More greatness to come by @BloggersRUs

More greatness to come

by Tom Sullivan

Graphic: Vox.

Maybe we should go back and try government of, by, and for people again. Regular people. Not billionaires. Not artificial persons that, by human design, operate at the level of appetite and instinct. Just a suggestion.

Because — hang onto your wallets — the Republican tax "cut" passed the House and is headed for a vote in the Senate after Thanksgiving. If you are not uneasy, you should be. Whatever happens. Likely, the GOP tax plan is headed into territory Republicans plowed earlier in the year with their attempts to repeal the Affordable Care Act, a.k.a., Obamacare. That's both in terms of prospects for the tax bill's failure and because Republicans are trying for the nth time to repeal Obamacare.

By knocking out one of the legs of the three-legged stool that holds up the ACA, they hope to engineer its collapse. By eliminating the individual mandate that supports eliminating the pre-existing conditions disqualifier and holds down the cost of sliding-scale health care subsidies that make the insurance affordable (in theory), premiums will rise and millions will lose coverage.

A small price to pay, they believe, for lowering the corporate tax rate and delivering on tax cuts.

"The numbers are in and it’s clear: this tax bill helps the rich and hurts everybody else," Adam Davidson writes at The New Yorker. Run by the chairs of the House Ways and Means Committee and the Senate Finance Committee, the U.S. Congress Joint Committee on Taxation report on the bill's impacts paint it, says Davidson, "much like a teaser rate on a new credit card." There will be an immediate payoff for the middle class for the first few years, but those payoffs erode quickly for those below median income.

By 2021, those making between twenty thousand and thirty thousand dollars a year are paying considerably more in taxes, those between thirty thousand and two hundred thousand see their benefit shrinking, and those making more start to see their taxes falling. By 2027, every income level below seventy-five thousand dollars a year sees a tax increase, while everybody above that level sees a continued decrease, with the greatest cut in taxes accruing to those making more than a million dollars a year.

KIMBERLY CLAUSING: A lot of what's holding back investment right now has nothing to do with a scarcity of after-tax profits. In fact, if you look at multinational firms, most of them have record-high after-tax profits compared to earlier years or earlier decades. Instead, what seems to be holding back investment is lack of good investment opportunities.

So for instance, if the middle class is struggling, that gives you fewer items that you could sell to the middle class and then less incentive to invest in factories to make those items. So I think most companies are not so much wanting for funds but wanting for things to invest in.

CLAUSING: I think what's interesting here is that if you look at the people who are marketing this tax plan, they're often marketing it as if it will help workers through a sort of a trickle-down mechanism. But if you went straight to the workers instead and gave them benefits from the tax cut - whatever tax cut you're going to have - that's I think more likely to trickle up and help corporate America by giving the middle class more money to spend on goods and services and by making those investments worthy opportunities for firms.

Executives know there’s no mechanism in the G.O.P. tax plan to reward them for passing those savings along to their employees, who Paul Ryan has estimated would get an average $4,000 raise (over a decade) as a result of corporate largesse. The labor market has tightened considerably—the unemployment rate is at a 15-year low—and the stock market is starting to level off. The word on the street, though, isn’t that higher corporate profits will lead to higher wages; rather, it’s all about buybacks: Goldman says stock buybacks will hit $590 billion in 2018, while Merrill Lynch predicts half of all repatriated cash would go to buybacks or acquisitions. It’s a sugar high that might extend the market rally temporarily, but will deepen the rot in our economic cavity.