Many have been knocking the different evil tenets within the Republican tax cut scam to illustrate how bad the bill is for the American people. Most importantly one must show with Republican policy will hurt all working-class poor and middle-class American whether they are Republican or Democrats.
Until one presents the Republican tax cut scam not as a partisan bill but as an evil bill with consequences that will make life untenable, fighting it is a losing battle. Robert Reich did just that in his piece titled “The True Path to Prosperity” that is worth the read.
He first points out the misconception about Republicans being better for one’s prosperity.
It’s often thought that Democrats care about fairness and not economic growth, while Republicans care about growth even at the cost of some fairness. Rubbish. Growth and fairness aren’t opposites. In reality, Democrats are the party of economic growth and fairness. Republicans are the party of neither.
Reich then explains why the type of policies like the Affordable Care Act and others that enhance education is the way to build prosperity.
Consider the two biggest legislative initiatives over past decade – the Affordable Care Act, achieved without a single Republican vote, and the current Trump-Republican tax overhaul, speeding ahead without a single Democrat. The ACA extends coverage to 21 million mostly lower-income Americans, including millions of children. …
But the ACA isn’t just about fairness. Healthier Americans are also more productive workers. Children who receive health care are better learners. The Act thereby fuels economic growth and widens prosperity.
He gives the factual and historical rationale for trickle-down economics failure under both Bush and Reagan. In fact, profits and cash on hand are at all time highs for corporations, and the spoils are not going to those who made the gains but to the shareholders and corporate executives.
Every major study (including Congress’s own Congressional Budget Office and Joint Committee on Taxation) finds that its benefits would go mainly to big corporations and the wealthy. Share prices may rise for a time. They’re already at record highs in anticipation of the tax cut. But higher share prices don’t trickle down, either. The richest 1 percent owns almost 38 percent of the stock market. Eighty percent of Americans together own just 8 percent of all shares of stock. This won’t fuel growth. Corporations expand and invest only when customers are eager to buy what they produce. And most of these customers are middle-income and below, who spend just about all they earn. The rich spend only a small fraction. …
After the Bush tax cuts of 2001 and 2003, economic growth stalled and then dissolved in recession. After the 2004 corporate tax holiday for bringing foreign profits home, corporations didn’t invest or expand. The Reagan tax cut of 1981 didn’t cause wages to rise; they flattened.
And he shows historically that policies that direct more money and services to the poor and middle-class is the way to juice an economy.
What’s the real formula for growth? Better access to education, healthcare, and transportation, all of which make workers more productive. These more productive workers command higher wages. With higher wages, they purchase more goods and services. These purchases motivate companies to expand and invest, and create more and better jobs.
American experienced this virtuous cycle for thirty years after World War II. We invested unprecedented sums in education, healthcare, and infrastructure. We financed these investments through higher taxes on the rich and on big corporations. The economy boomed and wages shot upward. The wages of the bottom fifth rose even faster than the wages of the top fifth. This unleashed consumer spending, which generated more growth.
The Clinton administration tried this formula on a much smaller scale in the 1990s, raising taxes on the top and investing in education and infrastructure. The economy boomed, 23 million new jobs were created, and for the first time since the late 1970s the typical American’s wage rose.
It is essential that Americans understand we tried both types of policies in the last several decades. The only one that has worked successfully is ensuring that the poor and middle-class is “protected” against the defect in capitalism that inherently extracts wealth from the masses to for the enrichment of the few. The government, we the people, imposing taxes and redistributing that money to infrastructure, education, and health is the only solution to mitigate the failures of capitalism. Understanding this concept is not rocket science. It is economic history and math.
Also published on Medium.