I don’t like labels. But if we have to label policies, then I suppose most of us are more “conservative” on some issues and more “liberal” on others. I am a fiscal conservative. Unfortunately, there is nothing conservative about the tax bill which was just passed. To budget “conservatively” for our nation means the same thing as it does in our households or businesses. It means we don’t lie to ourselves with pie in the sky projections. It means that we match income to expenses so they balance. It means we don’t take on so much debt that the interest payments cripple us and threaten us with bankruptcy.
This is not a partisan issue and I’m going to say something that will make Republicans and Democrats equally unhappy. At this moment in our country we should not be cutting taxes, but dramatically increasing taxes - only on the upper 20% - who have reaped all the benefits of this rising economy over the last nine years. In addition, we should be dramatically decreasing wasteful spending (without touching Medicare, Medicaid or Social Security). There are hundreds of billions of dollars of stupid and wasteful spending in our budget which should be eliminated. (Subsidies to companies such as Exxon who are making record profits is just one example.)
The problem with our lawmakers (and frankly many of our citizens) is they talk about economics without knowing much about the science, and then just repeat the ill-informed (and untrue) talking points which they are fed. I actually have a bachelors of science degree in commercial economics, and I want to tell everyone once and for all that the concept of “trickle down economics” is exactly what George Bush Sr. first called it; “Voodoo Economics.” I’ll just call it a fairy tale. It’s a fairy tale that does not work, has not worked, and will never work!
The concept of this fairy tale is that if rich corporations and individuals have their taxes cut, they will have more money to invest back into our economy, thus growing it. The fairy tale continues by saying that this growth will result in increased domestic job production and that wages will rise. THIS IS ABSOLUTELY NOT TRUE AND I WILL TELL YOU EXACTLY WHY!
1. The cost of money is so cheap (the prime rate has been around or under 4% for nearly a decade) that businesses would hire or expand if they had an increased demand for their product or service which required it. At these rates, the cost of money to do so is not a relevant factor.
2. Corporations now have more cash on hand than any time in history. And this just proves point #1. If business sees a need and an opportunity to expand in this country they will do it. If not, they won’t. Giving them a tax break now will do nothing other than giving them more cash on hand that they will likely put into buying back their own treasury stock, or paying out more dividends to their rich stockholders.
3. Tax breaks for the wealthiest individuals and businesses do not result in higher wages or increased production in this country because it does not change the fundamental dynamics of our global marketplace. If a company pays a worker $30 per hour in this country, which they can outsource to another country and pay someone $3 per hour (or even per day!) there is nothing that a tax break does to change this dynamic. It can only be impacted by trade policies, not tax policies.
4. The only policy that has historically been proven to raise overall wages in this country is an increase in the minimum wage. When the minimum wage is increased, what results is an increase in all other wage brackets as well. Some will argue that this hurts business, but from a macroeconomic perspective that is not true. Unlike the wealthiest in our country, when the working class have more discretionary money in their pockets, they put it directly back into our economy and benefit all businesses through increased spending on all products and services.
5. It is also a lie that the U.S. has one of the highest corporate tax rates in the world. When you take into account all of the loopholes that allow companies like General Electric who make billions of dollars and yet redistribute it in ways that allow them to pay “zero” in taxes (in past years) then we actually have among the lowest “effective” tax rates of industrialized nations in the world.
So……….. in conclusion; the tax bill that has just been passed is not only stupid economically, but morally reprehensible. It will add $1.5 trillion to the deficit while giving 83% of the tax breaks to the wealthiest 1% of our population. And in a cynical and underhanded move, the tiny tax cuts which the lower tax brackets receive will expire over the next 10 years, while the breaks for corporations and the top brackets go on in perpetuity. It is in essence a payback to the large donor class for the legal bribery which we call campaign financing. The bill also has all kinds of other deplorable aspects like increasing the estate tax exclusion to $22 million while charging taxes on loan money that graduate students borrow to get an education. And mark my words, the forthcoming budget shortfall will be used as a future excuse to cut benefits to the most vulnerable Americans in the form of cuts to Medicare and Social Security (which the working class has already paid for through their payroll taxes).
Our national debt is currently the second greatest threat to our country (after nuclear war) and it is a problem that has been created over decades of Democrats and Republicans (Congress and presidents alike) making deals with each other to reduce income (in the form of taxes) while increasing wasteful spending that does nothing to help people. Tragically; this tax deal is now a deal with the devil.
Pastor Mark Johnsen