The Republican Plan to Rob America

Robert Borosage

Robert Borosage Co-Director, Campaign for America's Future

The Republican tax plan is a lie. It’s being sold with the promise that the tax cut will create jobs and growth. In fact, the Republican tax cuts, if passed, will become the major obstacle to the very investments vital to generating good jobs and future economic growth.

Contrary to Donald Trump’s claims, the rich and big corporations will pocket the vast bulk of the tax cuts, not working people. The tax cuts won’t pay for themselves. They will increase the deficit. By 2027, one in four taxpayers will end up paying more. And for 80 percent of Americans, the tax cut they do get would be so small that it will go virtually unnoticed in most households. For example, the Tax Policy Center estimatesthat in 2027, the 27 million households with children and incomes under $75,000 will receive an average tax cut of all of $20 when the provisions are in full effect.

Americans get this. Fewer than one-third think they will end up paying less under the Republican plan, according to a new Politico/Morning Consult poll; about the same number think they’ll end up paying more. By a 41-28 margin, Americans know the rich will end up paying less, rather than more. Yet a plurality, 44 percent, thinks the tax cuts will have a “positive impact on the US economy,” while only 24 percent think the tax cuts will have a negative impact. The big lie still works.President Donald Trump argued that “our country and our economy cannot take off” without the tax cuts. Office of Management and Budget Director Mick Mulvaney, a true chickenhawk on deficits, now argues that the tax cuts are vital, even with greater deficits, because “we need to have the growth.” Yet there is simply no reason to believe the tax cuts will generate greater growth or more jobs.

Historically, tax cuts haven’t produced greater growth. The Reagan tax cuts are celebrated, but in fact the Reagan years produced a slower rate of growth than Jimmy Carter’s term in office. And the tax cuts weren’t nearly as important to the economic recovery in the 1980s as the Federal Reserve’s cutting interest rates and Reagan’s doubling the military budget in peacetime—a classic example of military Keynesianism.

Although George W. Bush cut taxes deeply and repeatedly in the early years of this century, growth collapsed in his administration. Real GDP rose well below its rate in the 1990s. In fact, after Clinton and Obama raised taxes, the economy grew faster than it did after Bush slashed them.

The idea that tax cuts will create jobs isn’t borne out by evidence. Sara Anderson of the Institute for Policy Studies looked at 92 profitable large corporations that already pay at or less than the 20 percent rate promised in the Republican plan thanks to taking advantage of loopholes in the tax code. Those corporations have been laying off, not adding, workers over the past nine years. Corporate profits are at near-record levels, but companies are spending their money buying back stock, financing mergers, or issuing dividends, rather than investing in new jobs or products. A stunning 55 percent of corporate profits of the S&P 500 corporations have been devoted to stock buybacks, which raise the price of the remaining stocks and, not incidentally, boost the value of executive-suite stock options.

The rich will pocket most of the GOP tax cuts—over one-half of the reductions will go to the wealthiest 1 percent, an average bonus of $129,000 in 2018. But inequality is already at record extremes, and even the conservative International Monetary Fund finds that extreme inequality is a drag on jobs and growth. The paltry tax break offered most Americans under the Republican plan might boost demand a smidgen, but, with consumer debt at record levels, most will simply go to pay down what is already owed.

Worse, the tax cuts—totaling $2.4 trillion over the next 10 years—will give away tax dollars that could be used to address our true investment deficit: the shortfall of public investments vital to our economy. Virtually absent in the public debate is the reality that the competitiveness of this economy is crippled by the starving of vital public investments.

The physical infrastructure that companies and families depend on—roads, bridges, airports, water systems, broadband, electric grid, public schools, and more—is dangerously decrepit. The American Society for Civil Engineers has documented the shortfall in our physical infrastructure, concluding that $2 trillion over 10 years will be needed simply to bring core infrastructure up to a reasonable standard. That does not begin to cover what’s needed to create the resilience and transformations needed to deal with catastrophic climate changes.

Already, before Republicans have managed to further slash federal revenues, public investment in research and development—vital to capturing the breakthrough inventions of the future—is being cut by 17 percent in the Trump budget. America has prospered by leading the world in education. Now vital investment in education—from pre-K to advanced training to college—is falling behind our global competitors. Trump’s budget would cut $143 billion from student loans over the next decade. It’s obvious that burdening college graduates with debts, depriving workers of technical training, and having children go without the pre-K that helps prepare them for school will damage the country.

Yet Republican tax cuts essentially lock in a continuing public-investment deficit over the next decade. For today’s reactionary Republican party, that is a feature, not a bug. The tax cuts won’t produce jobs or growth, but they will generate more pressure for more cuts in public spending. And when that spending is cut, most Americans will find themselves losing ground to pay for the tax breaks that were pocketed by the already wealthy and the big corporations.

Democrats need to be louder champions of public investment. They are cautious because 61 percent of Americans, including 44 percent of Democrats and Democratic leaners, think Democrats “too often” see government as the only way to solve problems. The Wall Street wing of the party, with its embrace of austerity and neo-liberalism, is happy to feed that suspicion. Many politicians are reluctant to champion a cause that is compelling but controversial, but they shouldn’t be.

Republican tax cuts will constitute a disgraceful giveaway to the wealthy and the entrenched corporate interests. Worse, they will squander tax dollars vital to the public investments essential to generating jobs and growth over the next years. They won’t simply add to America’s extreme inequality. They will sap our future prospects.

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Reposted from Our Future

Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement. Follow Robert L. Borosage on Twitter: www.twitter.com/borosage

Posted In: Allied Approaches, From Campaign for America's Future

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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