There We Go Again

The GOP brand dodged a bullet with the AHCA. Can yet another lesson be applied to Tax Reform?

For the GOP faithful, it was yet another chapter in a sad story. The DBO (Dead Before Arrival) American Health Care Act once again confirmed to the American public that if there is one major consistency in Republican policy over the last four decades, it’s transferring money from the middle class to the very wealthy. Despite the false promises from Trump of Nottingham, our party is playing the role of Robin Hood-in-reverse, taking from the poor to give to the rich, while undermining a working class of not-so-merry men.

Indeed, since the Reagan tax cuts for the 1% began in 1981, income levels for the wealthier individuals have soared, while income levels for the middle class have stayed relatively flat. To far too many Americans, this translates into something I believe should scare anyone who claims to have traditional conservative values: that the GOP doesn’t care about working people sliding from middle class to working poor. And sadly, despite its spectacular failure to even emerge from the House, the ACHA offered up more proof of an ugly narrative that has Republicans championing the exponential growth of income inequality.

Could the story be true? Is this what the GOP is about? Let’s consider this most recent installment – the footprint of the AHCA. While many opponents pointed to the bill’s draconian cuts, such as eliminating maternity leave and emergency room care and that an estimated 14 million Americans, especially the poor and elderly, would lose their current insurance, Team Trump/Ryan nevertheless persisted. Just on its surface, this hastily written bill (and the GOP only had seven years to work on it) proved an old political axiom – if someone is trying to rush a bill through, they don’t want you to know what’s in it and why they’re doing it.

The not-so-hidden motive behind the ACHA was to take $900 billion dollars out of Medicaid and transfer it into tax benefits for the uber-wealthy. Despite the fact that more than 60% of all Republicans don’t support higher income tax cuts, why does the party so stubbornly hold on to this doctrine? Because that’s what the establishment money interests that fund the party demand. The establishment donor class consists of the wealthiest people and corporations – and they don’t just give politicians money as a pat on the back. Despite all the lip service paid to the shrinking middle class, the GOP’s real problem is the base hates the establishment and the establishment doesn’t care about the base.

I’m a small business owner who is sick and tired of hearing that tax cuts for the highest earners will stimulate the “job creators.” The notion that I’m going to hire more people because my tax rate is 30 or 35% rather than 39.6% is absurd. Demand is what drives any small business owner to hire, which is fueled by spending, not tax rates.

I’m also a pragmatist and when we have massive income inequality, we’re never going to get the type of economic boom that happened in the 90’s when Clinton raised taxes (yes, even more of a boom than when Reagan cut taxes). The reality is that the top 1% can only spend so much. It’s when the middle class is spending that the economy takes off. If you allow people with a lot of money to keep more, they spend some of it. But if you allow people with little or no money to keep more, they spend most or all of it. I’m fortunate to be a member of the 1%, but I don’t need or want a tax cut. Why? In addition to the reasons above, we’re a humane society and basic fairness means the working class should have an opportunity to move up.

The bottom line, ignored by the AHCA, is this: while some wealthy people may still want a tax cut, they would be lying if they said that they need it. Just look at the Obamacare tax; the bulk of it is a 3.8% tax on capital gains. Nobody has done better over the last two years than investors. That is one group that can afford to pay 4% more on taxes; our base – the people we’re supposed to champion – cannot.

Reagan Redux? Or a New Chapter?

With the failure of the AHCA and tax reform on the horizon, there is an opportunity to change this narrative about who we are as a party. This means forgetting about tax cuts for the top 1% and doing the practical thing – cutting taxes on the middle and working classes. These are the folks who have had the toughest run these last 30 years with stagnate wages and almost unendurable (for them) global economic shifts. This would then give Congress a legitimate reason address entitlements by saying, in essence, “Here’s a rebate because we’re going to need to cut entitlement programs in the short run to save them for the long run.” This is an honest, meaningful and conservative message to send, especially to people under 30 who have little faith that entitlement programs are even going to be there for them. And by the way, if we can’t reach these young people, there’s not going to a Republican party for very long, anyway.

This approach is not merely posturing for the sake of changing an unfortunate narrative. Giving the middle and working classes a tax cut – while also shoring up entitlements – would not only show the party as focused on individual and family security for the long-term, but also save the nation from going off a fiscal cliff. Entitlements are almost 70% of the budget.

There is, of course, an aggravating factor here and that factor is, of course, Donald Trump. His irresponsible promise that he’s not going to touch entitlements is snake oil, at best. On top of that, his proposed drastic cuts to relatively discretionary, lower ticket items such as the EPA, State Department, science research and development, comes off as short-sighted as these are government functions that help keep all citizens healthy and safe and plugged into American innovation. Moreover, the defense increase is not going to make the country safer and the border wall is a joke; they are just fulfilling more irresponsible campaign promises.

White House intentions aside, as we move ahead toward tax reform we must seize the opportunity to reaffirm our commitment to the middle and working classes. And we must not forget the sad tale of the AHCA, which in all the years I have been following politics, was the worst bill I’ve ever seen. It wasn’t written to address a problem or help those in need; it was a brazen hold-up, the GOP’s version of Robbin’ Hood. Further widening the gap in income inequality is truly a story that, in the long run, we can’t afford to own.