Early in this millennium, Mississippi’s Trent Lott was the Senate’s Majority Leader. Then it was disclosed that he had done something outside the bounds of what most Americans considered “normal” and acceptable. Lott had spoken favorably about Strom Thurmond’s 1948 Presidential candidacy on a platform of racial segregation. So he had to go.
Favorable comments about a segregationist were enough to unseat a national leader fifteen years ago. This was considered a major scandal, and a short time after his comments were revealed, Lott was forced to resign his leadership position in the Senate.
That is what “normal” used to mean. That was then, this is now.
Breitbart is a “news” website, which was until recently run by Steve Bannon. It is a far-right outlet that promotes “alt-right” concepts often involving white nationalism.
Bannon often refers to what he calls a “‘Camp of the Saints’-type invasion” to describe what he sees as a rising tide of threats to Western civilization. When he says these things, Bannon is referring to a 1973 French novel that “describes the takeover of Europe by waves of immigrants that wash ashore like the plague,” and “reframes everything as the fight to death between races.”
Steve Bannon, race-baiting propagandist, is now the White House Chief Strategist. Yet this is not a national scandal.
In fact, Bannon is not the only “alt -right” person in the Trump White House. Other Breitbart staffers are also getting jobs in the new administration, as are other far-right figures. It is said that White House alt-right figures removed reference to the genocide of Jewish people in the White House’s International Holocaust Remembrance Day statement.
This is not normal.
President Trump recently accused former president Obama of a massive criminal conspiracy involving abusing presidential power to “wiretap” Trump’s campaign to help Trump’s opponent. This is , to say the least, not normal.
The White House has begun sending Americans a daily state-propaganda email “newsletter” called “Your 1600 Daily.” It is sent unsolicited, in violation of the 2003 CAN-SPAM Act. It comes from an official White House government email address, and is signed by “The White House. ”
One day this briefing advertised a meeting with “victims of Obamacare.” Another asks Americans to “Share Your Obamacare Disaster Story With President Trump.” Wednesday’s makes the claim, “Under his leadership, the United States will be the world’s great magnet for innovation and job creation.”
It promotes extremist news outlets like Townhall, and white nationalist outlets like Breitbart.
This is just not normal. In other times this, too, would be a major scandal.
And then there is the blatant moneymaking. Last week China granted Trump a number of lucrative trademarks, after Trump broke a campaign promise to declare China as a currency manipulator, which would have initiated a process that could lead to tariffs on Chinese-made goods entering the country.
But there are a number of red flags surrounding the transaction, and no way to rule out concerns that this represents just the latest instance of potential conflicts between the Trump administration’s obligation to the public and its own financial gain.
And that’s just a taste of the financial shenanigans going on. For example, despite Trump’s pledge to “drain the swamp” in Washington from the influence of lobbyists, his former campaign manager, Corey Lewandowski, has started a lobbying firm. See if you can guess what he’s selling to clients.
Fox News commentator Monica Crowley was asked to join the Trump White House, but had to back out after it was disclosed that she had engaged in plagiarism. Now it is reported that she is going to work as a lobbyist for Victor Pinchuk, a Ukrainian billionaire and Putin supporter. She’s making big bucks, because she has influence with the Trump White House. That is just a recent example of so many examples of corruption.
But wait, there’s more. The President of the United States is holding campaign rallies just one, two months into presidency. And he is raising “campaign funds” from donors. What?
Meanwhile the Republicans in Congress, in the thrall of corporate cash and billionaires, assist their benefactors rather than do their Constitutional duty to hold these people accountable.
This is like the story of the frog in boiling water. The water is starting to boil, but because the warming happens slowly, the frog gets used to it and doesn’t notice it is cooking.
What’s going on here is not normal. They are so much not normal and happening so fast that we risk becoming desensitized to what normal means.
So a reminder: This is not normal. Do not allow yourself to ease into any level of acceptance of this, or a belief that what is happening in our country is part of a pattern or a political pendulum that will swing the other way or a back and forth between parties or think checks and balances are going to save us and our nation.
This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.
This is classic dumb guy wedding speech writing: “The chorus of their dating became an earthquake of their love.” – Samantha Bee on Trump’s speech
Donald Trump just gave a fact-free, and detail-free, speech to a joint session of Congress. Early on in the evening, the president – who has loaded his cabinet with billionaires and his administration with former Goldman Sachs executives – earned audible guffaws from the assembled lawmakers when he declared, in all seriousness, “We have begun to drain the swamp of government corruption…”
With illegal border crossings at the lowest level since 1972, Trump devoted a good portion of his speech to spreading fear of undocumented immigrants. But only those from the south. There are twice as many immigrant visa “overstays” by Canadians as Mexicans. Meanwhile back in the real world, net migration from Mexico is below zero – more are leaving than coming
Trump claimed our borders are “wide open… for drugs to pour in at a now unprecedented rate.” But not only are our borders more secure than ever, our country’s much-publicized opioid addiction problem is the result of pharmaceutical company marketing, not Mexican drug gangs. American physicians have legally prescribed enough painkillers – largely in Trump-voting states – to stupefy people enough to, well, elect Trump.
Trump also spoke of immigrants committing crimes, asking what would those in Congress say to an American family when immigrants take “a loved one” from them. However, the New York Times reports that “Contrary to Trump’s Claims, Immigrants Are Less Likely to Commit Crimes.” Oh well.
But rather than run the risk that facts might distract the public from his agenda of fear, Trump showcased family members of people who had been killed by immigrants, then announced that he is setting up an official Ministry of Fear, saying,
I have ordered the Department of Homeland Security to create an office to serve American Victims. The office is called VOICE — Victims Of Immigration Crime Engagement. We are providing a voice to those who have been ignored by our media, and silenced by special interests.
Trump stressed that immigrants take jobs and income from American families. The Economic Policy Institute (EPI) took a 2014 look at this claim, “there is broad agreement among academic economists that in the long run, immigration has a small but positive impact on the labor market outcomes of native-born workers, on average.”
Then Trump went after Muslims, saying, we can’t allow “allow uncontrolled entry” to our country because – “the vast majority of individuals convicted for terrorism-related offenses since 9/11 came here from outside of our country.” Pushing the fear further, he said,
“We cannot allow a beachhead of terrorism to form inside America — we cannot allow our Nation to become a sanctuary for extremists.”
Trump conveniently neglected to mention the severe vetting process refugees and immigrants from Muslim countries already face, or the fact over half of the people the Department of Homeland Security has determined were inspired by a foreign group to attempt terrorist attacks in the U.S. were born in the U.S. And he certainly wasn’t about to bring up native-born white, Christian terrorists.
Trump promised to “work to bring down the artificially high price of drugs and bring them down immediately.” This promise comes less than a month after this headline, “After meeting with pharma lobbyists, Trump drops promise to negotiate drug prices“.
On the very day that headlines read, “Trump signs executive order to roll back clean water rule“, he said, “My administration wants to work with members in both parties to… promote clean air and clear water…”.
Trump also presented environmental destruction as a jobs program, saying for example,
We have cleared the way for the construction of the Keystone and Dakota Access Pipelines — thereby creating tens of thousands of jobs — and I’ve issued a new directive that new American pipelines be made with American steel.
In fact, as DeSmogBlog points out, Like Keystone XL, Much of Dakota Access Pipeline Steel Made by Russian Company Tied to Putin. And the jobs? A few thousand construction jobs, for a few months while the pipelines are constructed, in an economy adding more than 200,000 jobs a month, and then “Operation of the proposed Project would generate 35 permanent and 15 temporary jobs, primarily for routine inspections, maintenance, and repairs.
These are just a few examples of what we are dealing with when we hear Trump speak. Big whoppers, little whoppers, bamboozlements, empty promises, detail-free policy mumblings, flat-out intentional lies, trickery, and always the fear and the fear and the fear and the fear and the fear.
But this time his “tone” was supposedly easier to stomach. Did anyone fall for it?
The Trump administration, as have all Republican administrations, is promoting tax cuts for the rich, saying they will “create growth.” Never mind the destructive history of tax cuts, the destructive history of “trickle-down economics” (and the destructive history of Republican administrations generally) — they’re doing it again.
Getting A Few Bamboozlements Out Of The Way
Any time taxes come up, decades of Republican bamboozlement gets in the way of rational discussion. Republicans say things like “taxes take money out of the economy” and “tax cuts create growth” to trick people into supporting tax cuts for the rich and corporations (which are really just more tax cuts for the rich).
So it is reasonable to look at what has actually happened when taxes on the rich have been cut. History shows that tax cuts have never produced “growth.” (See also, the Congressional Research Service’s non-partisan study, “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945“: “Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth.” Also, take a look at what happened in Kansas and six other states when they tried to grow their economies through tax cuts.)
Tax Cuts Defund Our Democracy And Concentrate Power At The Top
So tax cuts do not “grow the economy.” They just don’t. But tax cuts and the resulting drop on revenue to our democracy are used to force cuts in the things our government does to make our lives better and help our economy prosper in the longer term.
When people have a say in how their government is run they say they want good schools and colleges, good infrastructure, health care, scientific research, good courts, and all the things that government can do to make our lives better. They also say they want a “flatter” wealth distribution, with people at the bottom having a way to make a living, and people at the top helping pay for our democracy by pitching in more of the gains that democracy brings.
When people don’t have a say in how their government is run, the economy delivers for a few at the top while leaving the rest behind. And this concentration of wealth also concentrates their power over our governmental decision-making.
Tax cuts don’t just force a drop in revenue to our democracy, they push the benefits of our economy to a few at the top. The Congressional Research Service study mentioned above, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, found that tax cuts do not bring economic growth. The study also found, “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”
Democracies demand high taxes at the top because the revenue is good for the economy in the long term. Taxes bring in revenue to pay for education, scientific research and improvements in infrastructure that cause the economy to grow. Investing in modern transit systems, smart grid, energy efficiency, fast internet and other improvements leads to a huge payoff. Infrastructure improvement and maintenance is the “seed corn” of economic growth. We have been eating that seed corn since Reagan’s tax cuts. Prosperity is the fruit of democracy.
Tax cuts do not “take money out of the economy”; they redistribute it to places where We the People decide it can be better used to help make all of our lives better and grow our economy. But the Reagan tax cuts were used to force cuts in things like education, scientific research and, unfortunately, maintaining and modernizing our infrastructure.
Our economy has been in trouble ever since. From the 2010 post, Reagan Revolution Home To Roost — In Charts:
Working people’s share of the benefits from increased productivity took a sudden turn down:
This resulted in intense concentration of wealth at the top:
And forced working people to spend down savings to get by:
Which forced working people to go into debt: (total household debt as percentage of GDP)
None of which has helped economic growth much: (12-quarter rolling average nominal GDP growth.)*
Tax cuts steal from democracy.
Tax Cuts Force Unsustainable Business Models
The dramatic decrease in top tax rates has also forced unsustainable “sell the farm” business models.
From the 2010 post 14 Ways A 90 Percent Top Tax Rate Fixes Our Economy And Our Country:
A return to Eisenhower-era 90% top tax rates helps fix our economy in several ways:
1) It makes it take longer to end up with a fortune. In fact it makes people build andearn a fortune, instead of shooting for quick windfalls. This forces long-term thinking and planning instead of short-term scheming and scamming. If grabbing everything in sight and running doesn’t pay off anymore, you have to change your strategy.
2) It gets rid of the quick-buck-scheme business model. Making people take a longer-term approach to building rather than grabbing a fortune will help reattach businesses to communities by reinforcing interdependence between businesses and their surrounding communities. When it takes owners and executives years to build up a fortune they need solid companies that are around for a long time. This requires the surrounding public infrastructure of roads, schools, police, fire, courts, etc., to be in good shape to provide long-term support for the enterprise. You also want your company to build a solid reputation for serving its customers rather than cheapening the product, pursuing quick-buck scams, cutting customer service, etc. The current Wall Street/private equity business model of looting companies, leaving behind an empty shell, unemployed workers and a surrounding community in devastation will no longer be a viable business strategy.
3) It will lower the executive crime rate. Today it is possible to run scams that let you pocket huge sums in a single year, and leave behind the mess you make for others to fix. A high top tax rate removes the incentive to lie, cheat and steal to grab every buck you can as fast as you can. This reduces the temptation to be dishonest. If you aren’t going to keep the whole dime, why risk doing the time? When excessive, massive paydays are possible, it opens the door to overwhelming greed and a resulting compromising of principles. Sort of the definition of the decades since Reagan, no?
Who Pays For Tax Cuts?
Conservative economics claims that tax cuts do not have to be “paid for.” (Modern Monetary Theory shows otherwise, but that’s for another post.)
Trump uses the old “tax cuts pay for themselves” bamboozlement to claim that much of the revenue lost from his tax cuts will be made up for by increased growth. They won’t, of course. Trump also throws in a number of things that will actually increase taxes on the non-rich, while hurting homeowners and nonprofit organizations.
One place the Trump tax cuts plan to “pay for” the huge windfall for the rich is by limiting or eliminating the mortgage interest tax deduction.
Another “pay for” is eliminating tax deductions for charitable giving. In “Will Trump’s Tax Plan Hurt Philanthropy?” Ben Paynter explains what this will do to nonprofits.
“In the long run, the Center for Effective Government estimates that the proposed policy could reduce cause organization funding by $9.1 billion annually. And United Way Worldwide has reported that nearly two-thirds of Americans might reduce giving by 25% or more.”
Marques Chavez of The Alliance for Charitable Reform names a few names, in a letter to the editor that appeared in The Hill
“The Tax Policy Center found that a cap on the charitable deduction, as proposed by President Trump, would cost as much as $26 billion in charitable giving in one year. That is more than the combined operating budgets of the American Red Cross, Goodwill Industries International, YMCA of the USA, Habitat for Humanity, Boys and Girls Clubs of America, Catholic Charities USA, the American Cancer Society, United Way Worldwide and Feeding America.”
What tax cuts actually do is steal our democracy out from under us.
The Republican Congress and President Trump are proposing more huge tax cuts for the rich and corporations. Call your member of Congress and your senators, and visit their offices, to let them know how you feel about this. Join #ResistTrumpTuesdays here.
This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.
Now that Republicans are running Congress and the executive branch, they’re planning to “reform” (cut) corporate taxes (again). This time they using the subterfuge of “this will make companies more competitive.” What does that mean? Of course, under Republicans, it really means one and only one thing: cutting taxes on the rich — rich people.
The top corporate tax rate used to be 52 percent. Under President Ronald Reagan it was 46 percent. Then Congress “reformed” corporate taxes and dropped the rate to just 35 percent. (Except for giant, multinational corporations. They were handed a “deferral” break that cut their taxes to zero.)
Corporations used to shoulder 32 percent of the total tax burden. Now they shoulder only 10 percent of the burden — a drop of two-thirds. The difference has been made up from cuts to infrastructure, schools, health care, scientific research and all the things our government does to make our lives better — and to help our economy prosper over the long term.
That’s the trade-off when taxes are cut. It means our government has to cut the things it does to make all of our lives better.
Who Gets That Money?
As corporate taxes were cut (thereby making it harder for the government to do things that make our lives better), where did that money go instead? It obviously didn’t go toward higher wages or shorter working hours or other things that might have made the tradeoff somewhat worth it for regular people, at least in the short term. No, time has shown us here it went: straight to a few at the top.
Politifact said it was true when Bernie Sanders, in Madison, claims top 0.1% of Americans have almost as much wealth as bottom 90%. Joshua Holland explains how it happened, writing at The Nation in 2015 in 20 People Now Own As Much Wealth as Half of All Americans,
The concentration of wealth at the top isn’t the result of some sort of organic process. The top one-10th of 1 percent of American households controlled about 7 percent of the nation’s wealth in the mid-1970s. By 2000, their share had grown to about 15 percent, and today it’s well over 20 percent. Those at the very top didn’t become three times as smart or lucky or good-looking in the intervening years. They’ve benefited from changes in things like trade policy, the tax code, and collective-bargaining rules — all policy changes they’ve used their wealth to champion.
That is where the money goes when corporate taxes (and rules and regulations and the bargaining power of regular people) are cut. It goes to a few actual, living people instead of toward the betterment of all of us and our economy.
Corporations Don’t “Do” Things. They Don’t “Make Decisions” or “Talk”
Over the last few decades a constant barrage of corporate/conservative propaganda has misinformed public understand of what corporations are, and why we have them. People have come to think of corporations as sentient beings that “do things,” like make decisions and speak. But corporations are things, like chairs and hammers. (Actually, they are more like wills or sales contracts.)
Corporations are things — legal contracts — that people use to get certain things done, for themselves.
These days corporations have also become things that are used to obscure or mask what certain people do. A corporation doesn’t “decide” to pollute a river or cheat a customer or hide profits in the Cayman Islands. And Bob in accounting or Alicia in marketing don’t decide to do that, either. But “the corporations” get the blame while really a few people who manage the corporation do things, and they do those things for their own, personal gain.
This is the important thing to understand. People make decisions and personally benefit; corporations do not.
When we cut taxes on corporations we are actually cutting taxes on a few people. And not just people, but very, very rich people.
The “Competitive” Argument
This time around the Republicans are trying to bamboozle everyone by claiming that we “need” to cut taxes on corporations so they will be more “competitive.” (As if our corporations are not already making the highest profits in history.)
Gayle Trotter captures the company line at the Washington Examiner, in Trump’s corporate tax plan will make America competitive again,
Lowering the corporate tax rate from 35 percent to 15 percent will help, not only to keep businesses here, but also bring jobs and innovation back home by reducing wacky incentives for United States companies to migrate offshore in tax-driven “inversion” deals.
This is legislation-by-extortion. This argument has giant corporations threatening to renounce their U.S. citizenship, and harm our country by killing American jobs, etc., unless we give them (the executives who make the decisions — and the threats) more money. This argument also threatens American entrepreneurs who want to start companies here, with its appeal to giant foreign companies to move here and serve those markets instead.
The argument also ignores what really makes a country “competitive.” That is the infrastructure, education, scientific research, court system and other things well-funded governments do to fertilize the soil from which companies can grow and prosper. Cutting corporate taxes cuts a government’s ability to nurture that soil — for the sake of a short term gain for a few executives who are making these extortion threats.
Switzerland Got Wise to the Con
A week ago Switzerland had a vote on lowering their corporate tax rate, “to attract businesses,” but the voters got wise to the con, with 60 percent of them voting to reject the extortion argument, as AFP reports,
The proposal would have leveled the tax rate for domestic and foreign firms while creating new deductions for innovation as well as research and development, tailored to attract global companies…
The left-wing Socialist Party (PS) called the government’s plan a “scam” that would have forced ordinary taxpayers to fill inevitable revenue shortfalls.
The referendum had “shown the red card to arrogance,” the party said in a statement, claiming the days of giving sweetheart deals to powerful corporations were “no longer tolerated.”
“Dollars Go to Support the Communities That Help to Make Their Businesses Thrive”
In April, 2015, the Main Street Alliance pushed back against these extortion threats, issuing a statement that SMALL BUSINESS OWNERS JOIN OTHERS ACROSS THE COUNTRY, PLEDGE TO REMAIN AMERICAN BUSINESSES,
With Tax Season in full swing, business owners and working families across the country are standing together, proud to live, work, and support the United States and their local communities. Small business owners across the country know that their tax dollars go to support the communities that help to make their businesses thrive. Investments in our schools, public infrastructure, safety, and much more depend on everyone paying their fair share of taxes.
Good for them. And good for people like the voters in Switzerland who did not fall for this “competitiveness” bamboozlement.
This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.
So far President Trump has signed very few bills. One lets coal companies dump waste into streams. The other lets oil companies bribe foreign dictators in secret. And he is moving to block a Labor Department “fiduciary rule” that requires financial advisors to act in the best interests of their clients when advising on retirement accounts.
Here’s the thing: this isn’t just Trump doing this. The Republican House and Senate passed those two bills, and the Republicans have been fighting that fiduciary rule tooth and nail.
It’s not just Trump, Republicans as a party are using Trump to engage in a general assault on protections from corruption, pollution, corporate fraud and financial scams.
This is who they are.
Puzder “Fails Every Test of a Labor Secretary”
In December, Ross Eisenbrey of the Economic Policy Institute wrote of Puzder’s nomination, Andrew Puzder fails every test for a Labor Secretary
He’s opposed to the new overtime rule that gave the right to time and a half pay to millions of salaried employees earning less than $47,476 a year. Wal-Mart has already raised its managers’ pay, as did about half of all big retailers, even before the rule was supposed to take effect on December 1. But Puzder wants to kill it so he can keep working low-paid employees without paying them a dime extra for their overtime hours.
by Ciro Carrillo
You don’t have to just be a boring-ass liberal. You can be a RADICAL!
Friday was Holocaust Remembrance Day. As you may have heard, the White house marked the occasion with this statement:
It is with a heavy heart and somber mind that we remember and honor the victims, survivors, heroes of the Holocaust. It is impossible to fully fathom the depravity and horror inflicted on innocent people by Nazi terror.
Yet, we know that in the darkest hours of humanity, light shines the brightest. As we remember those who died, we are deeply grateful to those who risked their lives to save the innocent.
In the name of the perished, I pledge to do everything in my power throughout my Presidency, and my life, to ensure that the forces of evil never again defeat the powers of good. Together, we will make love and tolerance prevalent throughout the world.
Can you see what’s missing?
At the beginning of the Obama administration Democrats had control of the Congress and passed the “stimulus.” Unfortunately only a third of that was for infrastructure work. Then Republicans in Congress obstructed every proposal since then to fix up our country’s infrastructure. Now the idea of maybe fixing some of our crumbling infrastructure seems to be back on the table.
What is the right way to invest in rebuilding our infrastructure, and how should it be “paid for”?
Infrastructure was one of the few actual policies that received any discussion at all during the election campaign – and it didn’t receive much.
President Trump formally withdrew the US from the Trans-Pacific Partnership (TPP). Though TPP was killed by a long progressive fight that resulted in it not having the votes to pass Congress, of course, he took credit for killing it himself.
TPP was another “trade” deal written in secret using a process dominated by corporate interests. As David Dayen, writing in The Nation Tuesday, put it,
The public recognized that free-trade deals aren’t about free trade anymore—tariffs are currently so low it would be hard to get them meaningfully lower—but about guaranteeing corporate profits through eliminating regulations and enforcing patents. Another deal written in secret, with lobbyists whispering in negotiators’ ears, gave nobody confidence that this would change. Secret enforcement tribunals were a prime target for criticism, because they protect corporate and investor profits and enable financial speculation. No such platform exists for workers if their rights are violated.
This rigged trade process and its results brought us Trump, and here we are.
So now that that’s over, how should our country trade with the world?
Do We Even Need “Trade Deals”?
“Trade” used to be about countries that grow bananas and “developed” countries exchanging bananas for cars and toasters. The banana regions had a “comparative advantage” because the climate favored banana-growing, the developed countries’ advantage was a completed manufacturing ecosystem. Unfortunately “comparative advantage” today means companies moving their production to places that allow them to pollute and exploit workers to “lower their costs.” (The costs of pollution and exploitation are then instead borne by working people and the planet.)
It is a common misconception that we need to have a trade deal with a country before American companies can export to that country. This is partly due to misleading arguments used to sell corporate-favoring trade agreements, like saying, “Ninety-five percent of America’s potential customers live overseas, so closing ourselves off to trade is not a solution.”
Not having a trade agreement doesn’t “close ourselves off to trade.” American businesses trade with the rest of the world and the rest of the world trades with us regardless of trade deals. But without trade deals countries can set tariffs and barriers according to their own country’s needs and goals.
In places where people have a say, people say they want good wages and environmental protections (and public education and health care and infrastructure and parks and science and other things people vote for in democracies). These protections mean that working people and the environment receive a larger share of the economic pie. The economic pie is also larger as a result of that investment in public education and infrastructure and the rest, so the “investor” class does better, too. To pay for these investment those who do better are taxed more.
In non-democracies and other places where people don’t have a say people aren’t paid well, the environment is not protected and a few people at the top end up with a larger share of the smaller economic pie.
So a democracy might want a tariff to remove the price advantage of goods made at “less cost” in countries without those protections. With a balancing tariff those goods won’t undermine democray’s good wages and protections, and undermine the tax base along with them. These tariffs and barriers might be called a “democracy tax,” with the revenues used for investment to make the goods made in the democracy more competitive worldwide.
Business and “investor” interests want to pay lower wages and environmental protection costs, so they encourage countries to pass “free trade” deals that prevent governments from imposing tariffs and barriers in the future. They call the idea of democracy taxes and other decision-making by governments to protect national interests “protectionism.”
“Free trade” deals set aside each country’s political decision-making in favor of “more trade” — thereby placing business interests above national sovereignty. Governments are prevented from acting to “protect” a country’s interests and businesses are free to seek the lowest costs, regardless of what happens to countries and the people in them and the environment.
“Opening New Markets” – To Monopolization
When corporate interests advocate for free trade deals they also claim the deals will “establish new markets.” Again, this falsely implies they can’t already export without establishing a trade deal. This language also makes it seem as though those countries don’t already have companies and industries in those markets. What they really want is a deal that blocks governments from using tariffs and barriers “protecting” their developing or strategic industries from being overtaken and knocked out by established or subsidized competitors from other countries. This “opens markets” to outside competition from giant corporations.
With open trade the largest multinational corporations are able to sweep into other countries — “new markets” — and buy up or knock out existing, smaller businesses. The larger companies use economies of scale, established supply chains, superior access to credit, and other advantages of bigness to become even bigger. The resulting “efficiencies” mean that people are laid off wages and benefits are cut and systems are set up to push profits to the “investors” in the corporation.
People Caught On
So American voters finally caught on to the gimmicks used to sell “free trade.” Or, better put, the damage from from free trade finally caught up to most of us. People rose up and demanded a change, and change is upon us. With TPP out of the way, and “free trade” on hold for the time being it is time to re-evaluate what We the People want from our trade deals and economy.
Stan Sorcher writes, in Restoring Trust After Our “Free Trade” Charade Ends,
Our failed “neoliberal” approach has been to manage globalization through trade deals, written by and for the interests of global companies. The neoliberal vision is a fully integrated global economy, where national identities are blurred, shareholder interests have top priority, public interests are devalued, and gains go almost entirely to investors.
… In this neoliberal vision, markets will solve all our problems, government is bad, and power and influence should favor those who already have plenty of both.
It’s time for a change. But what will the new trade regime look like?
Proposals For A New Trade Regime
Trade doesn’t have to mean a race to the economic bottom resulting in massive worldwide inequality. The benefits of a modern, globalized world are clear. Jared Bernstein, wrote last year that trade deals,
… provide necessary rules of the road by which countries deal with trade logistics, barriers, cross-border investments and conflicts, and, in this sense, they can smooth the path of globalization in useful ways. But they can also be captured by partisan or corporate interests and thereby used to channel the benefits of trade to a favored group. This has certainly been the case in the United States, and it is why many of us who are committed globalists opposed the TPP.
A new approach is needed. The question is how do we manage globalization and trade for the benefit of all of us instead of using it to set all of us against each other?
Plenty of groups and interests are already weighing in. Lori Wallach and Jared Bernstein, writing in The American Prospect last year, in The New Rules of the Road: A Progressive Approach to Globalization, (click through for specifics),
The new rules must prioritize the economic needs of low- and middle-income families while preserving the democratic, accountable policymaking processes that are essential to creating and maintaining the environmental, consumer, labor, and human-rights policies on which we all rely.
[. . .] A more transparent process with opportunities for meaningful engagement, accountability, and oversight by the public and Congress—rather than the current regime that privileges the commercial interests that have long captured these negotiations—is needed.
The AFL-CIO recently posted, 6 Ways We Could Improve NAFTA for Working People, which can be applied more generally to new trade negotiations, (click through for details),
1. Eliminate the private justice system for foreign investors.
2. Strengthen the labor and environment obligations (the North American Agreement on Labor Cooperation and the North American Agreement on Environmental Cooperation), include them in the agreement, and ensure they are enforced.
3. Address currency manipulation by creating binding rules subject to enforcement and possible sanctions.
4. Upgrade NAFTA’s rules of origin, particularly on autos and auto parts, to reinforce auto sector jobs in North America.
5. Delete the procurement chapter that undermines “Buy American” laws (Chapter 10).
6. Upgrade the trade enforcement chapter (Chapter 19).
The Sierra Club has issued a discussion paper, A New Climate-Friendly Approach To Trade, with ideas that
“start from a simple premise that marks a fundamental departure from the status quo: Trade and investment should be treated as tools for advancing public interest objectives—not ends in and of themselves.1 Agreements between countries should encourage trade and investment that support a more stable climate, healthy communities, and good jobs, while discouraging trade and investment that undermine these goals. This means, for example, incentivizing investments in renewable energy but not in fossil fuels,2 lowering barriers to the spread of green technology, and using taxes on highemissions trade to support increased climate protection and climate-friendly job growth.”
The Coalition for a Prosperous America offers 13 21st Century Trade Agreement Principles. Among these: Balanced Trade, reciprocity, stop currency manipulation, allow “Buy America” procurement, enforceable provisions, and more.
Many ideas being discussed seem to involve a “small-ball” approach, reacting to the existing trade regime instead of reimagining the possibilities. Current discussions revolve around things like getting rid of rules favoring investors over governments, or including enforceable labor and environmental standards. And, of course that is all needed. But so is a reimagining.
Obviously the first goal of a new trade policy should be to lift prosperity and improve people’s lives on all sides of trade borders — not just for a few at the expense of the many, but generally. This means the interest of all economic and trade “stakeholders” — labor, consumers, human rights, LGBTQ+, environmental, health, etc. and their governments, along with investors and businesses — need to be involved in the process.
It can be done. For example, imagine a “trade deal” that prohibits companies from threatening workers with having their jobs moved to another country. Hmm… By imagining the unimaginable all kinds of new possibilities begin to open up.
The business-oriented media are loudly proclaiming that president-“elect” Donald Trump’s proposed tax cuts for the rich and corporations will “boost” the economy.
● Fox Business Video: Why Trump’s tax cuts will boost the world economy
● Investors Business Daily: Here’s How Much Trump Tax Cuts Could Boost The Stock Market
The word filters down to the local media: (The exact word: “boost”…)
● Indianapolis Business Journal: Trump’s tax-cutting plan will boost economy
Really? Is THAT what happens when taxes are cut for the wealthy and their corporations?
Presidents Reagan and both Bushes cut taxes for the rich and their corporations, promising that the “benefits” would “trickle down’ to the rest of us. Kansas gave huge tax cuts to corporations and the wealthy to “boost” investment and jobs. For decades Puerto Rico offered tax breaks “attract businesses.” How’d that work out for them — and us?
Sam Brownback took office as Governor of Kansas in 2011. With a Republican legislature Kansas conducted a “real live experiment” and dramatically cut tax rates on the wealthy and corporations. They said it would boost investment and create jobs. They said the “boost” in the economy would actually increase tax revenues.
How did that work out? Not so great. The LA Times reports, Hard times for Kansas and its schools as economic ‘experiment’ creates gaping budget hole,
In February 2015, three years into the supply-side economics experiment that would upend a once steady Midwestern economy, a hole appeared in Kansas’ finances.
To fill it, Gov. Sam Brownback took $45 million in public education funding. By April of this year, with the hole at $290 million, Brownback took highway money to plug it. A month later, state money for Medicaid coverage went into the hole, but the gap continued to grow.
Today, the state’s budget hole is $345 million and threatens the foundation of this state, which was supposed to be the setting for a grand economic expansion but now more closely resembles a battleground, with accusations and lawsuits flying over how to get the state’s finances in order.
The Center for Budget and Policy Priorities (CBPP) took a long look at the Kansas experiment and what happened, and reported in Kansas’ Tax Cut Experience Refutes Economic Growth Predictions of Trump Tax Advisors,
In fact, the tax cut failed to boost the Kansas economy:
● Since it took effect in January 2013, total employment in Kansas has risen only 2.6 percent, compared to 6.5 percent nationally. Private sector employment in Kansas has risen 3.5 percent, compared to 7.6 percent nationally.
● The state’s economy has grown less than half as fast as the national economy; Kansas’ gross domestic product (GDP) grew 4.8 percent from the end of 2012 through the first quarter of 2016, while national GDP rose 11.9 percent.
● Kansas’ share of newly opened business establishments in the United States has actually declined slightly rather than increased.
But wait, there’s more. According to CBPP, “Moreover, the Kansas tax cut package has had a deleterious impact on the state’s financial stability and the provision of critical services.” Tax revenues did not grow as promised, they continue to decline as the state’s economy collapses. The resulting reduction in infrastructure funding is hitting roads, etc., The state’s bond rating has been downgraded — twice — so the state has to pay higher interest rates. Economic growth and job growth is slower than much of the rest of the country.
More bluntly, Mother Jones, Trickle-Down Economics Has Ruined the Kansas Economy.
Puerto Rico, Oops
Puerto Rico offered “competitive tax rates” to corporations, in an effort to boost their economy. How did that turn out?
A Reuters Special Report from December, How dependence on tax breaks corroded Puerto Rico’s economy,
In trying to be attractive to U.S. firms, Puerto Rico instead
The industrialization push, dubbed Operation Bootstrap, rested on the premise that manufacturers lured by tax breaks would spur the development of a local economy because they would need local suppliers. The federal government supported the effort, viewing Puerto Rico as a vital capitalist outpost in the Caribbean.became indentured to them, pledging tax breaks and cheap labor for ultimately transient economic benefits.
… It turned out that the manufacturers were generally locked into global supply chains, and so they had limited impact on local business creation.
… Today, the U.S. territory has nearly $70 billion in debt, an unemployment rate 2.5 times the U.S. average, a 45 percent poverty rate, nearly insolvent pension systems and a chronically underfunded Medicaid insurance program for the poor.
The economic nosedive started in 2006, at the end of a 10-year phase-out by U.S. congress of tax breaks that had brought manufacturers to the island. Plant closures and job losses followed. Puerto Rico’s commonwealth government made things worse by taking on years of debt to replace the lost revenue.
Tax cuts didn’t work out so well for Puerto Rico, either.
Studies: Tax Cuts Do Not “Boost” The Economy
Republicans always argue that tax cuts for the rich and their corporations will “boost” the economy because “taxes take money out of the economy” and the promise that by cutting taxes at the top the “job creators” have more of an “incentive” to work “harder.” They even argue that cutting taxes actually increases tax revenue as a result of that “boost” in the economy.
So what’s the record?
In September 2012 the Congressional Research Service published a report that looked at 65 years of tax cuts and the economy, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945. From that report,
Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.
What all those words say is as tax cuts took effect the economy slowed and longer term it slowed more. They didn’t conclude this was causal, but clearly tax cuts didn’t “boost” growth. The kicker: tax cuts were associated with wealth concentrating at the top.
So no, tax cuts didn’t “boost” growth at all and possibly cut growth while making income inequality worse.
David Leonhardt in the New York Times, also September 2012, Do Tax Cuts Lead to Economic Growth?
The defining economic policy of the last decade, of course, was the Bush tax cuts. President George W. Bush and Congress, including Mr. Ryan, passed a large tax cut in 2001, sped up its implementation in 2003 and predicted that prosperity would follow.
The economic growth that actually followed — indeed, the whole history of the last 20 years — offers one of the most serious challenges to modern conservatism. Bill Clinton and the elder George Bush both raised taxes in the early 1990s, and conservatives predicted disaster. Instead, the economy boomed, and incomes grew at their fastest pace since the 1960s. Then came the younger Mr. Bush, the tax cuts, the disappointing expansion and the worst downturn since the Depression.
From my December 2010 post, Do Tax Cuts Help The Economy,
It is obvious that the Reagan and Bush tax cuts for the wealthy have hurt us in many ways.
- They hurt the economy. (See charts above) (also, just look around you.)
- They caused massive debt.
- They hurt government’s ability to do its job.
- They caused extreme concentration of wealth.
- They changed us from a democracy to a plutocracy: government of, by and for the wealthy.
- They kept us from maintaining and modernizing our infrastructure.
But this was the plan all along, wasn’t it?
The April, 2011 post, Conservative Tax Tricks – Did Tax Cuts Grow The Economy? is full of charts and figures, including this:
From my post Tax Cuts Are Theft,
A beneficial cycle: We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper. We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.
Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations our democracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasingly concentrating at the very top, our country is declining.
Tax Cuts Hurt We the People
The record proves that tax cuts don’t “boost” the economy, they just make the rich even richer. So why do we keep getting told they will?
Tax cuts make the rich richer and hurt the rest of us because they force budget cuts in things that make our lives better and actually do grow the economy, like infrastructure and education. A prosperous economy with good businesses and good jobs and good wages result from good education and the business conditions created by good infrastructure, research, etc. These things take investment and regulation and those are the result of taxes and strong government.
If you cut taxes and wages to offer a “competitive environment” what happens is companies move from somewhere else, government there collects less in taxes, government in the new location collects less in taxes, the workers there get laid off and the new workers are always paid less — sometimes much less. If you do the math, you see that in the larger picture of an economy — one that includes the places the companies moved from and moved to — overall wages drop so the public in general is poorer, government is weakened so it can’t help and invest. In the end, the owners of the companies have a larger share of the pie.
Tax cuts are a scam to weaken democracy and our government’s ability to fight corporate power and concentrated wealth.