Josh Brown recently tweeted:
If they get this through, in its current form, will mark the complete and final takeover of America by corporations. You get to keep your stupid red hat though.
They’re getting it through. Not in its original form, but pretty close. Close enough to represent “the complete and final takeover by America by corporations.” But at least everyone gets to keep their stupid red hats.
The new tax law will result in a massive transfer of wealth to corporations and their shareholders from ordinary citizens and their progeny. If you’re fortunate enough to own financial assets, you may be one of the winners (provided you don’t live in a Blue State and you’re wealthy enough not to have earned income). If you don’t own a substantial amount of financial assets, then you and your kids are screwed. Especially your kids. And their kids. Any temporary benefits working and middle class people will realize from these cuts are likely to be offset by higher interest rates, a weaker dollar, future cuts to the Social Security and Medicare programs, and escalating health care and education expenses.
The national deficit will balloon as the result of this new law, which means your descendants will be inheriting an even larger debt burden, further eroding their standard of living. I guess people think we can simply add this to our tab and never have to pay it off. Or perhaps they’re just not thinking.
America’s tab of public and consumer debt already tops $40 trillion, including:
- $20.5 trillion of federal government debt;
- $14.6 trillion of residential mortgage debt;
- $1.5 trillion of student debt;
- $1.2 trillion of state government debt;
- $1.1 trillion of auto loan debt;
- $1.0 trillion of credit card debt; and
- a staggering amount of unquantified debt represented by unfunded public pensions and entitlement programs (the present value of unfunded entitlements has been estimated to be $49 trillion).
The outgoing Fed chair, Janet Yellen recently said, “I would simply say that I am very worried about the sustainability of the U.S. debt trajectory. It’s the type of thing that should keep people awake at night.”
Up at night?! No one in this White House and none of the Republicans in Congress seems to be losing any sleep. To the contrary, they’re not troubled in the least; in fact, they’re content to make the situation worse, just so they can give more money to their wealthy donors (and themselves and their own families).
This decision to give huge tax cuts to corporations that are already highly profitable, awash in cash and valued at high multiples by the market, and to massively cut wealthy people’s taxes, convinces me more than ever that few people care about the future. Apparently, today is all that matters. Our children and grandchildren are the forgotten ones in all of this. Such parental narcissism is, quite frankly, disgusting. So much for being concerned about the seventh generation.
Former Reagan budget director David Stockman hit the nail on the head:
At the end of the day, the GOP tax bill boils down to borrowing more than $1 trillion from the American public in order to pay higher dividends to wealthy private stockholders.
Another stalwart Republican, Steve Schmidt, who managed the 2008 presidential campaign for his party, wrote:
This tax bill demonstrates, once again, the total collapse of all and any rigor around the policy making process in the GOP congress. It is built on a foundation of lies. It adds more than a trillion to the debt. No real conservative should vote for this.
A foundation of lies indeed. Pennsylvania Avenue and the streets around the Republican controlled Congress are rivers of lies these days. So much for draining the swamp. It’s worse than ever. The only thing that still surprises me is the number of people who are willing to believe the lies, including those who will be most hurt by the lies. Gullibility seem to know no bounds.
Back to Josh Brown, a Wall Street type (financial adviser and CNBC regular) whom I quoted at the outset. Brown wrote the following the morning after the Senate passed the tax cut bill. As usual, Josh gets it right.
There’s a possibility that last night’s preliminary step toward final legislation will take the number one issue facing America and balloon it into Rubenesque proportions. Economic inequality, which largely drove voters to lose their minds and cotton to candidates like Bernie Sanders and Trump, could explode over the next few years as a result of fiscal stimulus targeted almost precisely at the part of the economy that doesn’t need it. The fact that the people who do need the most help could end up paying for that is perhaps the sickest, most cruelly ironic joke that’s ever been told.
Unless you believe in magic, which I don’t. And remember, I’m speaking here against my own immediate self-interest. I’m not stupid and this isn’t virtue signaling – I genuinely believe the economy is better when participation is broader and not as concentrated as it’s been. Obama attempted to solve this but he failed. Trump is not even trying. He’d sign anything brought to his desk at this point, just to say he did it.
Indeed, this bill will exacerbate wealth inequity, further hurting the very people who have placed their hopes in Mr. Trump. It is, as Josh writes, “perhaps the sickest, most cruelly ironic joke that’s ever been told.”
And now watch: I guarantee you the Republicans will be coming for your Social Security and Medicare.
The events surrounding this new bill further convince me of the power of propaganda (as if I didn’t know). And of the dangers of slick charlatans and demagogues and people’s willingness to embrace them if conditions are right. And of the dangers of willful ignorance.
But it is what it is. At least I get to keep my Pittsburgh Pirates cap. And I don’t have to wear one of those stupid red hats.