Who Pays the Bills?

 

Who pays the Bills?       Gerry OShea

 Conservatives love to preach about their core commitment to limiting the power of big government, their worst bugbear. So, it is not surprising that America’s spending on social benefits, as a share of GDP, is a great deal stingier than other Western countries. We trade higher take-home salaries for less generous safety nets.

  This distaste for an intrusive central authority is not confined to spokespeople for the Right - it is shared throughout the population. However, teasing out the implications of this hatred of government interventions reveals major differences between the two main political parties in America.

For those on the political right, this commitment is formulated around the need for fiscal discipline, and they lambast the rulers in Washington for disregarding this principle. They argue at every turn for a balanced budget or for policies that at least move in that direction.

  People are urged to consider the negative consequences of a society living beyond its means. They express shock at the billions of dollars accruing to the country’s debt which is passed on to future generations – a transgression clearly lacking any sense of principle outside of a major crisis. Passing bills accrued in one generation to people yet unborn is rightly compared to the behavior of a drunken sailor.

What about the option of raising taxes to pay the country’s bills and end the embarrassment of the richest country in the world living off a limitless credit card?

 This option is ruled out by conservatives on ideological grounds. Republicans recall President G.W. Bush’s promise of  “read my lips, no new taxes” when he ran successfully for the presidency in 1988. He ended up negotiating some minor tax increases with Democrats and lost his re-election bid to Bill Clinton in 1992 with the street wisdom ascribing this defeat to his breach of promise on taxes.

Every subsequent Republican presidential candidate has guaranteed that they will never increase the taxation burden on any citizen – rich or poor. In fact, they have been in the forefront demanding minimal tax rates, famously dubbing their opponents “the tax and spend Democrats.”

President Trump and his Secretary of the Treasury, Steve Mnuchin, promised that they would revitalize the economy with a giveaway budget marked by record reductions in the total tax collected by the Treasury. About 15% of the generous Trump giveaway budget went to low and moderate wage earners with the bulk of the billions handsomely benefiting the rich and even more the super-rich.

Mnuchin promised that these big bonuses for millionaires would trickle down creating new jobs and quickly lead to government surpluses that would more than compensate for the largesse that ended up in the bank accounts of the people at the top.

 This Trickle Down Theory is central to conservative financial thinking and has its advocates across the spectrum of right-wing ideologues. In their spurious rationalization, the best way to help the struggling middle class and the poor is to promote policies that make the rich even richer. Balderdash talk that seems to pass for rational debate.

How did this work out for Trump and Mnuchin? The same as it worked out for every Republican president going back to – and including - President Reagan. The national debt exploded - under Trump, adding a massive eight trillion to the total deficit.

 New taxes have no place in any Republican budget, irrespective of who they choose as leader. Any proposal for more money, except for the Defense Department, is immediately rejected.  Cutting social security payments is also ruled out because doing so would estrange seniors who vote disproportionately for Republicans, so they dare not alienate that constituency.

Democrats also generally agree with annual increases for the Pentagon and they wouldn’t contemplate any reductions in social security checks for retirees leaving the two parties agreeing on two major budgetary items.

Who pays taxes and how much they pay reveals a wide divide between Republicans and Democrats. The most recent proposal by Speaker Michael Johnson exemplifies the opposing positions on this central issue. Republicans want to cut the funding in the Biden budget which increases the number of IRS agents who would chase down the flagrant tax cheats among the affluent.

A study published a few years ago showed that if the top 1% just paid the taxes they owe, the exchequer would benefit by over $175 billion every year, which would just about lift everyone above the official poverty line. To balance the budget Johnson wants to reduce the allocation for the IRS by over fourteen billion dollars. It has since been pointed out that, ironically, if the Republicans got their way, the reduction in the number of agents would end up significantly increasing the deficit.

Surely, reducing - or dare we say - ending child poverty should be an agreed goal of both parties! The fact that one child in five in the United States lives below the poverty line cries out for immediate remediation. Republicans don’t think so. Every year as night follows day, they propose cuts in food stamps and Medicaid and every policy designed to give a break to the families at the bottom.

This is doubly shocking because many of the main voices in that party openly declare their allegiance to Christianity. When Michael Johnson, the recently elected House Speaker, was asked about his policies he pointed to the Bible as his source on all legislative matters. How can he with a straight face consistently veto policies that reduce poverty while claiming allegiance to the man who preached the Sermon on the Mount?

The federal minimum wage rests at $7.25 an hour for years. How is it possible for anybody to live a decent life on such a subsistent paycheck?

In President Eisenhower’s time seventy years ago top company executives earned about thirty times the wages of the “ordinary” worker while his counterpart today is awarded a multiple of over 300 times the salary of the shop floor employee.

And there is no record of company executives scrounging to pay their bills in America in the 1950’s!

Gerry OShea blogs at wemustbetalking.com