With Trump in the Oval Office, the US government spends like the world will end tomorrow. Is there a lesson here for the Morrison Government? DCReport Editor-in-Chief, David Cay Johnston, reports on how Republican tax cuts are bankrupting America.
HOW WOULD you like to take on $300 more debt every month for as far as the eye can see into the future?
Thanks to Donald “I’m the King of Debt” Trump, our federal government’s debt is rising much faster than under President Barack Obama despite Trump’s frequent assertions that the economy is much better now that he is in the White House. And that $300 per month of added debt you owe via our Uncle Sam is scheduled to grow and grow.
Our federal government’s budget deficit was nearly $739 billion in the first eight months of the current federal budget year, which began Oct. 1.
That’s a 71 per cent increase from when Trump took office in 2017 and a 39 per cent increase from just last year.
“No boost to economic growth, but a big boost to the wealth of the small minority of Americans who control our major corporations.”
All that red ink stands in contrast to the Obama era. For the same period in the 2015 budget year was less than $283 billion. When Trump took office the October through May 2017 deficit was $433 billion, still well below Trump’s performance.
Trump keeps telling us that the tax cuts he signed would boost the economy. So what did the Congressional Research Service find when it studied the effects of the Trump/Radical Republican tax cut law?
Last year the economy
“grew at 2.9 per cent, about the Congressional Budget Office’s (CBO’s) projected rate published in 2017 before the tax cut. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy.”
So no boost to economic growth, but a big boost to the wealth of the small minority of Americans who control our major corporations. A fistful of dollars for you, armored cars full of cash for plutocrats.
Taxing corporations less than people
The effective tax rate on corporate profits – the share of profits actually paid in tax – plummeted by half last year, the Congressional Research Service found.
The official tax rate is now 21 per cent of profits. The actual corporate tax rate paid last year? Just 8.8 per cent.
For individuals, the average federal income tax rate was 9.2 per cent. That was down just a fraction of a percentage point from 2017 so nothing like the big tax cuts for corporations.
What this means is that our Congress now taxes we the people at higher rates than it does corporations. We can change that because corporations don’t get to vote — at least not yet. But change requires American adults to register to vote, to learn about the issues and then cast ballots that, hopefully, will all be counted by local officials, not the Russian military cyber warfare hackers that Trump says Vladimir Putin assured him didn’t interfere in our 2016 election.
"Stage 3 cuts cost $95b & on the policy argument alone they're going to increase inequality, they're bad for economic growth, and they're bad for the budget." pic.twitter.com/UvAADDlNBP
— Australia Institute (@TheAusInstitute) July 3, 2019
Fiscal sin that no one talks about
During good years our government should run balanced budgets or generate surpluses to pay down past debts, or so traditional economic theory holds, and Congressional tax and spending policies proclaim.
Right now, though, our government is spending more than $3 billion per day more than it collects in taxes, duties and fees, up from $1.3 billion per day under Obama in 2015.
Spending more than our Congress taxes us has been the norm for the last six decades except for the last year under President Dwight D. Eisenhower, the last year under President Lyndon B. Johnson and the entire second term of President Bill Clinton. Notice the black ink years were under a general who could have run for the White House under the banner of either party and two Democrats who the Republicans denounced as free-spending liberals.
You might think all this extra red ink, which is projected to increase through the coming decade, would prompt hearings in Congress.
The number of hearings scheduled on getting us off Congress’s and Trump’s addiction to red ink? None.
Democrats aren’t sounding an alarm, but at least they keep noting that the deficits would be substantially smaller but for the 40 per cent reduction in the corporate income tax rate and the individual tax cuts that were heavily weighted in favor of the millionaire and billionaire class along with owners of commercial real estate, notably the current occupant of the Oval Office.
Republicans speak softly about all this deficit spending or keep quiet lest the upset their leader. Now that the GOP has morphed into the Cult of the Donald, sound tax and spend policies exist in a twilight zone where facts no longer matter.
Among Republican officeholders, deficit spending was once the most abominable of all fiscal sins. Today, as ordered by Paramount Leader Trump, exploding budget deficits are the fiscal sin that dare not speak its name.
DCReport’s founder and editor is Pulitzer Prize-winning journalist David Cay Johnston, author of seven books including ‘The Making of Donald Trump’ and ‘It’s Even Worse Than You Think: What the Trump Administration is Doing to America’. His reporting persuaded two presidents to change their tax policies, stopped tax dodges that Congress valued at more than $250 billion in the first decade alone, and promoted the passage of many federal and state laws and regulations. The Washington Monthly calls David “one of America’s most important journalists.”
David was a guest of the Sydney Democracy Network in Australia in 2017.
You can follow David on Twitter @DavidCayJ.
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