Wednesday, October 25, 2017

What Will Republicans Pay For Tax Reform?

This article provides a good answer to the price that Republicans will pay for tax reform.  There is no ceiling on the price they will pay.  They are willing to turn their party over to Trump/Bannon in order to pass a tax reform bill that is still undefined.  Cutting taxes for the rich is consistent with their ideology.  They also believe that they can continue to convince their base to exchange minor cuts, that some  of them will receive, for large cuts to the super rich.  They are also willing to reduce government tax revenue even if the loss of tax revenue produces large budget deficits.  They pretend to be the fiscally responsible party, but that only applies when Democrats are in office.  Deficits are fine when Republicans are in office.  Richard Nixon made that point many decades ago.  He said that "We are all Keynesian's now".  He understood that cutting taxes, and running budget deficits stimulated the economy just as Keynes had stated during the Great Depression.  He also knew that this was a good path to reelection.  Of course, that is why Republicans pretend to hate Keynesian economics when Democrats are in office.  They prefer to take away the Keynesian tool from Democrats even if it might reduce unemployment during a recession.

There is an even more important reason why Republicans want to pass a tax reform bill this year.  They need to show their base, and those that fund their campaigns, that they can get something done before the 2018 election.  This should be easy with control of the House and the Senate.  The only problem that they might have is with a small number of Republicans in Congress who actually believe in fiscal conservatism.  They can't afford to lose three votes in the Senate because of their slim majority.  They will not get any Democratic votes in the Senate for a tax bill that primarily benefits the super rich.  Democrats may be able to use the tax bill against Republicans in the 2018 election but that may not be easy.  Trump's base is almost totally concerned with social, cultural and religious issues. Moreover, the lies that Republicans use to defend their tax policies are not easy to overcome.  There are not many economically literate voters in any democracy, and Trump will criticize the media that provides an honest analysis of his tax bill as "fake news".  Unfortunately, this is the point at which we have arrived today in our nation.  There is no reason not to lie when the price of telling lies has fallen to an historically low level.

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