Opinion: Tax cut can’t save GOP

Even though they control every lever of the federal government, Republicans can so far claim only one solitary accomplishment of any significance, the passage of a massive tax cut.

This week, in the special election in Pennsylvania’s 18th Congressional District, they gave that singular accomplishment a test drive as a campaign issue, and it didn’t just fall flat, it backfired. It backfired so badly that by the end of the campaign, Republicans had ceased to even talk about it.

The winner of that race, Democrat Conor Lamb, had a lot to do with that failure. He addressed the tax-cut question squarely in his campaign, accurately calling it a giveaway to the already wealthy and explaining it as only one step in a planned shift in resources away from the working and middle class toward the GOP donor class.

“Within 12 hours of giving away our tax dollars to the wealthy and big corporations, Speaker Paul Ryan announced that he would try to pay for it by coming after Medicare, Social Security and Medicaid,” Lamb told voters. “They call this ‘entitlement reform,’ but make no mistake – that is just fancy Washington talk for taking the money you paid your whole working life and using it to cover the trillion dollars they just added to the debt.”

He’s right, about all of it.

He’s certainly right about the deficit: In a strong economy, the deficit ought to be shrinking not growing, but last month, as a direct result of the tax cut, the U.S. Treasury reported the largest monthly deficit since 2012. Government revenue fell by $156 billion, a 9 percent decrease from a year ago.

Lamb is also right about the longer-term GOP plan: Immediately after the signing of the tax bill, Ryan did indeed go on conservative talk radio to cite the suddenly larger deficit as reason to start slashing programs such as Medicare and Social Security, which has long been his goal.

“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said. “… Frankly, it’s the health-care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements — because that’s really where the problem lies, fiscally speaking.”

Lamb is also right about where the benefits of the tax cut are going. It’s not going to rebuild and modernize the nation’s infrastructure, where we have a glaring need and where, in the wake of these tax cuts, the government pleads poverty. And very little of it’s going into weekly paychecks — despite an unemployment rate near record lows, wage growth continues to astonish economists by being non-existent.

In the past year, while the Dow rose 20 percent, real average wages rose 0.4 percent. Since the tax cut, they have risen 0.0 percent. And while parts of corporate America made a big initial show of granting employee bonuses allegedly tied to the tax cut, it proved to be little more than a PR move.

The total amount spent on such one-time bonuses is estimated at $6 billion; every day since the tax cut, corporations have spent an average of $4.8 billion to buy back their own stock and drive up its price to benefit shareholders and top-level executives. JP Morgan estimates that by the end of the year, corporate America will have spent $880 billion on those buybacks, much of that generated by the tax cut.

This shouldn’t have come as a surprise. The same thing happened in 2004-2005, under President Bush, but this time we were told it would be different. Well, it isn’t different. And with President Trump and House Republicans already talking yet another round of tax cuts later this year, it won’t be different the next time either.