You gotta hand it to Republicans: Four decades on from the Reagan Revolution, they’ve distilled something very close to pure shamelessness from the noxious vapors of supply-side tax and spending policies.
After a struggle, Senate GOPers finally crafted a version of Donald Trump’s signature budget legislation everyone in the fractious caucus could agree on. Despite days of sometimes contentious debate, “success” (and I use that term very loosely here) was assured. If John Thune and Mike Johnson failed to wrangle their respective cat herds in time for Trump’s July 4 deadline, there’d be hell to pay.
With the bill on its way to becoming law, the Yale Budget Lab released a distributional analysis of the Senate version as it stood on June 27. Not surprisingly, it revealed a reverse Robinhood scheme similar to the House-passed version.
As the figure shows, the top 20% of the wealth distribution will score more than $6,000 in extra annual income from the legislation, funded in part by turning the bottom 20% upside down and shaking the loose change from their pockets.
“The overall effect of these policy changes would be regressive, shifting after-tax-and-transfer resources away from tax units at the bottom of the distribution towards those at the top,” the editorial accompanying the analysis read.
Lest we should forget while regaling each other in needlessly formal jargon, a “tax unit” is a person or, more to the point, a family. This bill, mostly through cuts to Medicaid and SNAP, will reduce annual incomes for the poorest American families by 2.3% on average. The richest 20% will enjoy a 2.3% raise.
If you’re wondering what the numbers look like at the very top of the wealth distribution, you’re in luck. According to the same analysis, the top 0.1% of Americans will get an extra $118,630 a year under the legislation on average.
Do note: The median household income in America is $77,000. So, Republicans are about to hand the richest 0.1% of the country one whole median annual income, plus a ~$40,000 kicker.
And please: Spare me the observation that the richest only get a 1.6% bump. That percentage is small because they make so damn much already. That wealth cohort shouldn’t be getting a bump at all. The adjusted gross income cutoff for that group is $3.31 million.
In explaining away the red ink from the bill — i.e., the difference between the cost of upward transfer payments to the richest Americans and what can be had by shaking down the poorest — Republicans cite a combination of future growth and tariff revenue in suggesting the bill may not actually balloon the nation’s borrowing needs as much as feared.
The “we’ll get it back with growth” talking point is one of the oldest canards in the supply-side book. Simply put: It’s a lie. As for the tariff revenue excuse, it’s implausible, but even if the GOP can count on trade levies to pay for a portion of the tax cuts, that makes the bill even more regressive given that tariff costs are borne disproportionately by the lower- and middle-class. The Yale analysis emphasized as much: “The overall impact of the combination of tariffs and changes in taxes and spending would be even more regressive” (emphasis mine).
This legislation is openly cynical, and it’s a gross betrayal of Trump’s blue collar base. “It’s all over but the backslapping, the high-fiving, and the cork-popping,” Stephanie Kelton wrote earlier this week, calling this the biggest-ever “transfer of resources from the poorest to the richest people in America.”
Newton’s Third Law of Motion… wait for the future Mamdani administration?
The numbers are actually even more egregious at the very top than what I initially published. The raise for the top 0.1% according to the Yale analysis of the June 27 version in the Senate was more than $118,000.
Most of your readers, myself, and most family and friends, included, undoubtedly will benefit financially from this legislation – at least marginally and in the short term. But, not that it’ll be meaningful to us. However – long term, big picture…? I fear for the future – not so much for myself, soon to enter my 7th decade – but for my young nieces, nephew and friends and their kids (none of my own).
In the early 1930s the world faced cataclysmic conflict between communist and fascist ideologies…not dissimilarly to what seems to be happening in the USA today. Somehow saner middle ground triumphed (at least in the West) then; we can only hope now…
So it’ll cost the poors roughly $700 a year ($1,600 according to the CBO) to take out their anger on immigrants and transgender people, but they have to pay that and then some to the wealthy people that actually shipped off their jobs.
Lucy just pulled the football again.
The billionaires are mad about the tax rate they’ve been getting.
Grandma’s gotta die to help finance Jeff Bezos’ wedding.
The poor people must pay, because their lives are so pathetic
and they could have been rich if they’d just been more energetic.
So Jeff can have his way, the poor people must pay.
If they’d just bought some congressmen, they might have had a say.
Little Timmy’s gonna die, he will not get his operation
because billionaires are suffering the effects of high inflation.
Mitch McConnell has assured us little Timmy’s family will move on
and not make a big deal about how little Timmy’s gone.
To placate Peter Theil, the poor get a raw deal.
So what if they are forced to forego every other meal?
Envy talk…”they make so damn much already.”
Whatever happened to a flat tax rate across the board, getting everybody ?
Easy answer. The flat tax is unacceptable to those who pay to put the various “lords” in office, with huge pensions, health benefits, vacations, free trips, free houses, large staffs with full budgets, yada, yada. All paid for by our taxes (for life).
“Envy talk,” Lee? Really? You’ve been around these parts for quite a while. So I can only assume you’re joking. I’m no Elon Musk over here, but I don’t have much cause to “envy” anyone else. I keep up with the proverbial Jones’s pretty well.
$118630? You’d have to be in a much lower income bracket to notice.
So all the young black and Hispanics that voted for trump or did not vote are now being profiled and some are being rounded up by ICE. And all the poor white underclass that voted for trump or did not vote are getting it in the teeth by losing food stamps, medicaid, and their rural hospitals will close or be damaged. Sometimes people have to learn the hard way. Too bad for all the other collateral damage. I feel really bad but now it is too late.
We’ll see if anything has been learned, come next November.
Even though these poor folks who voted for Trump will get a kick in the pants, they’ll still blame it on the Democrats.
H-Man, the Republicans are feasting on the kill while throwing scraps to the dogs.
“It’s a gross betrayal of Trumps base”. Since I believe that the top tax rate should be brought back to 70%. The direction the country is going is right down the tubes. I guess it takes awhile for the destruction to start. I am getting ready for SP500 to go to 4000.
With less tax on the rich, I’d assume the SP500 will go to 40,000, not 4,000.
Maybe 40000 with a rapid readjust to 400 as the masses take to the barricades
Rob from the poor and give to the rich. All hail Prince John!
Regressive taxation is a blight on mankind.
H-Man, his blue collar base is going to receive a big time wake up call. The boss just sold them down the river and they never saw it coming.
Seems to me the challenge is always this: how to turn the underlying facts from such stats & reasoning into some convincing, easily relatable stories to the majority of the voting population?
Simple fundamental disagreement, the more you have the more you get or vice versa. It’s amazing that someone can sell the former to the masses. Seems like 6th grade would be enough to figure that out.
I pray all of us who are the beneficiaries of this legislation increase our charitable contributions and let our elected officials know of our objections to it.
Thank you for your prayers… I think. Def not so sure about where all these supposed prayers are going these days. I suppose they’re heading out there with the other prayers for a second coming and the well-being of our annointed leader of the free world. Still it’s a nice thought. Thoughts and prayers, yay.
Prayers weren’t really for you Btfl – unless you were one of the millions who were screwed by this legislation.
To be clear, I was simply exhorting those few (statistically) of us who are fortunate (which I assume are the bulk of the subscribers to H-man’s unique, invaluable, report) … to think of those less fortunate.
I am indeed of those millions. Retirement age but still working, meager investments, reading and learning. Still raising a child too. So, yes please, think of us, pray if you must. Better, join us on the streets in protest. Raise your phone, call your reps. Do not let this go down without a fight.
Will do Btfl. Already called my reps. Again. Will increase charitable donations. Street protest I’ll pass on but I cheer on those who don’t.
Yes, do cheer us on Vannest03. Make a point of driving past the protest groups and toot-toot-de-toot-toot your horn and wave a thumbs-up. We need all the support we can get, and it builds morale in the moment for those on the streets. And reconsider joining in… even if you never have before. The smaller protest venues (hundreds to a couple thousand) are typically very friendly, neighborly groups with near zero police/agitator presence and if it’s in your local area you’ll likely run into someone you recognize, or you may make a new friend or three.