On November 29 headlines proclaimed that the Senate Budget Committee had approved President Trump’s controversial tax reform plan.
While analysts estimate that the three-quarters of middle class families who take the standard deduction would realize modest tax savings, due to a doubling of the standard deduction to $12,000 for individuals and $24,000 for married couples, big corporations and the super-rich would reap by far the biggest windfalls. Actually the doubling of the standard deduction is a misnomer, as exemptions (currently at $4050 per person) would be eliminated under both the House and Senate bills.
Upon closer examination, it is evident that the proffered benefits of the tax plan are based on extremely rosy projections of double-barreled economic growth, accruing from massive tax breaks to major corporations and the upper one percent. These projections naively presume a prevailing global climate that will promote optimal economic growth – e.g. an absence of wars, major natural disasters and other untoward events that could trigger economic tailspins.
Costs of the tax bill are projected at $1.5 trillion over the next 10 years, a carefully chosen figure. Coincidentally, under current Senate guidelines increasing the deficit by more than $1.5 trillion would trigger a Democratic filibuster.
Considering the priorities of the Trump administration, with an overriding emphasis on massive military build-up, deficit building and generous tax breaks for the wealthy, the outlook is indeed bleak if the Senate proposal passes. At this point passage appears almost certain, as Senate Majority Leader Mitch McConnell has declared “We have the votes.” In fact, by the time you read this the measure may have already cleared the Senate. I predict a massive revenue short-fall if and when the measure actually becomes law. This short-fall will trigger massive cutbacks in funding for education, together with essential health and human services programs. These cuts will, in turn, hit the poor and working class Americans the hardest.
Where do we go from here?
As of this writing (December 3), dynamic changes have taken place over the past week in the volatile politics focusing on the tax proposal. Trump has gone all out and successfully brought the GOP hold-outs on board, by hook or by crook. Some of these measures have been downright egregious. Sen. Lisa Murkowski (R-Alaska) was handily bought off on the tax proposal. The buy-off took the form of including a provision she herself drafted, calling for the federal government to open a portion of the Arctic National Wildlife Refuge for oil and gas drilling. A nice pork barrel coup, with devastating consequences for the environment!
To the dismay of many Arizonans – myself included – both Senators McCain and Flake have caved and announced their support for the proposal. On the positive side, a few enlightened GOP senators have jokeyed for inclusion of a mechanism to trigger tax increases in coming years. The increases would kick in if the bill fails to boost the economy sufficiently to generate the necessary revenue to offset the tax cuts. Don’t hold your breath on inclusion of this provision, however.
On the bright side, I am particularly impressed by the heroic posture of Sen. Susan Collins (R-Maine), an outspoken member of the Senate Budget Committee. As a condition for voting to send the tax proposal to the floor, she brokered an agreement promising that Congress would approve legislation restoring payments to health insurers – payments that Trump recently scuttled in an effort to sabotage the Affordable Care Act. Now that the proposal is out on the table, Collins continues her stalwart fight for further reform. In the interest of better serving the needs of lower and middle income taxpayers, she secured a provision that will allow homeowners to deduct up to $10,000 in local property taxes on their federal returns.
On the dark side, the projected impact of passage on federally funded healthcare programs is extremely dismal. For starters, the proposal intends to decrease Medicare outlays by $25 billion annually over the next 10 years. While Collins has been brokering to eliminate these Medicare cuts, a favorable outcome is far from certain. Even more horrific, on September 30 at our President’s behest Congress allowed funding to expire for both the Childrens Health Insurance Program (CHIP), a program enjoying widespread bipartisan support that affords access to health insurance for close to 9 million indigent children, and the federal Community Health Center Foundation, which this year has provided $3.6 billion to help 1,400 clinics serving the indigent stay afloat. Predictably, the tax plan contains no provisions to address this sorry state of affairs.
As to what will be the final outcome of all this, your guess is as good as mine. A ray of hope is provided by the fact that after the Senate bill passes, over the coming weeks there will be plenty of opportunity for concerned citizens to make their voices heard before a compromise version of the House and Senate bills is hammered out, approved by both houses and sent to the President. To be sure, the current outlook appears dismal and the stakes are high. As concerned citizens, it behooves each and every one of us to CONTINUE TO MAKE OUR VOICES HEARD!
Dr. John Newport is a prolific author and socio-political commentator based in Tucson. He is a former senior health care policy analyst at the UCLA School of Public Health and author of “The Wellness-Recovery Connection” (Health Communications, Inc.) and “The Tucson Tragedy: Lessons from the Senseless Shooting of Gabrielle Giffords.”
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.