Deja Vu: President Trump, GOP Congress, Awful Tax Law. Let’s Not Do It Again.
We’ve been here before. Donald Trump has been president, Republicans have controlled Congress, and their biggest goal has been to enact a tax law that lowers taxes mostly for the wealthy.
By William Rice
We’ve been here before. Donald Trump has been president, Republicans have controlled Congress, and their biggest goal has been to enact a tax law that lowers taxes mostly for the rich and corporations. In 2017, they “succeeded,” yet produced none of the economic benefits promised and hiked federal debt by $2 trillion, thus threatening funding for vital public services like Social Security, Medicare, education and housing. Must we do it again?
To hide the true cost of the reckless bill they enacted last decade, Republicans made most of it temporary–set to expire at the end of 2025. Democrats have pledged in recent years to extend tax cuts only for families making less than $400,000 a year while letting the cuts benefitting higher-income households expire on schedule. Trump and his fellow Republicans want to permanently extend all the expiring provisions, adding another $5 trillion to federal deficits over the next 10 years.
What rich households would get compared to what working- and middle-class families would receive makes it clear why a full extension of the 2017 Trump law would be a colossal and unfair waste of money. In the first year of such an extension (2026), households with over $914,000 of income–the highest-income 1%--would on average get a tax cut of almost $50,000. Middle-income families–making between roughly $55,000 and $94,000–would get less than three dollars a day. The poorest families would get a daily tax cut of about thirty cents.
What those middle- and lower-income families would lose is much more substantial. Trump has charged fellow billionaires Elon Musk and Vivek Ramaswamy–who, along with Trump, will each undoubtedly make a bundle from full extension of the budget-busting Trump tax cuts–with proposing how to reduce the national debt exclusively through cutting government spending. Musk has set a target of $2 trillion in spending cuts.
There are big chunks of the federal budget that Musk and Ramaswamy can’t or won’t touch. They include military spending (13% of the total budget) and interest on the national debt (10%). That leaves spending on health insurance of various kinds, including most prominently Medicare (24%); Social Security (21%); economic support programs like the Earned Income Tax Credit and supplemental nutrition assistance (SNAP, formerly food stamps) (8%); and veterans and federal retiree benefits (7%). The remaining 16% or so goes to federal services like aid to education, transportation projects, the weather bureau, and farm programs.
So the tradeoff for the vast majority of Americans is a few dollars a day in tax cuts versus some combination of, say, reduced Social Security payments; higher health insurance premiums; less aid to local schools; hungrier neighbors; and more potholes. That’s not a trade any sensible person would make.
The expiration of the Trump cuts offers an opportunity to actually reform our tax code so that the rich and corporations start to pay something closer to their fair share. That would fund necessary public services, bring down public debt and narrow the nation’s yawning income and wealth gaps.
Every year he’s been in office, President Biden has proposed just such reforms, which would raise trillions of dollars exclusively from the nation’s richest households and most profitable corporations. Let’s incorporate those proposed reforms into the legislative package needed to address the Trump law expirations. Then we could actually move into a brighter future, not relive an even darker version of the past.