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Politics

The huge tax heist

By Robert B. Reich, Tribune Content Agency on

Republicans say the middle class will come out just fine because it will get a larger standard deduction. Not true. The average American's tax bill will rise because the deductions lost will total more than the higher standard deduction that Republicans are proposing.

Second, most Americans will lose government services that will have to be eliminated in order to pay for the giant tax cut -- including, very likely, some Medicare and Medicaid.

More than $1.3 trillion in cuts to Medicare, Medicaid and Obamacare were quietly included in the budget resolution Republicans just passed so that they could get their tax bill through the Senate with just 51 votes. (No one paid much attention because Trump was attacking grieving combat widows.)

Third, most Americans will have to pay higher interest rates on their car and mortgage loans and other money they borrow, because the huge tax cut will explode the national debt.

That debt is now around $20 trillion, or roughly 77 percent of the total economy. If it goes much higher, it will crowd out borrowing and force interest rates upward.

Putting all this together, the theft would be the largest redistribution from the bottom 90 percent to the richest 1 percent in history.

Republicans' biggest fear is that word of the heist will leak out to the public, and their tax bill will be defeated by a handful of Senate Republican holdouts who feel the public pressure.

That's exactly what happened with their plan to repeal the Affordable Care Act. The GOP's big-money patrons pushed for repeal not because they had any principled objection to the ACA, but because they didn't want to fork over $144 billion in taxes on incomes over $1 million to pay for it over the next decade.

 

In the end, Republicans couldn't get away with it because Americans learned that more than 23 million people would lose their health coverage, and Medicaid would also be on the chopping block.

Trump was willing to distract the public's attention to give congressional Republicans a shot at repeal, but the moment the public started catching on, he blew their cover. After the Congressional Budget Office detailed the consequences of a Republican reform bill, Trump called it "mean."

He could do the same with the tax bill. He almost has. When word leaked out last week that Republicans were planning to limit 401(k) deductions, Trump tweeted that it wouldn't happen (and then backtracked on his tweet).

The moneyed interests who run the GOP depend on the Trump bomb to divert attention from their huge heist. Their challenge is to make sure the bomb doesn't go off in the wrong direction.

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(Robert Reich, a former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of "Saving Capitalism: For the Many, Not the Few," now available in paperback. His new film, "Inequality for All," is now out on Amazon, DVD and On Demand. His daily blog is at www.facebook.com/RBReich/.)


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