GOP Tax Bill: The Great American Heist
The ‘Insane and opaque’ Tax bill had no hearings, no independent experts, only lobbyists informed this bill. It will blow up the deficit and gut social programs, explains economist and white collar criminologist, Bill Black
SHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore. A historic tax heist is how the New York Times editorial board is describing the Republican tax plan. This looting of the public treasury by corporations and the wealthy had its expected results on Wall Street on Monday. “The tax cut euphoria elevates Wall Street to a record high.” said Reuters. Especially noticeable were the stocks of major banks, such as the Bank of America, Citigroup and Wells Fargo. They jumped by over 2%. On to talk about this with me is Bill Black. Bill is a white collar criminologist, associate professor of economics and law at the University of Missouri, Kansas City. He’s the author of the Best Way to Rob a Bank is to Own One. Thanks for joining us Bill.
BILL BLACK: Thank you.
SHARMINI PERIES: All right Bill, let’s start with the worst elements of this tax bill. What can we expect?
BILL BLACK: Well, it has exploded, one hopes finally, a bunch of myths and made it clear that Trump exists basically to con and to loot his supposed base in response to his desire to make the incredibly wealthy much wealthier. This bill is a travesty on multiple dimensions. Let’s start with the first one: that is that people hide things for good reasons. They’ve hid this bill. They literally conducted no hearings on this bill. Literally brought in no independent experts, so the only people they listened to were lobbyists for overwhelmingly, the ultra wealthy.
Second, these bills are supposed to go through the joint committee on taxation. The Republicans were critical in creating that committee, have praised it for years, and of course they learned that the Joint Committee was going to say that it was all nonsense, that this bill was actually going to make money for the Federal Treasury and in fact was going to, pick your metaphor, but basically dramatically increase the deficit. The Republicans, and this is in the New York Times as we are taping, went on an attack dog plan to discredit precisely the committee that they had created with independence to prevent this kind of travesty. They not only create the travesty but they want to create future travesties by completely discrediting anyone who might say no to all these things.
Next of course, was the fact that it became let’s make a deal. What they learned from the defeat of all their earlier legislation is “Oh my god, we can’t go back to our wealthy donors unless we actually get something,” so they just bought folks off. They bought them off at the last moment. People have probably seen it. If not, you can go on the net and see all this handwritten language on the printed bill that was to buy senators votes. It turns out that you can buy a US Senator’s votes for somewhere around $30 to $80 million for their donors in return. That’s all areas of insanity.
Then there are things in the tax bill that are outrageous that have nothing to do with taxes. For example, like defining a fetus as an unborn child with the hope that it will lead to overturning Roe vs. Wade. For example, getting rid of the individual mandate under Obamacare. Now, remember it was Republican right wing think tank that came up with the ideas that became Obamacare. I mean, that’s not a conspiracy theory, that’s just outright history. The individual mandate was viewed and conservatives explained, as absolutely essential to make this thing work. They’ve gutted it because they couldn’t get the votes to destroy Obamacare directly. This is going to result after not a terribly long delay in millions of people losing health insurance because they can’t afford them or getting health insurance plans that don’t really ensure you against much of anything because of the exclusions and the deductibles and such.
Outside of tax, it’s insane. Then, within tax we’ve already talked about one of the central insanities, that it’s being sold as if it’s actually going to create net revenue for the Federal government, when it’s going to reduce net revenue. Net of any increase from very modest growth by over $1 trillion according to most anyone. By the way, economists overwhelmingly agree that it will massively increase the deficit, agree that we’ll have only minor effects in terms of growth. You can already see the Republican strategy, and that is going to tell the Democrats to make a series of “Sophie’s Choices.” Which of your social programs do you want to gut because there’s no longer any money for them? They’re going to go after Medicare and Medicaid. All of the safety net programs, plus all the social programs. That’s going on.
Then, who’s going to end up with the vast amount of bucks? Well, there’s no dispute about that. Seriously, among economists, it’s going to go overwhelmingly to the wealthy. That was even before they made the last minute deals. Oh, and have I mentioned, the bill isn’t final yet. It’s going to go to what’s called a conference committee. A conference committee is the most opaque of this completely opaque process, in which the public learns almost nothing but the lobbyists literally sit just outside the door. They go back and forth and so the bill will almost certainly, absent an immense public uproar, get much worse than it already is.
SHARMINI PERIES: All right Bill, the obvious question here is how does this bill transfer wealth to the wealthy?
BILL BLACK: Primarily through the dramatic reduction in the corporate income tax but also the doubling what you could exempt under estate taxes. Only people who are exceptionally wealthy will pay anything under estate taxes. In other words, inherited wealth will become the absolute key to success in America because aristocracy is a good way to run a system. Beyond that, the bill says that it’s designed to make things easier. That’s supposed reform language but it actually makes things more complicated. It’s a gift to tax lawyers, among other folks. But beyond that, they had to come up with some way to claim that it was going to reduce taxes on the middle class. In fact, the problem is, it’s going to increase taxes on the middle class, but not for about eight years. Now, some middle class folks will have immediate tax increases but most middle class people will have tax increases under this bill, but they won’t kick in for eight years, so the Republicans are saying see. Look? It’s a tax reduction for the middle class. They hope that scam is going to fool people.
SHARMINI PERIES: All right Bill, the biggest argument to use for this kind of a tax heist is that if you give these breaks, tax breaks to the wealthy, they’ll have a trickle down effect and we will all be better off in the long run because they will create jobs and invest in businesses and create more industries. But recently, we’ve found out that that might not be the case. Explain this.
BILL BLACK: If you wanted growth what would you do? You wouldn’t cut the corporate income tax. The administration already had the embarrassment, remember? People have probably already seen the video where they ask business people, so how many of you would start hiring new folks, new workers, if we slashed the corporate income tax? Five out of 30 raised their hands, much to the chagrin of the treasury secretary. But what you would do if you wanted growth, growth now and growth over the next 100 years is really increase graduate education. Guess what? That’s what they’re going after. They’re going to make it enormously more difficult, as in impossible, for middle class and of course, anyone poorer than middle class students to go to grad school anymore. All those engineers and scientists, apparently we’ve got too many of them, because they literally went and had a war on graduate education which is the craziest thing even from their own perspective.
Oh, and that brings to mind, that’s not the only thing they did in education. They changed all the laws so that homeschoolers can now get these big deductions, as can religious institutions. These are deductions in taxes if you send your kids to homeschool or if you send them to a religious institution and such. You know, it’s just all over the place on these things. And of course, they now say that churches can both be tax exempt and can be totally political. They can spend as much money as they want. It can be their sole purpose. In other words, can just be a front group for politicians and it doesn’t matter. It’s exempt.
It’s going to be bad for growth. It’s going to be terrible for social programs. It’s going to after a few years delay be terrible for the middle class but it is spectacularly wonderful for the wealthy. I haven’t actually mentioned the one that is one some sense the craziest. This is the one that kills Kansas, right? This is the one that says “Well, if you’re a lawyer or you’re a dentist, you’re running a plumbing company, you can set it up as if you were a corporation, even though you’re really more of a partnership.” Now, we’ll get you an extra special low tax. Lower than corporate income tax. They didn’t go after the carried interest stuff that made the hedge fund guys that get, literally get $20 million, $200 million bonuses an exceptionally low tax rate.
All of those abuses continue or are expanded by this reform legislation and with by criminology, this is the one I really love, if you engaged in tax avoidance by keeping your money out of the United States offshore in these places that are cesspools of crime and corruption, then they also created an extra special, extra low tax rate for you if you bring the money back to the United States. You now will profit handsomely from engaging in that kind of tax avoidance through the offshore islands. Everywhere you look, and remember because it was put together with no hearings and changed at the last minute, nobody has, well nobody. Probably six people, and I’m not one of them have read the entire tax bill in the entire United States of America, much less been able to analyze how lobbyists bury things in arcane language in the stuff, which is to say there’s a lot more there and it’s going to be bad.
SHARMINI PERIES: All right Bill. This is a good time to go over, remind people who’s advising President Trump, in terms of these tax ventures and go over for us his key advisors and where they come from.
BILL BLACK: Well, they come from the usual suspects in particular, Art Laffer of the Laffer curve. The Laffer curve has no empirical basis. It has always been wrong but the claim was you could imagine a situation in which if you cut taxes, people who were so down trodden by the oppressive taxes that they didn’t work, it’s not any country I know of, would suddenly work vastly more and net tax revenues would go up. That was of course, the same guy who was the principal tax advisor to Governor Brownback in Kansas who made exactly the same promise and sent the state of Kansas on a path where it would’ve gone into bankruptcy but for the fact that these super Conservative members of the state legislature finally revolted around Brownback and Laffer, as crazy people. That’s just the latest, but again, Laffer has always failed everywhere that this has been tried. Beyond that, it’s a bunch of the usual suspects from the ultra right that have this same claim. Remember that the goal they’ve stated it openly, is to shrink government to the size that they can strangle it in a bathtub.
SHARMINI PERIES: Bill, thank you so much for joining us. I welcome any further analysis that you can provide next week.
BILL BLACK: Trump promised to bring back Christmas and he has created corporate Christmas right at the beginning of the month.
SHARMINI PERIES: Thank you for joining us here on The Real News Network.