A Double Deuce to Working Families (and Math)


By Josh Hoxie - Guest Columnist

The political theater that passes for serious policy debate is about to run into an unfortunate reality as Donald Trump’s budget plan comes face to face with its arch-nemesis: arithmetic.

It’s impossible to cut taxes, increase spending, and balance the budget. That’s not political bluster. That’s math.

Throughout the campaign and since, Trump promised to invest in infrastructure, pass an enormous tax cut, boost military spending, cut “waste, fraud, and abuse,” and protect Social Security and Medicare — and, of course, balance the budget.

This rhetoric has been remarkably effective, the presidential equivalent of offering free ponies for everyone — but even less practical.

Working in Trump’s favor, however, is that many Americans believe things about the federal budget that are simply not true. There’s a lot of misinformation out there.

According to public opinion polls, Americans believe nearly a third of the budget goes to international aid. In reality, it’s less than 1 percent.

A survey of Fox News viewers from 2013 showed nearly half believed most federal debt could be eliminated by “cutting waste and fraud.” It can’t.

Out of a nearly $4 trillion annual federal budget, about $3.4 trillion is spent on things that either can’t be cut or Trump has promised he doesn’t want to cut. This includes Social Security, Medicare, military spending, and interest on the national debt.

That leaves just over half a trillion dollars to cover all non-military discretionary spending. It’s a lot of money, to be sure, but a small proportion of overall spending. This is the part Trump is proposing to cut.

What’s included in this side of the budget?

To name just a few things: The benefits that help veterans get back on their feet after getting wounded. The nutrition assistance that helps babies born to low-income mothers. The science research that will mitigate the next infectious disease outbreak (remember Zika?).

The list could go on for paragraphs, each a small line item of a big budget, but each incredibly important to enabling a happy, healthy life in modern society.

Cutting programs the public depends on in an effort (real or imagined) to balance the budget isn’t new. Austerity has been in the air in the United States since Reagan and has taken Europe by storm, too. It’s the justification behind cutting programs that help the poor while passing tax cuts that exclusively benefit the rich.

It is, in short, part of a remarkably effective effort to redistribute wealth — upwards.

Consider, for example, Trump’s tax plan.

If the president were serious about balancing the budget, he’d be quite concerned about how much money the Internal Revenue Service collected each year. He’d know if that number went down, it would reduce the effectiveness of his spending cuts.

He is, to put it politely, not concerned about this.

As the Citizens for Tax Justice, a D.C.-based research group, points out, Trump’s tax plan nearly exclusively benefits the wealthy while raising the taxes of low- and moderate-income families. The budgetary impacts of his tax cuts total about a half trillion dollars a year — the same amount as the entire non-discretionary, non-military federal budget.

In other words, Trump’s tax plan is a proverbial one-handed middle finger to the working class. And his spending cuts represent his other hand making the same gesture.

While repeated rhetorical distractions may succeed in sidetracking his audience, Trump can’t use his impressive oratory skills to overcome basic mathematics.

A Tax Plan Only a One Percenter Could Love

It takes serious mental gymnastics to argue that Trump’s tax agenda would benefit the average working Joe or Jane.

After the failed effort to repeal the Affordable Care Act (aka Obamacare), the Trump administration has set its sights on its next big project: so-called “tax reform.”

And the “reform” they seek appears guaranteed to elicit disdain from all sides — with the notable exception of the ultra-wealthy.

Let’s first acknowledge that tax reform is hard. The system is held in place by entrenched interests who don’t want to see their favorite loopholes taken away. That’s a big reason why it’s been over 30 years since the last major tax overhaul, championed by Ronald Reagan in 1986.

Adding to the complexity of tax reform is the fact that all of the White House people working on it are resplendently wealthy.

Treasury Secretary Steven Mnuchin and Trump economic adviser Gary D. Cohn are each worth hundreds of millions. In fact, Trump’s cabinet is the wealthiest in history. That might have something to do with Trump, himself a billionaire, being the wealthiest president in history.

Put simply, the folks making the rules around taxes may not have working families’ interests in the forefront of their minds. Crowding them out are the wishes of the ultra-rich friends they see regularly in their glitzy country clubs and gated communities.

A seminal study by Professors Benjamin Page, Larry Bartels, and Jason Seawright in 2013 showed that the policy preferences of the wealthiest 1 percent are “much more conservative than the American public as a whole” when it comes to “taxation, economic regulation, and especially social welfare programs.”

The top 0.1 percent, those with assets over $40 million, have even more conservative views, the paper points out.

Perhaps unsurprisingly, the study shows, the wishes of the wealthiest citizens are much more likely to make it into public policy than those of the less affluent. One person, one vote be damned.

Every year Gallup puts out the same poll asking people about taxes. Every year they get the same response: Over 60 percent want to see the wealthy pay more in taxes. More than half believe “government should redistribute wealth by taxing the rich.”

Earlier this year, Treasury Secretary Mnuchin seemed to agree. He promised in no uncertain terms that this administration wouldn’t seek to cut taxes for the “upper class.”

Unfortunately, that was a bald-faced, pants-on-fire, inexplicable lie.

Trump’s plan does redistribute wealth, it turns out — but it’s towards greater inequality, not less. It takes serious mental gymnastics to argue that what Trump’s team has proposed on taxes would benefit the average working Joe or Jane.

The plan eliminates the federal estate tax, a levy that only impacts the wealthiest 0.2 percent of heirs and heiresses. It was put in place a hundred years ago with the express goal of reducing inequality and preventing aristocracy.

The plan also cuts the effective tax rates on the wealthiest individuals and most profitable corporations, those doing phenomenally well right now.

Meanwhile, the administration has proposed massive budget cuts eliminating whole programs for working people.

This draconian effort would intentionally and literally push working families into the cold, by zeroing out the Low Income Home Energy Assistance Program. If that weren’t savage enough, the administration also wants to cut the Women Infant and Children (WIC) food program that provides nutrition assistance to about half the babies born in this country.

The poor in this country often don’t see themselves as poor, the late author John Steinbeck noted, but as “temporarily embarrassed millionaires.” Maybe that’s why some working class people support this administration.

But what’s really embarrassing is what they’ll get in return.


By Josh Hoxie

Guest Columnist

Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. Distributed by OtherWords.org.

Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. Distributed by OtherWords.org.