The manner and number of ways Americans are screwed by the rich, the corporatocracy, the Plutocracy, the Oligarchy are immense. But the most callous exploitation is imposing debt on us all which cripples us throughout our lifetime. The problem is that the theft is so ingenious that many times we don’t get it.
Robert Reich’s article explains the theft in a few short paragraphs.
Decades ago, wealthy Americans financed the federal government mainly by paying taxes. Their tax rate was far higher than what it is today.
Now, wealthy Americans finance the federal government mainly by lending it money, and collecting interest payments on those loans, profiting when the rest of us pay them back.
Follow the money: As the debt continues to grow, interest payments are becoming huge. Taxpayers could soon be paying more in interest on the federal debt than we spend on the military or on Medicaid.
Reich points out that most of the tax cuts that Republicans (and Democrats) have been providing to the rich are a form of theft. Why? I explain after his quote.
Now, keep following the money. One of the biggest reasons the federal debt has exploded is that tax cuts, starting with the Bush administration in 2001 and extending through Trump’s 2017 tax cut, have reduced government revenues by over $5 trillion.
The Trump-Republican tax cut will cause the debt to explode even further. Trump’s own Office of Management and Budget predicts an added $100 billion a year in deficits over the next decade, adding up to $1 trillion of additional debt.
Keep following the money: Most of the benefits from those tax cuts are going to the wealthy. 65 percent have gone to the richest fifth of Americans, 22 percent to the top 1 percent.
So you see the big switcheroo? The rich used to pay higher taxes to the government. Now, the government pays the rich interest on a swelling debt, caused largely by lower taxes on the rich. Which means a growing portion of everyone else’s taxes now paying the rich interest on those loans, instead of paying for government services everyone needs.
A few months ago I explained the many ways in which Donald Trump’s tax cut scam was screwing the poor and the middle-class in the article titled “How to explain to Right Wing family/friend Trump tax cut scam screwed them” that everyone should read.
- The wealthy brought back overseas profits at very reduced tax rates enacted in the Trump/GOP tax cut scam. This means less money for the treasury.
- Overseas profits were mostly invested in stock buybacks which increased the stock price and thus the wealth of the wealthy stockholder – potential wage hikes and investment in workers denied.
- Because the “income” is being realized as capital gains, the tax rate will be much lower than dividend income – less money for the treasury as the wealthy gets richer.
- The government must borrow money to fulfill its obligation. Who buys the bonds to loan the government money? You guessed it, the wealthy. And what does that mean? We transfer more of our income and wealth in the form of taxes to pay the interest on the money we borrow from them.
- The government cut programs like healthcare, food stamps, and the like to reduce the budget deficit caused by the tax cuts that go mostly to the wealthy. Any minor tax cut the middle-class and poor would have seen is more than gobbled up by the increase in healthcare premiums, increased fees to parks and more. And guess who profits from that? The wealthy shareholders of the same health insurance companies, hospitals, etc. that charges the public more than they charge the government.
- Economic growth that helps the poor and middle-class is stunted because, in Economic 101 parlance, the marginal propensity to consume by the wealthy is much less than that of the middle-class and poor. In other words, economic activity is determined by the number of times money turns over, the velocity of money.
It’s not just a big switcheroo, it is grand theft country’s money.