From its beginning, TRH has been, as much as anything, my personal opportunity to scream as loudly as the Internet will let me against the assault by the Republican Party on the means to pay for the civilization we've built. Or, to use a word they regard as a curse word, on taxes. Somehow, it seems fitting, on the day that Barbara Bush is being laid to rest, to renew my protest against that assault by recalling one of her husband's best contributions to our political discourse--the phrase "voodoo economics."
If you can recall the 1980 Presidential campaign, and specifically the New Hampshire Republican primary, George H.W. Bush coined that phrase in a debate against, among others, Ronald Reagan, who was building his campaign, as he would later build his Presidency, around advancing supply-side economics as the means to ending the financial woes of Americans. Supply-side economics--or the concept that steep tax cuts will pay for themselves through the amount of economic activity they can generate--were correctly viewed by more moderate Republicans as being the fiscal equivalent of alchemy, and therefore not to be taken seriously.
Despite the correctness of that view, the concept has remained popular with the American people, many of whom have never met a "free lunch" they didn't like. Which goes a very long way toward explaining why, with a few exceptional moments of Democratic ascendancy in our national politics, supply-side economics have not lost its grip on the economic thinking of most Americans. Indeed, it is reflected in the one and only major piece of legislation signed into law by Donald Trump: last year's so-called "tax reform" bill.
It's worth stopping for a moment and asking the question: exactly why don't massive tax cuts generate equally massive amounts of economic activity? True, the expectation that they will pay for themselves is foolish on its face. But it does seem slightly logical to assume that, if Washington takes in less money from taxpayers, the taxpayers will then turn around and spend or invest the money in ways that generates tax revenue that, arguably, might not otherwise have been generated. Shouldn't that at least mitigate the cost of the cuts to the government?
Well, once again, the short answer is no. And the reasons for that are twofold: the tax rates that are created though supply-side economics, and the actual fate of the money that flows from the cuts.
Let's start with the rates themselves. As illustrated here, the United States, over the past 60 years or so, has gone from having a systems with a series of graduated tax rates, designed to tax incomes more deeply as they increased along the scale (i.e., "progressively"), to one that has a much smaller number of rates. The effect of this has been to tax the middle class far more heavily than wealthier taxpayers, forcing the former to pay for an increasing share of government services, while rendering it less able to generate economic activity on its own through either consumption or investment. It also means that the folks at the top of our economic pyramid get an increasingly larger share of benefits from those cuts, especially in the case of the Trump tax cuts.
But so what? Who cares about whether the very well-off get a lot of money from tax cuts? Surely they would be motivated to spend and/or invest that money in ways that make up for what the middle class is no longer able to do, right?
Again, no. Generating economic activity is not, contrary to conservative belief, what naturally motivates these people. Rather, fear of losing their riches is what motivates them the most. This is reflected in decades of Republican propaganda directed at working-class voters, to the effect of "Watch out, the Dems are going to find ways to take your money and give it to undeserving people!" (And, of course, by "undeserving people," they mean people of color.)
So, what do they do?
First of all, they buy out the government and the major political parties. This goes a long way toward explaining why political campaigns, and election spending generally, has increased in cost (but definitely not value) over the past several decades. It also goes a long way toward explaining the presence of corporate cash in Democratic coffers, and its subsequent "centrist" effect on traditional Democratic politics.
Second, they engage in bidding wars for various trophy items in our consumer culture, especially real estate, the last refuge of people looking to squirrel away money. Once upon a time, no one could find a decent place to live in New York City because of rent control, or so it was said by people who had an interest in destroying rent control. Now, no one can find a decent place to live in New York because the wealthy have bid up the price of real estate to a level at which only they can afford it. In the case of New York, this has the unfortunate ripple effect of pricing a lot of up-and-coming artists and arts organizations out of the supposed cultural capital of the nation. And the ripple effect of prices in New York eventually affects the price of real estate elsewhere, as people move out and bid up the values of other locations.
Third and, in some ways perhaps worst of all, they simply send the money out of the country altogether, into overseas business or into pure (actually, impure, given their purpose) tax shelters. I have said for many, many years that the Reagan tax cuts, and all similar tax cuts that followed, were little more than a foreign-aid program. The Trump tax cuts, however, illustrate this point to a spectacular degree.
So, unfortunately, we don't get massive benefits from the massive cuts. What most of us get, frankly, is the laughter behind closed doors of wealthy Republican donors and their economic fellow-travellers, as they gleefully celebrate pulling a fast one over on the rest of us. Once upon a time, the rich mocked the poor with so-called "poverty parties." No doubt nowadays, they're coming up with even more creative ways to mock the rest of us.
But wait a moment. Is it possible that the rest of us are finally catching on, that we're finally ready to stop being played for suckers?
Maybe. Consider, for example, this, especially coming, as it does, from a media source deeply invested (pardon the pun) in flattering the business community.
Or, speaking of business-oriented media, consider this, straight from the old Capitalist Tool itself.
Or, speaking specifically of Forbes, consider this. We are staring down the face of an annual federal deficit that has increased almost threefold in just a year. And we can't count on other countries to help us; they have their own problems. That's probably in no small part because they have followed our own bad example.
Is it too late to do anything about this?
Of course not.
We have an election coming up this fall. We absolutely must use it to tell Washington to stop comforting the comfortable at the expense of the afflicted. We must tell them that we are willing to pay for the civilization we have all worked together to built, in a manner that is fair in the paying and not spendthrift in the result. We must ensure that they take the steps needed to undo the harm that Trump and his Congressional cronies have done.
In short, we must put an end to voodoo economics. Once and for all. And remember that everything worth having has a price tag that has to be faced. And paid.
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