In the U.S. It’s Fine to Help the Affluent and Kick the Rest While They’re Down
“Kick them when they’re down” is what you expect from goons collecting for a loan shark. Why should we accept that kind of behavior from Republicans who seem ready to kick those who are already down and devastated by unemployment and higher rates of illness and death due to the jobs they do and their underlying health problems?
Republicans are now expediently blubbering about “too much” spending, despite their unbridled deficit-producing, debt-growing tax cuts and their blank check for military spending. Now they argue we cannot afford the sort of additional stimulus required to genuinely boost the economy and prevent even more declines in consumer demand and even greater economic contraction.
Over the past three months, our nation experienced a nearly 10% drop in Gross Domestic Product (GDP). Extended over a year, a contraction of that level would result in a 33% shrinking of the nation’s economy.
Everyone not down with Republican Hypocrisy agrees that the spending authorized by Congress after the national shutdown at the end of March, 2020 prevented even more economic pain. As Business Insider stated, “. . . the government intervention helped keep around 12 million people out of poverty, and many jobless workers saw their incomes increase during the pandemic.”
The next round of needed relief, however, is again mired by expedient Republican worry about too much spending. Republicans have no problem dousing worries about deficits and debt when it comes to yet another round of tax cuts for the affluent. Indirect spending for the rich in the form of tax cuts is fine for Republicans, no matter what the repeated, predictable results are on producing higher annual budget deficits and exploding national debt.
In early 2018, before Democrats took over the House, Republicans and the Trump Administration enacted tax cuts that were estimated to add over $2 trillion to the national debt by 2028. That tax cut, largely benefitting a tiny percentage of the American households, did very little to boost the economy or to enhance our nation’s capacity to compete in the world economy. That tax cut did encourage stock buy-backs and also boosted stock values.
During the Great Recession, between December 2007 and June 2009, Republicans fought tooth and nail to prevent President Obama and the Democrats from producing a sufficiently large spending package to stimulate the economy more quickly.
While Democrats couldn’t overcome Republican resistance to a bigger spending program, Republicans cynically exploited the slow recovery from the Great Recession. The steady, but languid, recovery figured prominently in the Republican takeover of Congress, as well as their presidential election victory in 2016.
Our current pandemic-induced economic downturn is by some credible accounts worse than the Great Recession. Yet, with the regularity of sunrise and sunsets, Republicans are again spewing their Quackery-on-Deficits. As for the disproportionate damage and death that Covid-19 has inflicted on the poor, medical and emergency personnel, workers in the food sector, and people of color . . . for Republicans, that’s how the cookie crumbles, apparently. Or as the President has said in a recent interview, “It is what it is.”
What we’re not debating is how much help we currently provide to better off Americans. Consider people who benefit from low interest rates and subsequent rising stock values. Remember, the current low interest rates are a matter of public policy; they’re not the “natural” result of some mythical “free market.”
Low interest rates help goose stock values. Rising stock values help less than 52% of American families, with most of the value going to a much smaller, higher income slice of U.S. households. Additionally, Americans with growing 401(k) stock and fund portfolios have been given a very generous one-year holiday from required minimum distributions, which also provides a significant financial benefit to individuals with significant IRA accounts. Those most adversely affected by the Covid-19 health and economic crisis don’t generally have significant IRA or 401(k) accounts.
Low interest rates help homeowners to reduce their monthly mortgage payments by refinancing. Those who can afford down-payments and other closing costs associated with purchasing homes can purchase homes with lower monthly mortgage payments. In fact, refinancing and loan originations on new home purchases are booming, but, again, the beneficiaries are not among those most adversely affected by the current economic and public health crisis.
Those households still in the workforce and receiving employer provided health insurance continue to benefit from the over $150 billion dollars worth of tax exempted assistance that employers receive for providing health insurance to their employees. Without that uncapped tax benefit, around half the nation’s population would have to pay more for their health insurance or receive less generous coverage.
Yet virtually every form of public assistance to those not eligible for employer provided health insurance is under militant assault by the GOP and the Trump Administration. Similarly much of the assistance to the poor, unemployed, or those who’ve been devastated by the current public health and economic crisis are faced with a Republican Party whose members believe such assistance unwisely coddles American workers and small businesses.
While we heap benefits on better-off households, we threaten to worsen conditions for those who already live at the margins. We generously underwrite and subsidize the housing costs of better-off households. Yet we add to the economic terror of individuals whose jobs are most at risk and who are most likely to be thrown out of their rented housing.
Better off households tend to receive most of their benefits via provisions of the tax code, whether directly or through subsidies provided to their employer. In fact, in a symbolic expression of how heartless and tone deaf the GOP and Trump Administration are, they’ve included enhanced meal and entertainment expense deductions in their most current version of pandemic relief. It would be laughable if it wasn’t so cynical.
Of course, tax benefits or tax expenditures are just other forms of public spending. Republicans, however, rarely agree to reduce or adjust those to manage budget deficits or the national debt. So the publicly produced tax benefits that are showered on the most affluent are left mostly intact. On the other hand, help for the less-well-off is almost always up on the chopping block when Republicans decide that deficits suddenly matter. Right now, it’s a matter of kicking folks when they’re already down.