Republicans also denounced and ridiculed the Obama administration’s efforts at fiscal stimulus, which included payroll tax cuts intended to raise workers’ incomes and lead to higher spending. Trump’s 2017 tax cut basically bypassed ordinary workers, giving big tax breaks to corporations instead, on the theory that these tax cuts would trickle down to the middle class. Now the Trump administration is basically admitting that trickle-down isn’t working and that Obama-style stimulus is actually the right way to go.
For what it’s worth, I don’t think any of these desperate measures is likely to happen anytime soon. The Fed is in no mood to be bullied by a president it believes has damaged the economy with his trade war. And while Democrats might support a clean payroll tax cut that really went to workers, my guess is that Republicans won’t be able to resist the temptation to lard their proposals up with more goodies for the rich.
And maybe none of it will be needed. We don’t actually know that a recession is coming. But if it does come, we know how the administration will respond: with blind panic.
The Trump scam has officially hit rock bottom
Mississippi state Sen. Chris McDaniel (R) defends Trump’s attacks by claiming his voters see McCain as the “embodiment” of the sort of “lifetime career politician” who left them feeling “powerless and voiceless for many years,” until Trump arrived.
GOP consultant Mike Shields claims Trump’s attacks on McCain tap his voters’ frustration with “politicians that lie to them” and “aren’t real,” whereas these attacks show Trump is “real.” Trump’s outsider authenticity turns out to be a willingness to slime a dead man who can’t defend himself.
.. And in a new interview with Fox News, Trump himself makes similar claims. He rips into McCain as “horrible” for voting against Obamacare repeal, adding: “We would have had great health care.” And he slams McCain for turning over to the FBI the “Steele dossier,” which he claims was “paid for by Hillary Clinton and the Democrats.”
Thus, the narrative Trumpworld is spinning is that, in attacking McCain, Trump is standing up for his voters, by going after a symbol of the GOP elites he campaigned against and of the deep-state forces working against the will of those voters, and those who blocked him from delivering on his health-care promises.
.. My intention here is not to defend or exalt McCain, but rather to look at what all this says about what a con this whole presidency really is.
Trump did not merely promise to repeal Obamacare. He also vowed to replace it with “insurance for everybody.” He explicitly campaigned on the idea that his desire to give people health care made him different from GOP elites. But he sold out on this promise, by embracing the actual goal of GOP elites: rolling back Obamacare’s coverage and protections for millions without meaningfully replacing them.
Because this was so unpopular, Republicans employed extraordinary partisan tactics and secrecy to try to push it through. This procedural abuse is what McCain voted against. He blocked Trump’s efforts to conspire with GOP elites to sell out on his promise to his voters.
That’s of a piece with Trump’s broader selling-out of his economic populism. After getting elected by promising to drain the swamp of elite corruption and take on the plutocrats who rig our political economy to enrich themselves, he gave those elites a deregulation spree that further rigged the economy in their favor, and a corporate tax cut that lavished enormous benefits on top earners. (As it happens, this is an area where Trump and McCain broadly agree.)
To save capitalism, we need to create a new political party and reinvent the role of corporations.
But how can the economic and political power of the middle class be restored to save capitalism?
Capitalism can be saved through the formation of a new political party. For instance, did you know that the largest political party in the country is neither the Republican Party nor the Democratic Party, but the party of nonvoters?
Just consider the 2012 presidential election. Only 58.2 percent of eligible voters exercised their right to vote.
A third party could be founded to unite apathetic voters, returning a political voice to disenfranchised Americans. This party should endeavor to enable the economic success of the country’s majority.
But to do this, the party would need to reform America’s system of campaign financing, which currently allows wealthy individuals to leverage their money to influence politicians. Beyond that, the party would need to raise the minimum wage, give priority to labor agreements instead of creditor agreements and limit the size of Wall Street’s gigantic banks.
When that’s completed, the corporation too will need to be reinvented. As the system is set up today, the financial interest of corporations means lower pay for the average worker and extremely high pay for executives.
One strategy for changing this system would be to tie corporate tax rates to the ratio of what a CEO makes compared with the pay of an average worker. The greater the difference, the higher the tax. This would give corporations an economic incentive to increase the average wage of employees.
Capitalism is not lost. Yet if it is to survive, it will have to be reorganized to better distribute its profits.
How Can We Tax Footloose Multinationals?
Apple has become the poster child for corporate tax avoidance, with its legal claim that a few hundred people working in Ireland were the real source of its profits, and then striking a deal with that country’s government that resulted in its paying a tax amounting to .005% of its profit. Apple, Google, Starbucks, and companies like them all claim to be socially responsible, but the first element of social responsibility should be paying your fair share of tax. If everyone avoided and evaded taxes like these companies, society could not function, much less make the public investments that led to the Internet, on which Apple and Google depend.
.. Transfer pricing relies on the well-accepted principle that taxes should reflect where an economic activity occurs. But how is that determined? In a globalized economy, products move repeatedly across borders, typically in an unfinished state: a shirt without buttons, a car without a transmission, a wafer without a chip. The transfer price system assumes that we can establish arms-length values for each stage of production, and thereby assess the value added within a country. But we can’t.
The growing role of intellectual property and intangibles makes matters even worse, because ownership claims can easily be moved around the world. That’s why the United States long ago abandoned using the transfer price system within the US, in favor of a formula that attributes companies’ total profits to each state in proportion to the share of sales, employment, and capital there. We need to move toward such a system at the global level.
How that is actually done, however, makes a great deal of difference. If the formula is based largely on final sales, which occur disproportionately in developed countries, developing countries will be deprived of needed revenues, which will be increasingly missed as fiscal constraints diminish aid flows. Final sales may be appropriate for taxation of digital transactions, but not for manufacturing or other sectors, where it is vital to include employment as well.
Some worry that including employment might exacerbate tax competition, as governments seek to encourage multinationals to create jobs in their jurisdictions. The appropriate response to this concern is to impose a global minimum corporate-income tax. The US and the European Union could – and should – do this on their own. If they did, others would follow, preventing a race in which only the multinationals win.
.. Politics matters: the multinationals’ objective is to gain support for reforms that continue the race to the bottom and maintain opportunities for tax avoidance. Governments in some advanced countries where these companies have significant political influence will support these efforts – even if doing so disadvantages the rest of the country. Other advanced countries, focusing on their own budgets, will simply see this as another opportunity to benefit at the expense of developing countries.