Déjà vu: The ‘trickle down economics’ of GOP tax plan don’t add up

Rebekah Entralgo

Rebekah Entralgo Reporter, Think Progress

The House and Senate tax plans, rolled out in October and earlier in November, vary slightly in their details, but in general, they revolve around the same central goal: to permanently reduce the corporate tax rate from 35 to 20 percent.

That goal won’t come cheap.

According to the Congressional Budget Office, cutting the tax rate for corporations to 20 percent would cost the federal government up to $1.5 trillion dollars. White House officials claim this is nothing to worry about, because these tax cuts will eventually pay for themselves through economic growth.

“We think we can drive a lot of business back to America, we can drive jobs back to America, we can make ourselves very competitive,” White House economic adviser Gary Cohn told CNBC in late September. “We think we can pay for the entire tax cut through growth over the cycle.”

Treasury Secretary Steve Mnuchin also recently argued that the tax plan would “not only…pay for itself, but it will pay down debt” as well.

The latest analysis from the non-partisan Tax Policy Center, however, finds that the House bill will not spur enough economic growth to pay for itself. GDP would increase over the next two decades, but only by 0.6 percent in 2018 and 0.2 percent in 2037.

In total, the House bill would yield around $169 billion in additional tax revenue, nowhere near enough to cover the roughly $1.5 trillion in revenue loss from a corporate tax cut.

“The increase in output would boost revenues, offsetting roughly a tenth of the revenue loss projected under the legislation without accounting for macroeconomic feedbacks,” the Tax Policy Center explained.

Republicans will likely argue that the benefits of corporate tax cuts will make their way to American workers in the form of more jobs and higher wages, eventually balancing the budget. The overwhelming consensus among economists, however, is that this brand of “trickle down economics” doesn’t work. The newest analysis from the Tax Policy Center also backs this up:

Although the legislation would increase incentives to save and invest, it would also substantially increase budget deficits unless offset by spending cuts. Higher deficits would push up interest rates, which would tend to discourage investment.

Republicans and the Trump administration have traditionally bucked any analysis that runs counter to their narrative. Back in September, the U.S. Treasury Department removed an economic study from its website that found workers do not benefit from corporate tax cuts. Officials reasoned that the study didn’t “represent [their] current thinking and analysis.”

This new Tax Policy Center analysis will likely make cause some hesitation among deficit hawks in Congress. Both Sen. Bob Corker (R-TN) and Sen. Jeff Flake (R-AZ) have already expressed concerns over how much the plan will increase the deficit.

Speaking with the New York Times last week, Corker stated simply, “If I believe it’s going to add to the deficit, I’m not going to vote for it.”

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Reposted from Think Progress

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work