Political Parties, a Trump Success, and the 2017 Tax Cut

 

 

HOW REPUBLICANS AND DEMOCRATS CAMPAIGN 

 

Having voted for presidents for 50 years, I find their platforms are usually limited to about five issues. Pretty simple concepts. National as well as state politicians routinely do as follows.

 

Salesmen are professionals—they know how to make a sale. Politicians are professionals—they know how to get elected. Politicians are good salesmen who know lots and lots about governing citizens. The average citizen knows very little about political realities. Politicians sell ideas how they can make government work for what we citizens want. They want us to buy into their plan and give them our vote. Politicians always, with some exotic exceptions, try to look honorable, kind, wholesome, and family oriented.

 

They sell their party (Republican or Democratic) as the best choice for Americans, also adding that the country is at a critical time in history. Very ,very rarely in election campaigns do politicians have enough air time to explain to citizens how they will accomplish what they are promising—legislation is far too complex.

 

They ask for our contributions and votes. They want us to feel a part of their campaign. But they avoid revealing how much money they have received from special interest groups. Appearances are everything; they don’t want it took look like they were bought out by powerful interest groups. Examples of important interest groups are: labor versus business, old versus young, taxation, the “haves” versus the “have-nots.”

 

Nowadays, by far the biggest campaign contributions are from the very rich and very powerful who give substantial sums to both candidates-- so whoever wins will be indebted to them.

Trump, throughout the primaries leading up to his 2016 election win, revealed himself to be unusual in disturbing ways that were obvious to almost everyone. He doesn’t apologize for anything but just persists in trying to get his way. Many persons who loyally served him have also written about his problems—most recently his attorney general Bill Barr in the new book, One Damn Thing After Another: Memoirs of An Attorney General.

 

Ezra Klein in his book Why We’re Polarized tells us that the 2016 voters “treated Trump as if he were just another Republican” and, further, that voters were so “locked into political identities” that nothing could change their minds. Klein believes that American politics has become a “toxic system.” Part of Trump’s uniqueness is how much loyalty he generates despite his unsuitability as a candidate. (2020, page xiv). 

 

As he campaigned for president, Trump made unrealistic and grandiose statements about what he would accomplish for the American people. He wanted a tax cut and in his publicity proclaimed his tax cut would pay for itself by stimulating the economy (economists thought this outcome unrealistic). The Trump tax cut would subsequently be known as the Tax Cut and Jobs Act (TCJA).

THEN COMES ELECTION NIGHT 

 

Elections decide winners and losers. Elections are about the wants and unmet needs of citizens. Elections are very much about loving or hating candidates. For all these reasons and more, election night is high drama. We are compelled to care, and therefore, we are nervously concerned about who wins. 

 

Donald Trump’s win in 2016 made many people shake their heads in disbelief. Even many political commentators thought the election itself was unusual, abnormal; and they began analyzing the causes. 

 

Remarkably, as detailed in Klein’s book, Why We’re Polarized, the statistical patterns of 2016 voting “mostly looked like 2012 and 2008, and 2004.” It is worth adding here that Hilary Clinton won the popular vote but Trump won the election by the electoral college vote and therefore the presidency; this procedure is correct.

The election was not unusual but the candidate was. (Klein, 2020).

 

AFTER THE ELECTION TRUMP AND CONGRESS WORKED TO PASS THE TCJA 

 

Fortunately, to insure adequate and useful legislation, the political process in the U.S. Congress has numerous checks and balances.

• Both parties keep a wary eye on each other and protest strongly when any part of the legislation might be bad for their constituency (the loyal voters who voted them into office). 
   
• The American Civil Liberties Union (ACLU) was well prepared to sue the Trump administration for anything violating civil rights. (Cose, 2020)
   
• Political commentators, including many economists, analyzed in depth the Trump Administration proposals and made public their analyses of the good or faulty parts of TCJA. Before, during, and after passage of TCJA, dynamic models were run to predict the effects of the proposed law. 
   

The models predicted that the TCJA would not pay for itself but would increase the deficit by one or two trillion dollars. And the models predicted which income levels would get more or less tax benefit. The economists with their models made fairly accurate predictions of what results the TCJA would produce for the various income groups and the amount added to the federal deficit.

 

 

THE ACTUAL RESULTS OF THE TCJA ACCORDING TO HARD DATA 

 

The Tax Cut and Jobs Act ((TCJA) passed into law in 2017 at a time when the Republicans were the majority party. 

 

I attempted to figure out whether Trump’s TCJA was successful or not. I looked at news reports from Bloomberg Tax and Accounting, Brookings Policy, the New York Times, and a few other sites. I definitely had to look at many sources in order to have confidence in my assessment.

Here are my takeaways:

• The Trump treasury secretary Mnuchin was asserting that the tax cuts would stimulate the economy such that the tax cut would pay for itself. Economists didn’t think this was at all likely and Mnuchin’s claim was widely disputed. 
   
• The Congressional Budget Office (CBO) found that the law paid for only about a fifth of itself. And, the law added a trillion dollars to the national debt. I have not heard that the CBO is biased and presume, therefore it's findings are credible.
   
• Some experts figured that an average American family would have about $750 more to spend per year due to the tax cuts. But the top 20% of earners got much larger tax savings! It reduced taxes for upper classes more than for the lower. 
   
• Businesses benefited the most from the tax cuts. This result is, of course, a very typical Republican goal. 
   
• There is plenty of hard data, and the data has led to a clear consensus that most citizens really did get something of a tax cut. However, citizens in the lower fifth of the income groups did not see much in tax savings (of course, a percentage tax cut on a lower wage leads to a smaller dollar savings).

A remarkable fact about the TCJA, is that the tax cuts for citizens expire in 2025. But the tax cuts for business don’t expire! Hmm... Turns out the layers and layers of congressional laws have sections which place undesirable restrictions on future laws; for Congress to pass TCJA they had to reduce the cost of TCJA by having the citizen tax cuts expire within a prescribed time frame. Economist Paul Krugman makes reading about these convoluted politico-economic issues quite entertaining! I highly recommend reading "The Ultimate Zombie" in his book, Arguing With Zombies. (Krugman, 2020)

Only in this week have a learned much about the TCJA. I’m quite pleased to find it has benefited not just businesses, but also the middle class. I also learned that the tax laws were simplified. That’s certainly a benefit to all. 

 

And I’m pleased for Trump and his supporters that one of his platform planks is something of a success—although an expensive one. 

 

I plan to do more study on the interaction of economics, government, and politics. The world’s economists seem to agree with each other better than the politicians about the workings of economics. On one best-of lists, the most highly rated political economics writer-commentator is the Nobel Prize winner, Paul Krugman. I’ve been reading his book Arguing With Zombies(2020 copyright). Very readable, lively, and without statistics. The book contains 15 short articles just on the TCJA. He said the TCJA is very complex and he explains some of its convoluted aspects. 

 

Enjoyable and enlightening reading!

 

 

 

        WORKS CITED

 

        For references, see the relevant page on the powertomyvotes.com website.

 

 

        - END -  

Income Inequality In America

 

How does it happen that the rich are getting richer and the poor are getting poorer?

 

Part One: What Is the Problem of Income Inequality

The professor and economist Dr. Robert Reich wrote the 2020 book, The System: Who Rigged It, How We Fix It. It’s a very readable 206 pages. There is no calculus. Ninth grade math knowledge of percent is all the math you need. In this book Reich reveals and explains income inequality in a professional, kind manner. I don’t think he is politically polarized. He illustrates his points with interesting economic-related facts from American history. He reveals how corporate greed supported by politicians has interfered with the financial survival of eighty to ninety percent of American families. 

 

According to Robert Reich, Americans live in a rigged economic system where the rich are getting richer and the poor are getting poor. Here are specific figures from Reich’s book:

• Between 1980 and 2019, the share of the nation’s total household income going to the richest 1 percent more than doubled, while the earnings of the bottom 90 percent barely rose (figures were adjusted for inflation). Most of us are in that bottom 90%!
   
• Chief Executive Officer's (CEOs) pay increased 940 percent, (yes, that’s 940%) but the typical worker’s pay increased 12 percent. "In the 1960s, the typical CEO of a large American company earned about twenty times as much as the typical worker; by 2019, the CEO earned three hundred times as much.” (Reich, 2020)

Let’s get more information from another credible source, the well respected and often quoted Pew Research Center. One year ago they said, “Economic inequality, whether measured through the gaps in income or wealth between richer and poorer households, continues to widen.” (Note: “wealth” means the value of assets such as savings accounts and how much money you could get from selling your home.) Their data comes from the U.S. Census Bureau and the Organization for Economic Cooperation and Development.

 

Data published by Pew Research shows income inequality is rising in America. In each decade the numbers show the ratio of income at the 90th percentile to the income at the 10th percentile (90/10 ratio).

• 1980 - 9.1
• 1990 - 10.1
• 2000- 10.6
• 2010 - 11.7
• 2018 - 12.6

More data from Pew Research shows that there is more income inequality in America than in the G7 countries listed below. G7 countries all have well developed economies.

• U.S. - Most income inequality
• UK
• Italy
• Japan
• Canada
• Germany
• France - Least income inequality

I don’t doubt Robert Reich and the Pew Research Center’s statistical data and conclusions. Here are two bottom lines and most important takeaways.

• Except for those at the upper 20% income level, everyone else’s income has been stagnant for many years. 
   
• Eighty percent of US citizens since the 2007 Great Recession forward to 2016, have not recovered their lost wealth.

Although America has dozens of significant problems worthy of focus, income inequality gives pain to the large majority of citizens; therefore, the pain should strongly motivate us to become more engaged politically, voting on issues, and voting for particular politicians rather than political parties.

Part Two: Where to Focus and How to Approach Getting Solutions to Income Inequality 

 

On the one hand, the stark reality of America’s income inequality is not hard to grasp. This is because being richer or poorer is a simple concept to grasp. It can be displayed in numbers graphs. This is what researchers label “objective data.“ It’s difficult to honestly argue against objective facts from well- established research groups. 

 

But on the other hand, income inequality has many causes arising from many places in government and society. This leaves much room for argument, blaming, and bitter political disagreements. Proving those major causes sufficiently for legislative purposes will face many difficulties. The many special interest groups will push back and attack one another. In today’s political world, conspiracy theories will be added to bias and prejudice to impede progress by creating confusion.  

 

 

 

REDUCING CANCER FROM SMOKING TELL US HOW TO PROVE POLITICAL CURES

 

To prepare us for the difficult task of understanding the causes of and remedies for income inequality, let’s learn from the success story of reducing lung cancer from smoking. Though the problems are different, the processes toward solutions are similar: Success comes from significant changes in the intensity of research. Changes in state and federal laws will be necessary. Citizens must become more determined to use their voting power to elect politicians who will put citizens first instead of CEOs. Governmental stalemate won’t be tolerated. A lot of consistent effort everywhere must be applied over a long time. 

 

Smoking causing lung cancer, is a simple concept which was difficult to prove. Our example comes from the book, The Lady Tasting Tea: How Statistics Revolutionized Science in the Twentieth Century. The author, David Salsburg, had a long career as Senior Research Fellow at Pfizer, the pharmaceutical company. He is an expert with deep knowledge of math and statistics used for preventing disease.

In the late 1950’s cigarette companies were vigorously denying the validity of smoking as a cause of cancer. And there were some statisticians who pointed out limitations in the statistical methods. Salsburg explains that the cancer studies were retrospective studies, meaning that they looked from the onset of lung cancer backwards in time to measure years of smoking by the persons in the research study. The correlation coefficient statistic used in the research showed a connection between smoking and cancer; but correlation suggests causation but cannot prove it. 

 

Between 1952 and 1959 there were 5 – 10 more retrospective studies. Mr. Cornfield and five prominent cancer specialists laid out their results which showed a much greater percentage of cancer among smokers than among the comparison group of nonsmokers. The evidence in total showed, that “smoking is a causative factor in the rapidly increasing incidence of epidermoid carcinoma of the lung.” Salsburg shows how the scientists overcame the problems proving causes and concludes with, “Although each study is flawed, the evidence keeps mounting, as one study after another reinforces these same conclusions.” (Salsburg, 2001)

For a while, The Tobacco Institute continued to run full page ads in popular magazines questioning the smoking-cancer relationship. But in reputable scientific magazines no articles questioning the smoking-cancer relationship appeared after 1960.

Was the incidence of death from lung cancer due to smoking reduced? Yes!

 

From 1991 to 2003 in the U.S. there was a 40% reduction in overall cancer death rate. At a minimum, 146,000 lung cancer deaths were prevented. (Peto R, Darby S, Deo H.et al Smoking, smoking cessation and lung cancer in the UK since 1950: combination of national statistics with two case‐control studies. BMJ 2000321323–329.)

 

What actually caused the success? Research has shown that the most potent demand-reducing influences on tobacco use have been interventions that impact virtually all smokers repeatedly, such as higher taxes on tobacco products, comprehensive advertising bans, graphic pack warnings, mass media campaigns, and smoke-free policies. (Cummings KM. Programs and policies to discourage the use of tobacco products. Oncogene. 2002 Oct 21;21(48):7349-64. doi: 10.1038/sj.onc.1205810. PMID: 12379878.)

 

In Robert Reich’s book of 206 pages, The System, every page is filled with substantial information. He has written a gripping story of how rich and powerful persons (whom he calls oligarchs) cleverly influence individual politicians so they, the oligarchs can further increase their wealth and power. This process also helps the politicians get reelected and maintain their power and influence. The cozy big business and politician relationships have been an enduring and much debated problem for at least 150 years!

• In the past, laws have been passed to insure the government serves the people and that the people have a stronger voice than the railroads (in 1800s), or banks, or Wall Street, or big business. And the oligarchs have pushed back and caused new laws to weaken or leave loopholes in the previous (reform) laws. 
   
• Government passes laws telling how corporations how to treat their employees, as well as what is legal or illegal. Important laws are often very complicated, have exceptions, and loopholes. Of course, some exceptions are reasonable. But politicians insert some exceptions and loopholes as part of how politicians bargain with one another and major influencers to get the law passed. Many citizens suspect they’re being betrayed by their government but the vast majority of citizens know so little inside information they couldn’t put into words a meaningful complaint.

Within any government, even in well-established democracies, there are tempting ways to “game the system,” to unethically exploit it, or systematically corrupt it.

Keep in mind, now, the exemplary successes in the prevention and treatment of the complex disease of cancer. Everybody got involved to make things better. Government, science and citizens cooperated in the success.

 

In contrast, however, since 1980 the Republican and Democratic parties have failed to discover, implement and maintain a program to first halt and then reduce the gross amount of income inequality. 

 

The goal cannot be equality of income. The appropriate goal is a reduction in the grossness of America's current level of inequality.

        WORKS CITED

        For references, see the relevant page on the powertomyvotes.com website.

        - END -