What The GOP Pols Have Wrought - A Fiscal, Economic And Political Monster

The GOP tax bill is not "at least something". It's not "better than nothing". And, no, we are not letting the perfect become the enemy of the good.

In truth, this thing is a fiscal, economic and political monster. It is hands down the worst tax bill enacted in the last half-century----maybe even since FDR's 1937 soak-the-rich scheme, which re-ignited the Great Depression.

True, rather than soak them, the GOP's bill will pleasure America's wealthy with a bountiful harvest of tax relief. Owners of public equities, for example, will garner a trillion dollar shower of extra dividends and stock buybacks from the corporate rate cut.

Likewise, 4 million top bracket ATM (alternative minimum tax) payers will be relieved of about $80 billion per year of Uncle Sam's extractions; around 5,000 dead people per year with estates above $20 million will get to leave more behind; owners of real estate will be able to deduct another 20% of property income that isn't already sheltered by depreciation and interest deductions; and tax accountants and lawyers will become stinking rich helping America's proprietorships (24 million), S-corporations (4 million), partnerships (3.5 million) and farms (1.8 million) convert their "ordinary income" into newly deductible "qualified business income".

Notwithstanding these facts, the commonality between the FDR's tax bill disaster and this one is that both represent exactly the wrong policy at a time which could not be worse.

In the New Deal case, business and investor confidence had finally begun to recover after the trauma of the Crash and subsequent withering depression, but FDR's excess profits tax and punitive marginal rates on high incomes sent the economy tumbling until it was rescued by war mobilization after 1940.

In the current situation, the absolute worse thing you could do is draw on Uncle Sam's credit card to fund temporary cuts for the middle class and a permanent windfall to the top 10 percent of households which own 80% of the stock. And the reason, of course, is that America is marching straight into a 20-year fiscal and demographic trap that has the potential spiral out of control and smoother any semblance of economic prosperity as we have known it.

Indeed, the signal event of 2017 is not the gimmick-ridden dog's breakfast of K-street favors being enacted today, but the GOP's utter failure to repeal and reform ObamaCare.

As we have long insisted, America's health care system consists of the worst of both worlds. It amounts to socialism for the beneficiaries, which generates uncontainable demand via third-party paid, cost-averaged pricing; and crony capitalism for the providers, where delivery system cartels of doctors, hospitals, nursing homes, pharma suppliers, medical device makers etc. have implanted themselves deep on K-street and have thereby rigged reimbursement systems for maximum private revenue gain (and minimum system efficiency and competitive discipline).

That's why the US spends 18% of GDP on health care compared to 10-12% in the rest of the (socialistic) developed world, on the one hand; and why the GOP couldn't lay a glove on ObamaCare, which embodies in spades this "worst of both worlds" paradigm.

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Olivia Neale 6 months ago Member's comment

No life without problems no problems without solutions...