Tag Archives: Congress

A Selection of Stuff You’d Rather Not Read About

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Four articles that made an impression this week, from least to most depressing, that didn’t even mention Jerusalem, Puerto Rico, healthcare or starving polar bears.

One hundred and eighty-seven people are facing felony charges for participating in a demonstration in Washington D.C. that turned violent. The demonstration was on the day Trump was inaugurated. A trial is now underway. The depressing aspect of this story is that none of the six defendants are accused of doing anything aside from being there:

What jurors haven’t heard, and prosecutors don’t intend to offer, is evidence that any of the six individuals currently on trial … actually engaged in any property damage or violence. Under the government’s theory of the case, in which anyone arrested in the group is part of a conspiracy and is responsible for any actions taken by others, the lack of individualized wrongdoing doesn’t matter.

Maybe the jury will have the sense to acquit everyone and convince the government to stop these prosecutions.

Elsewhere in Washington, Republicans from the House and Senate are trying to reconcile the terrible tax bills they’ve recently passed. Could any of them read this article from The New York Times and say they were proud of their efforts so far?

… for the first time since the United States adopted an income tax, a higher rate would be applied to employee wages and salaries than to income earned by proprietors, partnerships and closely held corporations….

“We’ve never had a tax system where wage earners were substantially penalized” relative to other types of income earners, said … a former Treasury Department official….

Indeed, economists and tax experts across the political spectrum warn that the proposed system would invite tax avoidance. The more the tax code distinguishes among types of earnings, personal characteristics or economic activities, the greater the incentive to label income artificially, restructure or switch categories in a hunt for lower rates….

“The more you look at any of the major rules, the more ambiguities, glitches, clearly unintended consequences and tax planning opportunities you see,” said Michael L. Schler, a lawyer in the tax department of Cravath, Swaine & Moore. He has written a 50-page summary of the more glaring problems …

From Georgia Southern University, a professor named Jared Yates Sexton, who grew up in the South, writes about the fascism that runs in his family.

Eventually I left for college and found my own people who didn’t express such fascist and ignorant beliefs. I visited for the occasional holiday, kept in decent enough touch, but I felt confident knowing that people like my family would never be in charge of the country they understood so poorly….

They hoard weapons, supplies, and daydream about the day the government will fall and they’ll be free to remake the country as they see fit.

I cannot say they are fascists, but I can definitely say they hold fascist ideas. This is why they hardly blink when Donald Trump quickly erodes the normal order of the government, why they’re not concerned when he undermines the Freedom of the Press or cozies up to authoritarian leaders. They love it when he tells policemen to be rough on suspects. They want someone who plays nuclear chicken with a despot while the lives of hundreds of million innocent people lie in the balance.

Finally, speaking of nuclear chicken, Jeffrey Lewis, a “scholar at the Middlebury Institute of International Studies”, shares some really scary thoughts in The Washington Post. He imagines how a confrontation between North and South Korea might escalate, helped along by a morning tweet from the president, into nuclear war.

And so, facing what he believed was a massive American military invasion, Kim gave the order. The thread of history winds along on twists of fate, like Archduke Ferdinand’s driver missing a turn…

The U.S. Missile Defense Agency would later say this was a sign that the system had worked well, downing about a third of the missiles — although experts would argue that the low intercept rate resulted from problems that the Los Angeles Times had reported in 2017…. It seemed more likely, the experts said, that five of the missiles had simply broken up as they reentered the earth’s atmosphere.

The remaining seven nuclear warheads landed in the United States. These missiles were no more accurate than the others — but with 200-kiloton warheads, 10 times the power of the bomb that destroyed Hiroshima, close was enough to count in most cases.

I told you so.

If They Wanted Real Tax Reform

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The big story in Washington this week is the Senate Republicans scrambling to pass a major tax bill that nobody but their donors and other members of the plutocracy likes. Assuming something like it eventually becomes law, it will give a temporary tax cut to most members of the middle class and raise taxes for others, while giving a permanent tax cut to rich people and corporations. It will also add more than a trillion dollars to the deficit while requiring billions of dollars to be cut from programs like Medicare. (There is a nice summary of the giant con here.)

Republicans and even some journalists are calling it “tax reform”, even though it will make our system of taxation worse than it already is.

Wondering what real reform would look like, I read a book called A Fine Mess: A Global Quest for a Simpler, Fairer and More Efficient Tax System. It’s by a journalist named T. R. Reid. After a lot of research and conversations with tax experts around the world, he reached the same conclusion most experts have. The simplest, fairest and most efficient system of taxation is based on the “Broad Base, Low Rate” (BBLR) model.

The BBLR idea is that countries should tax as much as possible while keeping rates as low as possible. So, in the case of income tax, it’s best to tax all kinds of income at the same low rate. That means getting rid of deductions, exemptions and credits, many of which benefit people with the highest incomes, while categorizing things like health insurance benefits from your employer as personal income. That’s the “broad base” part. Once you’ve broadened the base and made more income subject to taxation, you can then lower everyone’s rates (that, obviously, is the “low rate” part).

The BBLR approach has a number of benefits. Filing and auditing tax returns is far simpler. Since rates are low and everyone’s income is treated the same, fewer people are tempted to avoid or evade taxes. Also, decisions about things like buying a house or building a factory tend to be made on the merits, not on the basis of tax considerations.

Reid also thinks the U.S. should institute a Value Added Tax (VAT). It’s a kind of sales tax, but one that is applied at every step of the manufacturing or distribution process, i.e. whenever money changes hands. We are the only rich country in the world that doesn’t have a VAT. Since it’s a tax on consumption, not income or savings, a VAT apparently has beneficial effects on a nation’s economy. It’s also difficult to evade. That’s why everyone else has one.

Another change Reid recommends is to reduce taxes on corporations. The U.S. has a high corporate tax rate, which results in corporations devoting a lot of effort to reducing or even eliminating their taxes. He thinks it would be better if all of the income people receive from corporations, especially dividends and capital gains, were subject to the same tax rate as other income (today, supposedly in order to foster investment, that income is taxed at a lower rate, which again mainly helps the wealthy). In fact, in a very interesting article in The Washington Post earlier this month, Reid advocated eliminating the corporate tax altogether, since it doesn’t do what it’s supposed to do.

What surprised me most about A Fine Mess, however, was that some of the ideas Reid endorses are included in the Republican tax bill. (Seriously, it doesn’t happen very often that there is overlap between “Republican policy” and “good idea”.) For instance, the Republicans have talked about getting rid of the deductions for medical expenses, state and local taxes and interest on mortgages. They would try to offset the disappearance of those deductions by increasing the standard deduction and lowering everyone’s rates. The result would be that more income would be taxed, but at a lower rate (that’s BBLR). Another result, not so beneficial, would be that millions of average taxpayers, for example, those who have major medical expenses or live in states with high taxes or who have big mortgages, would get a tax increase, even if their tax rates were lowered.

Unfortunately, the Republicans want to combine their few good ideas with many bad ones. For example, they want to get rid of the estate tax, which only affects the truly wealthy, and give more favorable treatment to certain kinds of business income (it’s been said that the Republican tax plan could have been written by Trump’s accountant). They also want to reduce taxes on the rich so much that they’ll have to cut social programs like Medicare, while adding more than a trillion dollars to the deficit.

Reid points out that Congress tends to produce a major tax bill every 32 years. The last one was in 1986. Congress worked on it for two years. The bill had bipartisan support and actually deserved being called “tax reform”. This year, the Republicans are trying to pass their bill in a matter of weeks, without hearings and without input from the Democrats. That indicates how screwed up our government is and how far away we are from getting actual reform.

A Fine Mess: A Global Quest for a Simpler, Fairer and More Efficient Tax System by T. R. Reid

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The journalist T. R. Reid argues that America’s national tax system is a disaster, but we could fix it if we started over and adopted the best ideas about taxation from other countries. According to Reid, better systems of taxation are based on the BBLR model, i.e. they tax as much as possible (a “Broad Base”) but at rates that are as low as possible (“Low Rates”). So, instead of allowing lots of deductions and exemptions and credits, as we do now, we should simply tax all income. But since more income would be subject to taxation, the government could lower tax rates for everyone. Because their rates would be lower, fewer people and businesses would hire lawyers and accountants in order to avoid taxes. Business decisions and personal decisions would no longer be made on the basis of what taxes would be owed. In addition, filing a tax return would be much simpler than it is today.

Reid cites New Zealand as the country with the best tax system in the world. They once had a complicated tax system like ours, but were able to revamp the whole thing, following the BBLR model. He also argues for the adoption of a VAT (Value Added Tax), a kind of sales tax that every advanced country but the United States currently applies (one benefit of a VAT is that it’s hard to evade).

Some of the ideas Reid proposes would be acceptable, in theory, to both liberals and conservatives. But he admits that overcoming opposition from special interests and taxpayers who benefit from the system’s complexity would be a big challenge. For example, he recommends eliminating the deductions for charitable donations, local taxes and mortgage interest. I assume he would eliminate medical deductions as well. No doubt some taxpayers would end up paying more, while some would pay less. But we would have a system of taxation that was simpler, fairer and more efficient.

Given the benefits, it seems like the United States should do something like this. Given the craziness of the Republican Party, it seems unlikely that we ever will.

The “Skinny” Repeal of the ACA Is Back

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Republicans in the Senate want to cut taxes so much for rich people and corporations that the federal deficit would go way up. That means they need to reduce government spending or find new revenue to offset the cuts. Their latest idea is to bring back the “skinny” repeal of the Affordable Care Act. The repeal would be “skinny”, because the only thing being repealed would be the “individual mandate”, the requirement that people have health insurance or pay a fine.

But why would getting rid of the individual mandate help offset tax cuts? The reason is that millions of low-income people would no longer buy health insurance, so the government would no longer need to give money to help them afford it. Right now, the government spends millions of dollars on health insurance subsidies for people who couldn’t otherwise get it. If those people don’t have health insurance anymore, the subsidies won’t be paid.

Unfortunately, there are serious problems with this approach. From The Washington Post:

 

Repealing the mandate would undermine … key parts of the Affordable Care Act. The health care law banned insurance companies from discriminating against people with pre-existing health conditions. But in order to prevent people from waiting to buy insurance until they got sick, the law … imposed financial penalties [the individual mandate] for individuals who did not maintain health insurance coverage.

 

Health experts say eliminating the mandate would destabilize the individual insurances markets set up by the Affordable Care Act, as they would be full of people with high health care costs but have far fewer of the healthy people that insurance companies bank on. In response, insurance companies would likely either massively raise premiums or pull out of the marketplaces entirely.

 

A powerful group of stakeholders, including the major health insurance and hospital insurance lobbies and two influential doctors’ groups, wrote a letter to leaders from both parties arguing that they should retain the individual mandate.

 

“There will be serious consequences if Congress simply repeals the mandate while leaving the insurance reforms in place: millions more will be uninsured or face higher premiums, challenging their ability to access the care they need,” the groups wrote.

The Congressional Budget Office (CBO), among others, analyzed “skinny” repeal earlier this year. Their conclusions led three Republican senators to vote against it on the night of July 27th (it was in all the papers). Maybe the same three will defeat it again if it’s part of the Republican tax bill, but there might be more pressure on them to accept it this time.

Meanwhile, Republicans in the House of Representatives have their own version of the tax legislation. Today, the CBO had something to say on that. From Yahoo Finance:

 

If the House GOP tax plan passes, it is projected to cut revenue significantly, likely increasing the deficit by $1.456 trillion from 2018 to 2027, according to the Joint Committee on Taxation and Congressional Budget Office.

 

… the CBO explained that without any more money to offset the fall in revenue, the Office of Management and Budget (OMB) would be required to issue a “sequestration order” to reduce spending in 2018 by $136 billion.

 

The effects of this sequestration order would trigger automatic cuts to various programs, including Medicare. According to the CBO, this could be as much as 4% for Medicare, which amounts to $25 billion in 2018. Furthermore, all non-exempt programs would be eliminated, which include some farming subsidies, border security, and student loan help.

So, in order to give the wealthy and corporations an enormous tax cut, Republicans will either raise insurance premiums for millions of average Americans or apply major spending cuts to programs like Medicare (or do both). This is in addition to increasing taxes on millions of people who itemize their deductions because they have big medical bills or live in states or cities with high taxes. All of this will happen while they increase the deficit by $1,456,000,000,000, give or take several billion. 

On the plus side, the president, his family, the billionaires in the Cabinet and lots of other plutocrats, including many CEO’s, will have a lot more money in their very deep pockets, a few dollars of which will trickle down to the rest of us. Inequality will increase, people will die too sooner, but that’s all right, because I’ve got mine, Jack!

What Republican Senators Are Thinking

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Cracks may be developing in Congress’s support for the president. Fred Kaplan of Slate writes about the silence of Republican senators regarding recent statements by fellow Republicans to the effect that the president needs round-the-clock supervision and isn’t playing with a full deck:

It is a hair-raising fact that though few Republicans have seconded [Senator Corker’s] or [Secretary of State Tillerson’s] appraisals of Trump, still fewer have spoken out in their president’s defense. The day after Corker’s interview in the Times, CNN staffers phoned all 52 Republican senators to see if any of them would come on Wolf Blitzer’s show to discuss politics that day. Not one assented.

They chose not to protest that one of the party’s leaders in the Senate likened Trump to a patient in an “adult day care center.” They don’t seem to mind that the nation’s top diplomat called Trump a “fucking moron.” And no one has as yet rebutted the latest report on Trump’s appalling cluelessness about nuclear weapons. The Republicans don’t deny any of these indictments, yet they do nothing about them; they do nothing to address the clear and present danger.

Elsewhere, Robert Reich, an economist who was the Secretary of Labor in the Clinton administration and now teaches at Berkeley, posted this on Facebook. I can’t vouch for its accuracy, of course, but it does give one hope:

This morning I phoned my old friend, a Republican former member of Congress.

RR: So what’s up? Is Corker alone, or are others also ready to call it quits with Trump?

He: All I know is they’re simmering over there.

RR: [Senators] Flake and McCain have come pretty close.

He: Yeah. Others are thinking about doing what Bob did. Sounding the alarm. They think Trump’s nuts. Unfit. Dangerous.

RR: Well, they already knew that, didn’t they?

He: But now it’s personal. It started with the Sessions stuff. [Attorney General Sessions] was as loyal as they come. Trump’s crapping on him was like kicking your puppy. And then, you know, him beating up on [Majority Leader McConnell] for the Obamacare fiasco. And going after Flake and the others.

RR: So they’re pissed off?

He: Not just that. I mean, they have thick hides. The personal stuff got them to notice all the other things. The wild stuff, like those threats to North Korea. Tillerson would leave tomorrow if he wasn’t so worried Trump would go nuclear, literally.

RR: You think Trump is really thinking nuclear war?

He: Who knows what’s in his head? But I can tell you this. He’s not listening to anyone. Not a soul. He’s got the nuclear codes and, well, it scares the hell out of me. It’s starting to scare all of them. That’s really why [Corker] spoke up.

RR: So what could they do? I mean, even if the whole Republican leadership was willing to say publicly he’s unfit to serve, what then?

He: Bingo! The emperor has no clothes. It’s a signal to everyone they can bail. Have to bail to save their skins. I mean, Trump could be the end of the whole goddam Republican party.

RR: If he starts a nuclear war, that could be the end of everything.

He: Yeah, right. So when they start bailing on him, the stage is set.

RR: For what?

He: Impeachment. 25th amendment.

RR: You think Republicans would go that far?

He: Not yet. Here’s the thing. They really want to get this tax bill through. That’s all they have going for them. They don’t want to face voters in ’18 or ’20 without something to show for it. They’re just praying Trump doesn’t do something really, really stupid before the tax bill.

RR: Like a nuclear war?

He: Look, all I can tell you is many of the people I talk with are getting freaked out. It’s not as if there’s any careful strategizing going on. Not like, well, do we balance the tax bill against nuclear war? No, no. They’re worried as hell. They’re also worried about Trump crazies, all the ignoramuses he’s stirred up. I mean, Roy Moore? How many more of them do you need to destroy the party?

RR: So what’s gonna happen?

He: You got me. I’m just glad I’m not there anymore. Trump’s not just a moron. He’s a despicable human being. And he’s getting crazier. Paranoid. Unhinged. Everyone knows it. I mean, we’re in shit up to our eyeballs with this guy.

Will Congressional Republicans stick with this monster to the bitter end? If only they were brave enough and clever enough to get rid of him and put Vice President Pence in the Oval Office. They have to be looking for an excuse to dump Trump, since their lives would be so much easier with President Mike Pence. Before Pence became governor of Indiana, he served in Congress for 12 years. He’s a standard right-wing religious fanatic they could work with!