Blast #329

                                                 Trump’s Clown Posse
                                                                        &
                                                           Tax “Reform”
 
              Assuming you are following the news, you are aware of the Republican “Tax Reform” bill moving its way through the House of Representatives today.  It is, of course, not a “reform” bill at all but a massive tax cut for corporations and the wealthiest 1% of our population.  There are a number of odious features to this legislative charade but we should also note that the Republicans “gerrymandered” their budget bill to insure they could institute their tax legerdemain.  As noted in the July 18, 2017 The Atlantic, reported by Priscilla Alvarez:

The proposal calls for more than $200 billion in cuts to mandatory programs. It also serves “as a vehicle for changing taxes,” CNN reports, which is “the primary legislative focus of the 2018 budget.”
 
           And what might those “mandatory programs” be?  Well, according to Aida Chavez, in the October 4, 2017 The Intercept, wrote:

Their 2018 budget proposal paves the way for a $1.5 trillion tax cut to be offset by massive cuts to Medicaid and Medicare, according to Senate Democrats who are sounding the alarm. The proposed fiscal 2018 budget resolution Senate Republicans announced last week would lead to a $1 trillion cut to Medicaid and $473 billion cut to Medicare over the next decade, along with slashing other programs low-income individuals rely on. (bold, italics mine)
 
              The Republicans, for years, have wanted to decimate “entitlement programs” (remember George W.’s attempt at “privatizing” Social Security) and it looks like they’ve put their foot in the door with this measure.  As Steven Benen noted on November 15, 2017, for MSNBC:

The scope of this vision is pretty extraordinary: GOP officials have a vision of overhauling the federal tax code, redistributing wealth to the top, scrapping health care benefits for millions, and then targeting social-insurance programs like Social Security and Medicare. If you start hearing chatter that the GOP tax plan would lead to billions of dollars in Medicare cuts, it’s not a political scare tactic. Based on the Congressional Budget Office’s own numbers, that’s a likely outcome of the Republican proposal.
 
          That’s the starting point for this “tax reform.”  And now, of course, the Senate version of this “reform” bill is looking to eliminate the Obamacare Individual Mandate --- cutting off insurance for 13 million Americans!

       Trump’s key economic advisors, Gary Cohn and Steve Mnuchin, have proven themselves to be an Insane Clown Posse when it comes to the  2017 “Tax Reform” bill.  Cohn, as reported in Vox by Matthew Iglesias on November 9th:

In his interview with John Harwood, Gary “Cohn ends up basically surrendering and admitting the plain truth about the Republican tax plan: that it’s a bonanza for big businesses and the rich, whose main benefit for normal people is a vague hope that prosperity will trickle down from those at the top.”
 
         As Yglesias notes: “experienced political operatives know you’re supposed to say your plans are all about the middle class. Cohn, by contrast, is so new at this that he winds up actually saying ‘the most excited group out there are big CEOs, about our tax plan.’”  Not exactly news to those who have been following this “plan” as it has moved through the House.  But Ygelsias points out exactly why big CEO’s love this Republican tax plan.
The Republican tax plan offers multiple benefits to Cohn’s “big CEOs”:

• It reduces the corporate income tax rate, which boosts corporate profits and therefore share prices. Since most CEOs’ compensation is linked to share price performance, that means CEOs benefit directly.
• It lets companies take cash that’s been stashed tax-free in foreign subsidiaries and use it for dividends or buybacks that also boost share prices.
• The changes to the rate structure mean that very high-income people will pay lower income taxes.
• Repealing the estate tax helps you if you manage to amass an $11 million fortune, which big CEOs tend to do but family farmers don’t.

None of this, however, helps a normal person. But Cohn has an answer: The money will trickle down  Cohn is so new to this that he doesn’t seem to realize “trickle down” is a pejorative phrase and literally uses it to describe the plan.
 
         What makes this all the more embarrassing --- and gives substance to what the  lie that this “reform” will “trickle down” and result in wage increases.  According to Cohn:

We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that's good for the economy.  So our biggest supporters are really the Business Roundtable. When you talk to all the CEOs — they're the most excited about this.
 
                 Yet, several days later, when Cohn met with the Wall Street Journal’s CEO Council on Monday, this is what happened (as reported by Heather Long in the Washington Post):

President Donald Trump’s top economic adviser, Gary Cohn, looked out from the stage at a sea of CEOs and top executives in the audience Tuesday for The Wall Street Journal’s CEO Council meeting. As Cohn sat comfortably on stage, a Journal editor asked the crowd to raise their hands if their company plans to invest more if the tax reform bill passes. Very few hands went up. Cohn looked surprised. “Why aren’t the other hands up?” he said. He laughed a little to lighten the mood, but it didn’t cause many more hands to rise. Maybe the CEOs were tired. Maybe they didn’t hear the question. It was a casual poll, but the lukewarm response seemed in tension with the much of the public enthusiasm among corporations for a tax overhaul.
            (If you want to see that exchange, go to: https://www.cnbc.com/2017/11/15/ceos-raise-doubts-about-gary-cohns-top-argument-for-cutting-the-corporate-tax-rate-right-in-front-of-him.html)
 
             The fact is, when a similar tax windfall was given to corporations in 2004, during the W. Bush administration, “U.S. companies spent the majority of their money coming back home from overseas on stock buybacks. It was a payday for Wall Street investors that generated little benefit to the middle class and wider economy.” (Long, WaPo)  If you want a more detailed explanation of why and how corporations will not re-invest to improve jobs and wages, I recommend you read Tyler Durden’s piece in the November 16, 2017  zerohedge.com website. 

                But enough about Cohn.  The other half of the Clown Posse is, of course, Steve Mnuchin.  Another Blast will go into detail about his “work.”  Let’s just end this Blast with a photograph released yesterday with Mnuchin proudly presenting the first dollar bills that bear his signature as Secretary of the Treasury.  He, of course, brought his (3rd) wife for the photo-op --- who wore elbow length leather opera gloves for the occasion.  Here’s the photo and here are my captions for it.

                                  "This is exactly how much middle-class taxpayers will get back with our tax cut."
                                                                                                                   or
                                                            "How do you like our new dinner place mats?"