Republicans have officially stopped caring about the deficit they bemoaned constantly for the eight years Barack Obama was president. And in the face of all kinds of non-partisan analysis, some of them even are admitting that yes, the enormous tax cuts they propose are mostly benefitting very rich people.
However, the GOP insists that increasing the deficit in service to the bottom line of the top 1% is worth the tradeoff because it will trigger an explosion in economic growth, wage increases, and new jobs.
Oh, and they also have a bridge in Brooklyn they want to sell you.
The “small businesses” that will be helped most by the Republican tax plan are so-called pass-through businesses. I will get a tax cut because I am a consultant. Law firms will get a tax cut. Private equity and hedge fund companies will see a rather large tax cut -- for many of them it will be in the millions of dollars. Real estate companies such as -- to pick one completely random example -- the Trump Organization will get tax cuts. In Trump’s case it will be at least $23 million.
But you know what? These kinds of businesses expand when business is good. I hire new employees when I get new clients, not when I pay a little bit less in taxes. Do you know how hedge fund CEOs will invest tax cuts? Maybe they will buy a new Rembrandt for the wall, or get a second yacht, or buy a new mansion in the south of France. Or maybe they will use it to gamble more excessively in financial markets like they did back in the good old days of 2006 and 2007. I’m sure that will be healthy for the economy!
When Ronald Reagan passed his massive tax cut for the rich in 1981, the economy nose-dived into a deep recession later that year and didn’t climb out for a couple more years. Both job creation and wage increases remained weak throughout the 1980s. When George W. Bush cut taxes for the rich in 2001, there was negative job growth for three years afterward; wages and new job creation remained flat all through the decade; and by the end of his administration, we had the great economic crisis since the Great Depression. When Brownback cut taxes for wealthy Kansans in 2011, he created the biggest budget crisis in Kansas history, forcing the school system to shorten its school year and layoff large numbers of teachers.
You create economic growth by investing in the American people, by raising their wages so they can buy things, by building new roads and bridges and schools, by investing in the future by supporting renewable energy and R&D.
I talk about these issues on this video below. Take a look: