Republicans: Up is Down, Medicare is Safe

Leo W. Gerard

Leo W. Gerard USW International President

Up is down. Would is wouldn’t. What you are seeing and what you are reading is not what's happening.” And a new round of GOP tax cuts, proposed this week, definitely will not result in damage to Medicaid, Medicare, or Social Security!

Definitely.

Republicans live in an Alice-in-Wonderland World where they can pass $1.5 trillion in tax cuts that won’t cost anything. They’ll pay for themselves! Just like a worker’s mortgage does every month. Just pays for itself! And then the GOP can propose another $1 trillion in tax cuts that also won’t cost anything! They certainly won’t increase the federal deficit!

The reason Republicans believe in Magic Unicorn Money is that they never actually socialize with, or speak to, or even vaguely know minimum-wage workers, or middle-class workers or precariat workers who drive for Uber at night because their day jobs deny them full-time hours. These workers get paid in cold, hard currency that lacks the power of Unicorn Money to magically materialize whenever necessary to pay bills.

Up is down. When Republicans passed their massive tax cut for the rich and corporations in December, most credible economists, including nonpartisan ones in the government itself such as the Joint Committee on Taxation, estimated it would cost at least $1 trillion over 10 years. That is, the government would receive $1 trillion less in tax payments. Which means $1 trillion less to pay bills. Which means higher deficits. Especially since Republicans increased spending.

Republicans said that wasn’t true. It wouldn’t happen. No way. Just last month, Larry Kudlow, director of the President’s National Economic Council, told Fox News that the tax cuts caused the deficit to decline, “And it’s coming down rapidly,” he said.

Yeah, about that: Tax collections from corporations, which got the biggest, fattest tax cut of all, are near a 75-year low as a share of the economy. In the first six months of 2018, tax receipts from corporations fell by $50 billion when compared to the first half of 2017. That means the federal government received about a third less money from corporations. That drop off is enlarging the federal deficit even faster than economists had predicted.

This decline in revenue for the feds is occurring even as corporations are rolling in cash. Their profits after taxes have hit all-time record highs. They’re spending that slush fund on stock buybacks, which raise stock prices, thus enriching already rich shareholders and CEOs. They’ve announced $436.6 billion in buybacks – the most ever and nearly double the old record.

Would is wouldn’t. Of course, those cash-fat corporations have awarded big raises to workers, just like Kevin Hassett, chair of the President’s Council of Economic Advisors, said they would. “I would expect to see an immediate jump in wage growth,” ranging between $4,000 and $9,000 for the typical worker, Hassett said in October, just before Congress passed the tax cuts.

Maybe what he meant to say was “wouldn’t” expect that jump in wage growth. Fewer than 500 of the nation’s 6 million employers gave workers a one-time bonus or a wage increase because of the massive corporate tax break, according to tracking by the group Americans For Tax Fairness. U.S. government data show that for nonsupervisory workers in the first quarter of 2018, real wages, that is wages adjusted for inflation, fell 0.1 percent, and private data show them dropping even further in the second quarter.

While corporations wouldn’t come through with those raises, prices workers had to pay this year shot up, including those for gasoline, interest on credit card debt and health insurance.

That is the real, lived experience of workers. Higher costs and no additional money to pay them. Not only did corporations stiff them, but workers are not feeling that tax break in their paychecks either. Only a quarter of those surveyed in a recent Politico/Morning Consult poll said they’d seen more money in their paychecks as a result of the tax cut. By contrast, 52 percent said they saw nothing. Nada. No bump for the working chump. And those guys aren’t happy about it. The poll found only 37 percent supported the tax cuts.

But a worker can’t be trusted to really understand his or her own paycheck, right? What you are seeing and what you are reading is not what's happening.”

Republicans are trusting that statement to be right – that workers don’t actually know what’s happening. The House GOP announced this week they’re going to extend the individual tax cuts – the ones workers couldn’t find in their paychecks, the ones that gave the vast majority of benefits to the wealthiest 1 percenters.

That’s fat cats like U.S. Rep. Vern Buchanan, a Florida Republican who bought himself a $1 million yacht on the very day he voted to approve the tax cuts for the rich. And like U.S. Sen. Bob Corker, a Tennessee Republican who swore he’d never vote for a tax bill that added “one penny to the deficit,” then voted for this tax bill that added $1.5 trillion to the deficit after lawmakers added a special provision at the last minute to specifically benefit Corker, a provision immortalized by the title: Corker Kickback. The Center for American Progress estimates Corker got himself a tax cut of between $125,383 to $706,383 as a result. Buchanan’s tax reduction – between $371,752 and $2.1 million.

Last December, as Republicans in Congress passed the tax cut for the rich that they said would not balloon the federal deficit – but which did, in fact, balloon the federal deficit – they announced their project for 2018 would be to deflate the massive federal deficit. Confused? Don’t worry, “What you are seeing and what you are reading is not what’s happening.”

House Speaker Paul Ryan, Sen. Marco Rubio and Sen. Orrin Hatch all raised the deficit by voting with their fellow Republicans for the tax scam while at the same time saying they’d really like to cut the deficit by raiding Medicaid, Medicare and Social Security. That’s right. Tax breaks for the rich; heartbreak for the rest. No Magic Unicorn Money for the old, poor or sick.

But don’t say that out loud. Up is down. Would is wouldn’t.


Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama appointed him to the President’s Advisory Committee on Trade Policy and Negotiation and the President's Advanced Manufacturing Partnership Steering Committee 2.0. He serves as co-chairman of the BlueGreen Alliance and on the boards of Campaign for America’s Future and the Economic Policy Institute.  He is a member of the executive committee for IndustriALL Global Labor federation and was instrumental in creating Workers Uniting, the first global union. Follow @USWBlogger

Posted In: From the USW International President

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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