The Ever-Evolving Tax Cut Swindle

Republicans used to love saying that cutting taxes for the rich was all about creating jobs. Now they say it’s all about raising wages. Has anything changed?

Whenever so-called “facts” turn out to be false, it’s rare for those who promote these lies to apologize for getting it wrong. History is littered with people who clung to stubborn defiance — either through sheer ignorance or because they directly benefitted from the lie.

You don’t have to look back to the 15th century, though, to see how beneficiaries of falsehoods press onwards. Today, the Republican Party’s breathless campaign for tax “reform” provides a perfect blueprint for how to promote false claims in the face of overwhelming evidence.

In a time of terrible inequality, Republicans are trying to pass a tax cut plan which disproportionately helps out the rich while hurting “the poor more than originally thought.” It’s supported by only a quarter of Americans, with over 60 percent of the population thinking it will mostly benefit those at the top. And still they unapologetically persist.

Now, usually, popular support tends to be important in a functioning democracy, but the American government has passed the point of functionality. Driven by the interests of their corporate overlords and donors, conservative politicians are disregarding public opinion and marching forward with their tax cut plan.

These trickle-downers know they (and their policies) are full of shit, but still they remained undeterred. And why shouldn’t they? For years now, Republicans and Democrats have been extremely effective in manipulating the American people to help out the rich and corporations.

Since the Gilded Age we’ve been told that the rich are the true job creators. It took decades of repetition and disciplined narrative-building to convince the commoners that the more money the wealthy and corporations possess, and the less constrained they are, the more jobs they will create. Tax cuts, in short, lead to growth.

Americans have internalized this theory of growth like we’ve accepted milk is good for your bones (it’s not).

Here are a few examples of growth-oriented arguments we’ve been fed over the years:

• “If there is one thing above all others that will stimulate business it is tax reduction.” — Calvin Coolidge, 1925
• “[Job creation] can best be done by temporary tax incentives to charge up our free enterprise system...” —Gerald Ford, 1975
• “Marching in lockstep with the whole program of reductions in spending is the equally important program of reduced tax rates. Both are essential if we’re to have economic recovery.”—Ronald Reagan, 1981
• “Every $1 billion in tax savings would create 7,000 well-paying jobs, [AT&T Chief Executive] Randall Stephenson went on to say.”—New York Times, 2017

This “tax cuts=job growth” framing does have a key weakness, however. The message becomes rather useless if the economy already has a lot of jobs—which is exactly where the American economy finds itself today.

Currently, the federal unemployment rate stands at 4.1%, a remarkably healthy number and job growth, too, has been particularly strong.

As CNBC stated this summer, the American economy’s problems have nothing to do with job growth or unemployment. Instead, “wages are the one giant problem” facing today’s economic landscape.

In October of this year, American “wages grew at their slowest annual pace in more than 1–1/2 years.” This is hardly a new problem, either. According to a Harvard Business Review study: “since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year.”

In this economic environment, where jobs are aplenty and wage growth is anemic, selling job growth is like selling heat lamps in the summer.

But, like any worthwhile snake oil salesman, Trump and his merry band of trickle-downers have not given up on their product. Instead, they have been forced to think on their feet, and we’re seeing in real time how the trickle-down argument for tax cuts is pivoting.

Now advocates of the GOP tax scam are highlighting a more relevant causal relationship to Americans: tax cuts lead to wage growth.

Voila!

Obviously this isn’t exactly a new talking point. Republicans have blathered about wage growth and tax cuts before, but recently they’ve really started hammering home this point.

Let’s put it this way: President Trump didn’t mistakenly harp on raising wages by pointing out the corporate tax cut will “likely give the typical American household a $4,000 pay raise.”

Neither did the White House’s Council of Economic Advisors randomly call attention to “the deteriorating relationship between wages of American workers and U.S. corporate profits.” (Never mind that corporate profits are at an all time high while wage growth remains stagnant).

Nor did Speaker Paul Ryan accidentally point out on his website how “Another Study Confirms Massive Wage Growth from Corporate Tax Reform.”

Amidst all of this political noise, however, it’s telling that conservatives won’t cut out the middle man and just raise wages. After all, there are a bunch of really popular policies that—get this—directly increase salaries without having to give tax cuts to corporations and the rich.

Raising the minimum wage comes to mind—there’s a policy that would immediately help the working class. What about the middle class? Well, conservatives could increase the overtime pay threshold, which right now only affects those earning under $23,000 a year (around eight percent of salaried workers). Recently, a poll found that “79 percent of Americans support raising the threshold above” this meager number, “while 65 percent support raising it to $75,000.” So it’s not exactly like that policy proposal is toxic.

Yet Republicans aren’t talking about these policies, and that’s because their cries for wage growth are mere covers for their political self-interest and the financial self-interest of their donors. And Americans finally get that.

If we’re not careful though, we will let new trickle-down justifications permeate our understanding of how the economy works. Americans must stay vigilant and keep an eye on Republican tactics, because if history shows us anything, it’s that those representing the interests of the powerful will always come up with fresh reasons to perpetuate the status quo.