John Podesta Tears Into Trump On Taxes, Calls Mnuchin A Liar

By John Podesta for the Washington Post

One of the new constants in the Trump era has been the GOP’s complete and utter disdain for evidence-based, nonpartisan policy analysis. In the battle to repeal Obamacare, Republicans consistently tried to ignore, delay and finally belittle by labeling as “fake news” the Congressional Budget Office analysis that tens of millions would lose coverage. In their effort to gut environmental, health and safety, and financial regulation, the White House is using accounting tricks to exaggerate the costs and ignore the benefits of critical regulations. But President Trump’s dishonest pitch for his tax-cut proposals takes this tactic to a new level.

Fact checkers have already had a field day debunking claims by Trump, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn that the tax cuts benefit only the middle class and not the rich. They are, of course, lying. It’s a bit harder to debunk the president’s claim that “it’s not good for me, believe me,” since we still have no idea whether Trump has paid any federal income tax in the past 10 years. (We do know that the repeal of the estate tax will at least be good for Trump’s family.)

Not only that, but also they and their allies in Congress are already doing everything they can to undermine or even prevent objective analysis that would tell the truth. Republicans are delaying producing an actual bill, perhaps in the hope that they can rush a bill to passage before the objective congressional scorekeepers for tax legislation, the Joint Committee on Taxation, can tell us who wins and by how much. As long as Republicans can delay an official estimate of how the tax cuts’ benefits will be distributed, they can continue to perpetuate spin masquerading as analysis.

Key to that strategy is the argument that corporate tax cuts benefit workers, not shareholders – because, they’ll say, it’s workers who bear the burden of corporate taxes. Mnuchin went so far as to claim that “most economists believe that over 70 percent of corporate taxes are paid for by the workers.” If you think that sounds off, you’re right. As Reed College economist Kimberly Clausing wrote recently for the Washington Center for Equitable Growth (where I serve on the steering committee), the evidence suggests that the vast majority of corporate taxes is effectively paid by shareholders, not workers. To disguise this basic truth, the Treasury Department recently stripped from its website a study conducted in 2012 by career professionals in the department that attributed only 18 percent of the corporate tax burden to workers, a whopping 82 percent to shareholders.

To be clear, many middle-class taxpayers have significant investments in the stock market, and that’s a good thing. But their individual holdings pale in comparison with those of the wealthy, and so do any benefits they will get from a corporate tax cut.

So if the White House and Republicans believe a cut in corporate taxes is needed – say, to boost growth – they should sell it honestly. Don’t lie about who receives the direct benefits and don’t try to conceal the evidence.

Of course, even the growth argument is increasingly dubious. Bruce Bartlett, a Reagan administration official who had also worked for Jack Kemp, the original true believer in the Laffer Curve, wrote recently that even Kemp never claimed the kind of magical economic growth from cutting taxes that Mnuchin is claiming: “In reality, there’s no evidence that a tax cut now would spur growth.” Indeed, as Bartlett pointed out, most recent evidence points in the opposite direction – strong periods of gross domestic product growth have followed tax increases more than cuts.

Nor should Republicans lie again about what unpaid-for tax cuts will do to the deficit. Again Mnuchin: “Not only will this tax plan pay for itself, but it will pay down debt.” As you ponder how that claim could possibly be true, keep this in mind: An analysis by the Center on Budget and Policy Priorities found that the George W. Bush tax cuts of 2001 and 2003 will be responsible for 40 percent of our national debt by 2019.

At some point, the lies will fall apart and the bill will come due. And Republicans have made clear again and again this year who would pay the price. We’ve watched them try, unsuccessfully so far, to make deep cuts to Medicaid. Trump’s 2018 budget would also slash food assistance, education, biomedical research and a host of other important programs that help millions. These cuts would far outweigh any small benefits this bill might provide to working families. It might seem like Groundhog Day, but it’s no joke. Tax cuts for the wealthy will be paid for by cuts in programs affecting low- and middle-income families. But the joke will be on us if they can pass the bill by hiding the arithmetic.