The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
So here we are, awakening on the darkest day of the year - speaking objectively, and astronomically, of course - with a new spring in our step, buoyed up by the unbearable lightness of Republican tax policy.
There are any number of awful things about the new Tax Cuts and Jobs Act (aside from its inferior acronym - the unpronounceable TCJA - "TicJa"?). Now that the dust has settled, the bill's outlines are pretty clear. No simplification - that idea got dropped pretty early on. Some tax reductions for the "middle class"; individuals with incomes from around $38,000 to $425,00 will, for instance, see their rates fall from a range of 25-33% to a range of 22-32%. Coupled with other changes (doubling the standard deduction, increasing the child care credit) many taxpayers will see a reduction in their tax liability, though TCJA's new limits on deductions (for state and local taxes, mortgage interest) and the elimination of the personal exemption, will offset that for a number of taxpayers and will result in somewhat higher tax bills.
But the big reduction is of course reserved for the corporations (and other "pass-through" business enterprises), who will see much more substantial reductions in their liability.
Maybe this will work, and will give the economy a big boost, raise wages, increase investment, etc. I'm no expert, and my ability to foresee the future is no better than anyone else's. It does strike me as peculiar to believe, at a time when US corporations are sitting on around $2 TRILLION of cash - a record high, by the way [see here and here] - that what the economy really needs is more cash for the corporations, that they're just waiting for some additional cash to get moving on all that job-creation, empolyee raises, capital investment and the rest of it - even though they're not spending the cash they already have. You'd think that before you decide to water the garden, you'd check to see if it looks like it needs water.
But like I said, I'm no expert, and I suppose we'll see.
It will also be interesting to see if the GOP can sell this to their base - especially to their base - as being part of their new 'populist' agenda. I guess I thought that there was all this anger, among the GOP base, at "Wall Street" and the small cadre of "elites" who have managed to rig the system to their advantage - where did that go? It's a strange kind of populism, that's for sure, that showers money onto Wall Street and into corporate coffers, on the hope that the money will be used for more than just the benefit of corporate shareholders and corporate officers and executives.
And it will be interesting to see if the Republicans will really have the chutzpah, when it comes to "entitlement reform," to demand cuts in Medicaid, Medicare, and/or Social Security, on the grounds that there is - surprise!! - no money any more to pay for these programs.
But whatever damage the bill may or may not inflict on the US economy over the coming years, it has already inflicted damage, which might be considerable, via the manner in which it was foisted on the American people. Not a single public hearing on a bill that has the potential to be the most significant economic legislation in decades. No real public debate, because nobody - except the lobbyists, of course - knew what was in the (400-page) bill until it was basically time to vote. No "experts" - God forbid! - giving us their analyses of the bill's provisions; the only interest anyone seemed to have in the CBO analyses was in the estimate of the cumulative 10-year effect on the deficit, and that was only because a too-large number would have taken the bill outside the "reconciliation" process in the Senate and required 60 votes (i.e., same small measure of Democratic support) (a problem the GOP solved by early termination of the individual, but not the corporate, tax breaks - Nice!). No attempt whatsoever to try to find any sort of bipartisan common ground.
I know there are some people who respond to this charge with some variant of "Well, the Democrats did that too, when they controlled Congress and the White House, in 2008-09, with Obamacare . . ." The response is the same as to the "But he started it!" defense familiar to anyone with a 9-year old around the house: other peoples' misbehavior does not justify your own. There's a right, and there's a wrong, way to conduct yourself, and it does not depend on the extent to which others do or do not conform. The Republicans had a chance to do this the right way, a chance I thought they might seize after the initial failure of the Obamacare repeal. But they didn't seize it. Quite the contrary; they've made it, I fear, the new normal. And we will pay the price for that down the road, for sure.
[UPDATE: Because of a technical glitch, the author's name didn't at first appear at the top of the post; this has now been fixed.]