As decisions go, the passing of the Republican tax cut bill could have the most profound consequences for any nation having economic relations with the United States, including, and perhaps especially, Canada. Nobel Prize winner and New York Times columnist Paul Krugman wrote of how all the lies surrounding the initiative, “show the rot spreads wide and deep,” in the GOP. Krugman isn’t without his many critics, but there was something so manufactured, so devious about the tax plan, that he spoke honestly to what can only be termed as the greatest tax grab by the wealthy in decades.
Myths abounded, mostly exposed and exploded, by a bipartisan group of leading economists who consistently bit back at the fabrications. Will the cuts stimulate growth? Only 0.8% over a decade, according to the economists. Will cutting the corporate tax rate from 35% to 20% prompt corporations and businesses to raise workers’ wages, as Trump maintained? Perhaps, but largely the benefits will go to managers and executives, not the average employee.
Was Trump correct when he said the rich wouldn’t benefit? In perhaps the biggest untruth, the reality is that the greatest benefits will go to the top 5% of families, and by 2027 families with the lowest incomes will get no benefit at all. Will the highest benefit go to the middle-class? Again, no. No benefit will be derived to the middle-class by 2027, while the benefits to the top 0.1% will continue on.
Perhaps most troubling has been the rationale and language used by today’s GOP that carries strong ties to their counterparts 40 years ago during the Reagan era. Numerous Republicans have been saying that the only way to get the deficit under control is to cut the wages and benefits of public servants when in reality it is Trump’s tax plan that will create deficits unlike anything seen in recent memory. Already Republican voices are saying that deficits will only be exacerbated by social programs designed to help the neediest and vulnerable and that they should be downsized. And then there is the old refrain emerging of how it is time to starve government, conveniently leaving the wealthiest with less accountability and monitoring.
Many economists such as Krugman, or even the Congressional Budget Office, worry that the deficit created by the new tax regime of one and a half trillion dollars will relentlessly cut into growth, public health and overall prosperity. And an American economy dragged down by its own devices could take other economies along with it, while opening the door ever wider for Chinese expansion and domination. Despite claims to the contrary, Canada’s economy is irrevocably tied to the economic dynamism south of the border and it’s now likely that Donald Trump’s trickle-down rationale will inevitably reward the few at increasing cost to the many. This isn’t some form of regular seesaw battle between Democrats and Republicans, Left and Right, but is a marked departure, an outright open grab, from anything previous.
This last point is salient, and somewhat damning. It was only a decade ago that citizens and organizations, bewildered and troubled by the sheer greed that almost brought down the economic order, claimed, “Never Again.” From the Great Recession emerged the Occupy Movement, cries for financial reforms and regulations, calls for democratic renewal, the 99% and 1%, and a re-examination of trade policies. The majority of citizens, beleaguered following years of economic worry, eventually grew fatigued with such efforts and went back to their daily lives. But the reforms they wished for were largely ignored and within a decade the keys to the financial kingdom in America have been handed back to the very individuals and financial houses responsible for the debacle of a decade earlier.
This says something about the managers of the financial order and of citizens themselves. The former, shaken from their earlier experience of the Great Recession, are now back on their game with little reflection on what history should have taught them. The latter will only grow more alarmed as the populace becomes ever more divided in a turbulent economic era in which wealth moves ever upward and the true costs for deficits will be passed on to average family and smaller business. Our cousins to the south are about ready to endure a world of hurt, leaving this country with a cautionary tale it should heed. “Never again” just happened and we’d best get set for the fallout.