Don’t Piss On My Leg And Tell Me It’s Raining

“Don’t piss on my leg and tell me it’s raining.” It is a lovely and efficient idiom. To me it expresses, in ten words, what every intelligent and thoughtful American should want to say to Donald Trump.

It must be obvious at this point that this man Trump has no regard for truth. He lies as easily and naturally as he takes breath. That is not unique in the field of politics. What is remarkable, and possibly unique, is the audacity with which he will lie about things that can be proven, with no very hard effort, to be false. In another essay I spoke of his pathological insistence that he won the biggest electoral vote count since Ronald Reagan. As I noted then, a fifth grader with a smart phone could have pronounced Trump a liar within 3/5ths of a second. Why lie about something when you know you will be caught? The only reason to do so is because, in today’s bizarre America, it seems to work. It works with a remarkable coalition of our fellow citizens: the extremely gullible, racist xenophobes, and the unprincipled opportunists of the Republican party.

The gullible and the xenophobes require no further explanation. In a sense they are, at least, consistent. The really troubling folks are the Republicans who are smart enough to understand what a charlatan Donald Trump is but refuse to denounce him. They are whatever the opposite of patriotic is. They tolerate him and prop him up with tacit approval because they want things. What do they want? They want what Republicans always want and they are willing to put their country at risk to get it.

Here Come the Tax Cuts

Nobody likes paying taxes. Nobody gets a little anticipatory thrill about the approach of April 15. But, if we are honest and rational, we know that paying our taxes is a patriotic act. It is not the kind of patriotism exhibited by serving two tours of duty in Afghanistan, surely. But it is much more of a sacrifice to our country than is sticking a “Support our Troops” bumper sticker on the back of your pickup. Why? Because it is, quite literally, supporting our troops.

Since 1974 it has been an article of faith in the Republican Party that cutting taxes on the rich not only stimulates economic growth but also generates more revenue for the government. Famously, the economist Art Laffer drew a graph on a napkin in a Washington, D.C. restaurant which established this idea and made disciples out of the Ford administration officials in attendance, notably Dick Cheney. The Laffer curve, as it became known, caught on quickly in Republican circles primarily because it was simple. Economist Hal Varian observed, “It has been said that the popularity of the Laffer curve is due to the fact that you can explain it to a congressman in six minutes and he can talk about it for six months.”

The graph purports to show tax revenues to the government as a function of tax rates. Shaped like a woman’s breast the curve shows revenue increasing as tax rates increase and then declining again as rates enter what Laffer called “The prohibitive range.” The idea is simple; the more you tax, the more money you take in. But at some point taxation will become onerous and one of two things will occur to decrease revenue – either people will stop working and corporations will shut down or taxpayers will find increasingly clever ways to cheat on their taxes. Therefore, Laffer determined, cutting tax rates below the prohibitive range will generate more revenue. Cheney was convinced. Reagan made a religion out of the Laffer curve. It suited Republican ambitions since they had always wanted lower taxes for the rich anyway. They actually put the infamous napkin in the National Museum of American History at the Smithsonian.

The Laffer Curve – The Napkin which caused much of the U.S. National Debt

In principle Laffer was right. There probably is some tax rate at which a point of diminishing returns is reached. What the Laffer curve probably isn’t, is a nice, symmetrical C-Cup. It’s possible that it really resembles a wave crest on the ocean, or, as some economists have speculated, a certain part of the male anatomy.

While Laffer’s disciples saw his curve as a revelation the truth is that as a guide to establishing optimum tax rates it is useless. If you look at Laffer’s napkin you will see a common coordinate graph with an x axis and a y axis. What you don’t see are units. The only numbers that appear on the graph, in fact, are the tax rates 0% and 100%. While the graph on the napkin appears to peak at around 50% taxation the sketch was not based on empirical data. The difficulty in applying the Laffer curve to real world economics is simply this: 1. Nobody knows where the prohibitive range begins and 2. Nobody knows where we are on the curve.

The truth is that Republicans don’t really care about deficits or the national debt anyway, unless Democrats are in power. When they take the reigns they want two things, increased military spending and tax cuts, preferably “huge” tax cuts. All their tea-party deficit rhetoric dissolves into thin air when they get into power.

Since Republicans don’t really care about maximizing tax revenues to keep the deficit down the Laffer curve is to them a cynical rhetorical tool. They want lower taxes on the rich. Therefore, when they enlist the Laffer curve to serve their political cause they simply assume, no matter the current rate, that we are in the prohibitive range and tax cuts are needed.

Thus in 1979, when Reagan used the Laffer curve as a club to bludgeon those “tax and spend” Democrats, the top marginal rate in the United States was 70%. That seems high, but it was nothing like the top rate during the booming economy of the Eisenhower years – 91%.

During the middle of Bill Clinton’s time in office, in 1996, the top marginal rate was 39.6%, a little more than half the rates of the 1970’s when Laffer drew his curve. Still, George W. Bush, and a certain Vice-President of his whom we have met before in our narrative, convinced the country that, once again, miraculously, those “Tax and spend Liberals” had us back in the “prohibitive” range. They cut the top marginal rate to 35% and would have liked more. For the second time in modern history the Republicans proved, though they didn’t mean to, that cutting tax rates doesn’t increase revenues. The deficit skyrocketed under Reagan when he cut taxes, and did it again under Bush when he cut taxes while simultaneously spending trillions on a war in Iraq.

Now Trump and Mnuchin and McConnell and Ryan want to try it again. Although each, over the last 8 years, has given earnest and ominous speeches about the danger of deficits and the cruel burden they lay on “our children,” the crack cocaine of tax cuts simply overwhelms their fiscal “conservatism.” Just because Laffer’s brilliant scheme didn’t work at 70% taxation, or at 39% taxation, or at 35% taxation, … or ever, doesn’t mean it won’t work this time. It’s such a pretty chart and so easy to explain.

The Wikipedia article on income inequality in the United States offers a pretty good overview of the absurdity and cynicism of Republican ideas.

The top 1% of households received approximately 20% of the pre-tax income in 2013, versus approximately 10% from 1950 to 1980.

The bottom 50% earned 20% of the nation’s pre-tax income in 1979; this fell steadily to 14% by 2007 and 13% by 2014. Income for the middle 40% group, a proxy for the middle class, fell from 45% in 1979 to 41% in both 2007 and 2014.

To put this change into perspective, if the US had the same income distribution it had in 1979, each family in the bottom 80% of the income distribution would have $11,000 more per year in income on average, or $916 per month.

According to Republicans the super rich, like our current President, whose incomes have surged while the lower and middle classes have stagnated, deserve a break, yet again.

So how do you sell tax cuts for the rich to a society in which the top 1% of Americans control 40 percent of the nations wealth? How do you justify to them a world in which the richest 85 people on the planet (30 of whom are American Billionaires) have more wealth than the poorest 3.8 Billion people. How do you convince a working class voter that the CEO of his company who earns 347 times his salary is suffering from overtaxation? You piss on his leg and tell him it’s raining!

You lie and you obfuscate and you misrepresent. And if there is data that contradicts your assertions, you erase them from the official record. According to a Sept. 28, 2017 Wall Street Journal article:

“The Treasury Department has taken down [from it’s website] a 2012 economic analysis that contradicts Secretary Steven Mnuchin’s argument that workers would benefit the most from a corporate income tax cut. The 2012 paper from the Office of Tax Analysis found that workers pay 18% of the corporate tax while owners of capital pay 82%. That is a breakdown in line with many economists’ views.”

So, when the billionaire who has been pissing on your leg for the last two years says it looks like rain, don’t believe him. And don’t believe his minions either. Gary Cohn, Trump’s economic advisor said, recently, “The wealthy are not getting a tax cut under our plan.” That is pure piss and you don’t have to be an economist to understand that.

The Trump tax cuts, “the biggest in history,” according to Trump, have 6 main components. 1. Cutting the corporate tax rate from 35% to 20%. 2. Cutting top marginal rates. 3. Eliminating the estate tax. 4. Repeal of the alternative minimum tax. 5. A new tax loophole for “pass-through” income. 6. An exemption for corporate foreign profits.

You can debate the merits of any one of these proposals if you want, but the idea that they together do not represent a massive tax cut for the wealthy is simply and clearly a lie.

Trump’s other foundational lie about his tax cut plan is that it will not, like Reagan’s tax cuts and Bush’s tax cuts, blow the deficit sky high. According to Treasury Secretary Steven Mnuchin “We think this tax plan will cut down the deficits by a trillion dollars.” This is the Laffer curve again and it is pure piss. Even if you are the type of conservative who kneels down five times a day to pray to the napkin you must realize that there is no way Laffer’s “prohibitive range” starts at 35%. Cutting taxes now will not increase federal revenues and will, most assuredly, explode the deficit.

Finally, in a recent speech Trump said this about his tax cut scheme, “I’m doing the right thing, and it’s not good for me. Believe me.” also, “I don’t benefit. I don’t benefit, In fact, very, very strongly, as you see, I think there’s very little benefit for people of wealth.”

A Sep. 28, 2017 New York Times article, based on Trump’s estimated net worth and 2005 tax return (the only one available), determined that he would, indeed benefit, and in a massive way. The analysis calculated that Trump would personally save $31 million from the elimination of the alternative minimum tax, $16 million from cuts in business taxes, and $.5 million from the reduction of the highest rate. His delightful children would gain even more, saving an estimated $1.1 billion when the estate tax is repealed.

Any man who says “believe me” as much as Trump does is not to be believed. This tax cut is designed by billionaires to benefit billionaires and it will, once again, massively expand the deficit. It is a transfer of wealth to the wealthy at a time when income inequality is already at levels not seen since the late 1920’s, and that didn’t end up so good.

As I have said before, Republicans control all of Washington now and they are the only ones who can stop this comic book villain. You may like what Trump can do for your narrow self-interest now but, as he has demonstrated time and time again to his friends and foes alike, he will piss on your leg if he gets the chance. Believe me, Believe me.

By: Dustin Joy

 

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