Congress) decides to spend the money in the trust fund on something other than social security contributors. In other words, if congress steals the money in the fund, and then lies about it. Keep this note in mind.

Republicans also attacked other elements of the social safety net. At a campaign rally in 1976, Ronald Reagan introduced the so-called “welfare queen”:

“She used 80 names, 30 addresses, 15 telephone numbers to collect food stamps, Social Security, veterans’ benefits for four nonexistent deceased veteran husbands, as well as welfare. Her tax-free cash income alone has been running $150,000 a year.”

Based loosely on the account of one individual, Linda Taylor, this ‘welfare queen’ myth misstates her criminal activity by failing to note that Taylor didn’t just rip off welfare agencies. She stole money from a host of other businesses, and defrauded private individuals, and was involved in a kidnapping and possible murder attempt. In short, she was a career criminal who was ultimately arrested and taken to jail. She was in no way an indicator of ‘welfare’ abuse, any more than an individual burglar is responsible for wide-spread home insurance fraud.

Individuals committing welfare fraud are, in reality, very rare and an incredibly small percentage of those legitimately receiving welfare. But Reagan managed to tap into the underlying racial resentment and fear surrounding any kind of mandated government assistance. “Welfare queen’ became a racialized symbol of all that was wrong with liberal programs to help the poor. And it didn’t stop there. Hopping on the bandwagon, Newt Gingrich infamously lamented a food-stamp recipient who used her benefits to fly to Hawaii at taxpayers’ expense. This, too, was gibberish. As anyone who has actually enrolled in the Supplemental Nutrition Assistance Program (SNAP) would know, benefits are tightly restricted to food products off of the shelf and can’t even be used to buy other necessities, such as diapers, much less a plane ticket.

Thanks to Reagan’s “welfare queen” and other propaganda efforts by Republicans and their allies, by 1989, 64 percent of Americans felt that “welfare benefits make poor people dependent and encourage them to stay poor,” This was all nonsense, but it set the stage for President Bill Clinton’s infamous ‘triangulation.’ Just as only a Republican could go to China, only a Democrat could take on welfare. And Clinton used the national mood as a political opportunity, declaring an end to “welfare as we know it” in 1996. Under his leadership, AFDC was eliminated and in its place was something called Temporary Assistance to Needy Families, or TANF…
Temporary was the operative word.

No longer would poor families be able to draw on the government for material support. Now there was a five-year time limit on benefits AND a requirement that the applicant for aid would have to constantly be looking for a job. Worse, for the first time, the federal government gave states wide leeway with welfare funds, allowing them to be diverted to non-cash-payment programs. The intent was to allow states to fund workforce training, higher education, affordable child care, and other supports that would help women find employment. But in reality, there were almost no standards regarding what states could do—for example, some states allowed these funds to be used for classes that urged women to get married. Most significant, though, the dollar amount given to the states by the federal government, and the amount states were required to contribute themselves, was set at 1996 funding levels, with no mechanism for increasing it.

That meant states could run out of money and refuse aid to qualifying families simply because they no longer had the funds. It also meant the cash amounts given to each individual family were eroded by inflation. In July 2015, the highest average cash payment for a single parent with three children was only about $704 a month in California. In two states, Mississippi and Tennessee, benefits are less than $2 per person per day, and in 27 more states the program provides less than $5 per person per day.

Two years ago, Clinton finally acknowledged: “The poorest welfare families…are worse off, and we should do something for them. And all of us who supported it should admit that.”

If you ever wonder why there are so many people on your street corner with signs, you can thank neoliberals from either party. What Republicans started at the dawn of the welfare state, and neoliberalism and triangulation under Clinton continued – the refusal to acknowledge the implicit compromise between society’s needs and laissez-faire capitalism—the Republican majority in all three branches of government have pretty much finished this week.

Most of you know the basics of the current Tax Bill, but here they are again, just as a reminder.

According to the Tax Policy Center’s analysis of the final bill, in the first year, the top 1 percent of the wealthiest taxpayers get 20.5 percent of the benefits, but by 2027, they’ll get an amazing 82.8 percent.

And while regular folks will get a break of a few hundred dollars at first, not only do their breaks come with expiration dates, by 2027 every group earning less than $93,200 a year will on average see their taxes go up. More than half of American households will see a tax increase. What’s worse, of course, are the seemingly endless loopholes still packed into the 1000 plus page document, that are tilted heavily toward the already wealthy and well-connected. Add to that, the malicious elimination of the ACA individual mandate, which will likely force millions of Americans off of health insurance (estimates are up to 13 million), and you have the perfect storm for what remains of our 75-year-old compromise with capital.

One of the most telling contributions to the Senate debate over the Tax Bill came from Tom Carper, a moderate, business-oriented Democrat from Delaware. He pointed out that it wasn’t Barack Obama, or any other Democrat, who invented the individual mandate. It originated in a 1993 health-care-reform bill that John Chafee, a Republican senator from Rhode Island, put forward. It was subsequently picked up by another Republican, Mitt Romney, when Romney led the passage of a sweeping health-care law as the governor of Massachusetts. “It’s a Republican idea. It’s a market-based idea,” Carper said calmly.

But, of course, today’s Republican Party isn’t the Republican Party of Chafee or Romney. It’s the party of the Koch brothers, Sheldon Adelson, Robert Mercer, Heritage Action, the Club for Growth, ALEC, and the late Supreme Court Justice Antonin Scalia. In many ways, this tax bill, with its huge breaks for major corporations and very wealthy individuals, is the logical corollary of the 2010 Citizens United Supreme Court ruling, which legitimized the wholesale corporate purchase of political parties and elected politicians. As our democratic integrity got flushed away with the election of Trump and his acolytes, our economic integrity has been flushed away as well. We are left with whatever didn’t go down the bowl.

The wealthy interests that bankroll the Republican Party have now achieved a major item on their agenda. What remains to be determined is whether this victory will help bring down the G.O.P. in next year’s midterm elections before they can implement the second part of their strategy to destroy the social safety net in America completely– by slashing Social Security, Medicaid and Medicare. Paul Ryan has promised us this outcome; and it makes sense, as it’s the natural consequence of this tax cut. “You see,” the argument will go, “cutting these ‘entitlement’ programs are necessary to offset the dreadful deficits we now have.” What Paul Ryan and the Republican majority may or may not mention is that any mounting deficit will have been caused precisely by the unnecessary and wholly gratuitous tax cuts they just gave to some of the richest families on Earth.

See you at the polls. Or on the street.

by Jack Johnson