After “Tax Reform” Time for “Welfare Reform”

By R.W.

Why do people who do not belong to the small wealthy elite, people who depend on Social Security or other supplements to their income, people who are dependent on government supported health care and people whose children are enrolled in public education vote for politicians who promise to blitz these very programs, why do they vote for a propagandized ideology and against their own interests.

This new tax bill sets the stage to further reshape American society by deepening inequality. While nearly 41 million Americans live below the poverty line, with nearly one in five children living in poverty, this legislature promises to stuff the coffers of corporations and the wealthiest Americans. Corporation profits are now peaking at near their highest levels in history. The richest 1 percent of Americans receive 20 percent of overall national income, double the level in 1980 and the highest level in nearly a century. Income for the top 1 percent has risen more than four times faster than for the middle-class, nearly tripling since 1980.

Now, this bill promises to accelerate that process, adding to the already established desperate inequality behind the practice of global tax dodging by corporations and the wealthy where nearly 10 percent of the world’s wealth is held offshore by a few individuals.

The beaming, exited, laughing faces of the leaders of the Republican Party and their acolytes on the front pages of news sources over the last few days tell us that something momentous, something long longed-for by them  has at last happened. They are laughing at you and me (unless you are one of the mega-rich), they are laughing in triumph, not yet saying “gotcha, gotcha, you fools” but reveling at having passed another threshold, another giant step in the right wing revolution that is sweeping the country, another gift for themselves, the wealthy and their enablers.

It is Christmas time, after all.

It took nine months for Trump and the Republicans to arrive at the very brink of passing this new tax bill, a possible first significant legislative achievement of Trump’s failed till now presidency, a massive giveaway to themselves. They call this a tax cut for America’s middle class, while it so clearly cuts taxes just for themselves,  and eliminates services for the poor and dispossessed with cuts in Medicaid,  Medicare, Social Security, public education and anti-hunger programs. The proposed exclusion of the Affordable Care Act’s individual mandate will result in an additional 13 million uninsured people and a 10 percent increase in premiums.

Graduate and PhD students who receive free tuition and stipend in exchange for teaching or conducting research would have these waivers translated as taxable income, making their indebtedness to the feds too large to allow them to continue their studies. This is on top of a general college affordability and student debt crisis. A year at a public university typically costs more than $20,000, a formidable challenge for families when median household income is $59,000.

Total student loan debt has now topped $1.3 trillion. More than two-thirds of college graduates have no choice but to borrow to go to school, and their average debt upon graduation is about $35,000, triple the level of two decades ago. The legislation will raise taxes for over 100,000 graduate students, end the tax break for student loans and make employer-provided tuition assistance taxable. If the plan is to promote the stupefaction of America, this should prove to be a giant step.

While the new tax deal was being ironed out, the Senate majority leader, Mitch McConnell promised that no middle-class American would see a tax increase. Now he has issued an “oops, did I really say that?” type of statement, saying: “I must have misspoken.” The Republicans still claim that  a big corporate tax cut would benefit everybody, because businesses would then invest more money in the economy, increasing wages and employment for all of us. But since it is so visible that in the last half century taxes paid by the wealthy  have fallen dramatically and income for the top earners has  boomed equally dramatically, there has been none of the much promised “trickle down”, no real gains for the rest of the population.

While many conservatives have long argued for cutting and changing social safety net programs, arguing that anti-poverty programs have failed, so what’s the point of continuing with them, but cutting programs for seniors ahead of the 2018 midterm elections is a little tricky since seniors do vote more than most other groups, and the “cutters” would pay a political price. At this moment in time one-third of American workers are not making any retirement savings, and increasing numbers of those about to retire do not have the money to do so.

So that’s a little gasp of breathing space for a soon to be targeted group, but others, the disenfranchised, the marginalized minorities, the huddled masses lingering on these shores that they have reached to escape tyranny and exploitation, have cause for alarm. The Republicans are faced with a formidable task of convincing them that this legislation will put more money in their wallets, and they have a job on their hands to be in time for the 2018 elections.

To make their case the GOP promises  years of wage and job growth once the bill becomes law, for people at all educational and economic levels. They describe the legislation as the spark of a “middle-class miracle” that voters will see soon in their paychecks. President Trump reaches well beyond the official GOP rhetoric and bizarrely portrays  the bill as one that will tax the very wealthy to help working-class Americans, and has predicted an economic boom that would lead quickly to employers raising wages.

“Middle-class families will not only see their tax bill go down, they will see their incomes go up by an average of around $4,000. That’s because we’re going to cut taxes on American businesses so they will compete for workers, they’ll raise salaries,” he explained.

There are indeed   some tax breaks for sections of the middle-class, but they come with time-limits, unlike the corporate tax breaks, which are permanent. So far independent analysts suggest that the Senate plan would offer a mixed bag for middle-income taxpayers. Some groups in every tax bracket would face a tax increase and that share would grow over time.

According to an analysis by the nonpartisan Tax Policy Center, by 2027 the top one-fifth of earners  would receive 90 percent of the tax bill’s benefits paid for by closing loopholes that benefit middle-class people. By that date all taxes on those earning less than $75,000 will increase. Congress’s own joint committee on taxation declared that the Senate plan wouldraise taxes most percentage-wise on the poorest households, specifically those making less than $30,000 a year.

Republican Senate leader Mitch McConnell appears not to be too concerned by the negative public reaction, so far. A poll conducted by FiveThirtyEight found that 46 percent of the public opposes the Tax Cuts and Jobs Act, compared to 32 percent who support it.

“We’ll see how unpopular it is when people start noticing they’re paying less in taxes, the economy’s growing, there are more jobs and opportunity,” he said. He gave no details of how this would take effect.   He made no comment on the abandonment of a pillar of Republican policy, the reduction of the U.S. national debt; the current proposals will raise it up to a humongous 2 trillion by some estimates.

This obviously cannot be allowed to remain. Sen. Marco Rubio (R-Fla.) made it clear what measures need to be taken. Seeing what the three largest social insurance programs are (Social Security, Medicare and Medicaid), he said: “You also have to bring spending under control. And not discretionary spending. That isn’t the driver of our debt. The driver of our debt is the structure of Social Security and Medicare for future beneficiaries.”

Millions of Americans, families with children, single parents and senior citizens face poverty. The tax bill and future developments along the lines of  “Welfare Reform” as proposed by Rubio, will make things desperate by triggering an automatic $25bn cut in Medicare next year – and probably more such cuts in subsequent years together with cuts in Social Security.

One Comment

  1. Call it by what it is: Death to all living on poverty level social security, medicare and medicaid recipients! And we are not able to vote them out of office. Foreign hackers are at work on that. All we can do is to keep our beloved Jemez safe and sound. We’re all in this together.

Leave a Reply

Your email address will not be published. Required fields are marked *