White House Proposes $4.7 Trillion Budget for Fiscal 2020

Trump’s outline would sharply cut spending on safety-net programs

The Trump administration proposed a $4.7 trillion budget that would sharply reduce spending on safety-net programs, while effectively exempting the Pentagon from strict spending caps set to take effect in fiscal year 2020.

The president’s plan would widen the federal budget deficit to $1.1 trillion in the next fiscal year, which begins Oct. 1, and would propose to eliminate the deficit by 2034, in part by assuming the economy grows much faster than many independent forecasters expect.

Socialism and the Self-Made Woman

What Ivanka Trump doesn’t know about social mobility.

.. Back to the “potential for upward mobility”: Where do people from poor or modest backgrounds have the best chance of getting ahead? The answer is that Scandinavia leads the rankings, although Canada also does well. And here’s the thing: The Nordic countries don’t just have low inequality, they also have much bigger governments, much more extensive social safety nets, than we do. In other words, they have what Republicans denounce as “socialism” (it really isn’t, but never mind).

And the association between “socialism” and social mobility isn’t an accident. On the contrary, it’s exactly what you would expect.

To see why, put it in a U.S. context, and ask what would happen to social mobility if either the right wing of the G.O.P. or progressive Democrats got to implement their policy agendas in full.

If Tea Party types got their way, we’d see drastic cuts in Medicaid, food stamps and other programs that aid Americans with low income — which would in many cases leave low-income children with inadequate medical care and nutrition. We’d also see cuts in funding for public education. And on the other end of the scale, we’d see tax cuts that raise the incomes of the wealthy, and the elimination of the estate tax, allowing them to pass all of that money on to their heirs.

By contrast, progressive Democrats are calling for universal health care, increased aid to the poor, and programs offering free or at least subsidized college tuition. They’re calling for aid that helps middle- and lower-income parents afford quality child care. And they propose paying for these benefits with increased taxes on high incomes and large fortunes.

So, which of these agendas would tend to lock our class system in place, making it easy for children of the rich to stay rich and hard for children of the poor to escape poverty? Which would bring us closer to the American dream, creating a society in which ambitious young people who are willing to work hard have a good chance of transcending their background?

Look, Ms. Trump is surely right in asserting that most of us want a country in which there is the potential for upward mobility. But the things we need to do to ensure that we are that kind of country — the policies that are associated with high levels of upward mobility around the world — are exactly the things Republicans denounce as socialism.

Elizabeth Warren Wants a Wealth Tax. How Would That Even Work?

There are other tools that don’t involve quite the risks and challenges of targeting the richest families.

When the United States government wants to raise money from individuals, its mode of choice, for more than a century, has been to tax what people earn — the income they receive from work or investments.

But what if instead the government taxed the wealth you had accumulated?

That is the idea behind a policy Senator Elizabeth Warren has embraced in her presidential campaign. It represents a more substantial rethinking of the federal government’s approach to taxation than anything a major presidential candidate has proposed in recent memory — a new wealth tax that would have enormous implications for inequality.

It would shift more of the burden of paying for government toward the families that have accumulated fortunes in the hundreds of millions or billions of dollars. And over time, such a tax would make it less likely that such fortunes develop.

It would create big new challenges for the I.R.S. in ensuring compliance. There is a reason many European countries that once had a wealth tax have abandoned it in the last couple of decades.

And that’s before you get to the legal and political challenges. There is an open debate around whether a wealth tax is constitutional. And some of the most powerful families in the country would certainly deploy their vast resources against a wealth tax, and against any candidate who embraces it.

The comedian Chris Rock had a routine in the early 2000s in which he expounded on the distinction between those who are rich and those who are wealthy.

Shaquille O’Neal, the star basketball player, was rich, Mr. Rock said. The team owner who signed his paycheck was wealthy. And that, in a nutshell, gets at the conceptual difference between trying to tax people’s income, as the tax code does today, versus their wealth.

The C.E.O. of Walmart makes about $22 million a year. He is rich by any definition. But the Walton family, descendants of the company’s founder, are mind-bogglingly wealthy. The Bloomberg Billionaires index estimates that Sam Walton’s three living children are worth around $45 billion each, putting them each among the 20 wealthiest people in the world.

A family that has accumulated enormous wealth can escape with surprisingly low income levels, and therefore tax burdens.

In an extreme example, Warren Buffett owns enough stock in Berkshire Hathaway to put his estimated net worth at $84 billion, but he pays himself $100,000 a year to be its chief executive. Even in years when his wealth rises by billions, he must pay tax only on his comparatively modest income and on the gains from shares that he chooses to sell.

Ms. Warren and other advocates of a wealth tax argue that this accumulation of untaxed or lightly taxed wealth is a bad thing. They say that it enables the creation of democracy-distorting dynasties who accumulate political power, and that tax policy should be used to rein them in more than the current tax code does.

How to tax the rich (economist.com)

And how to limit the economic damage

.. If revenues are to rise, there are good grounds to look first to the rich. Mr Trump’s tax cuts are just the latest change to have made life at the top more splendorous. Between 1990 and 2015 the real income of the top 1% of households, after taxes and transfers, nearly doubled. Over the same period middle incomes grew by only about a third—and most of that was thanks to government intervention. Globalisation, technological change and ebbing competition have all helped the rich prosper in recent decades. Techno-prophets fear that inequality could soon worsen further, as algorithms replace workers en masse. Whether or not they are right, the disproportionate gains the rich have already enjoyed could justify raising new revenues from them.

Unfortunately, the proposed new schemes are poorly designed. Ms Warren’s takes aim at wealth inequality, which has also risen dramatically. It is legitimate to tax wealth. But Ms Warren’s levy would be crude, distorting and hard to enforce. A business owner making nominal annual returns of around 5% would see much of that wiped out, before accounting for existing taxes on capital. That prospect would squash investment and enterprise. Meanwhile, bureaucrats would repeatedly find themselves having to value billionaires’ art collections and other illiquid assets. Eight rich countries have scrapped their wealth taxes since 1990, often amid concerns about their economic and administrative costs. In 2017 only four levied them.

There are better ways to raise taxes on capital. One is to increase inheritance tax, an inequality-buster that, though also too easily avoided, is relatively gentle on investment and work incentives when levied at modest rates. Another is to target economic rents and windfalls that inflate investment returns. Higher property taxes can efficiently capture some of the astronomical gains that landowners near successful cities have enjoyed. It is also possible to raise taxes on corporations that enjoy abnormally high profits without severely inhibiting growth. The trick is to shield investment spending by letting companies deduct it from their taxable profit immediately, rather than as their assets depreciate. (Mr Trump’s reform accomplished this, but only partially and temporarily.)

.. What about income tax? Ms Ocasio-Cortez’s boosters point out that a 70% levy is close to the rate that is said to maximise revenue in one notable economic study. In truth the study is notable because it is an outlier—one that ignores the benefits of entrepreneurial innovation or of workers improving their skills. France’s short-lived 75% top tax rate, which was scrapped at the end of 2014, raised less money than was hoped. America’s top rate of federal income tax is 37%; higher is clearly feasible, but it would be wise to keep change incremental.

Although there is scope to raise taxes on the rich, they cannot pay for everything, if only because the rich are relatively scarce. One estimate puts extra annual revenue from Ms Ocasio-Cortez’s idea, which applies only to incomes above $10m, at perhaps $12bn, or 0.3% of the tax take. Ms Warren’s proposal would raise $210bn a year, her backers say—but they assume, implausibly, limited avoidance and no economic damage. Ultimately, the price of ambitious spending programmes will be tax increases that are also far-reaching. The crucial point about a strategy for taxing the rich is to realise that it has limits.

The Tax-Cut Con

The advocates of tax cuts are relentless, even fanatical. An indication of the movement’s fervor — and of its political power — came during the Iraq war. War is expensive and is almost always accompanied by tax increases. But not in 2003. ”Nothing is more important in the face of a war,” declared Tom DeLay, the House majority leader, ”than cutting taxes.” And sure enough, taxes were cut, not just in a time of war but also in the face of record budget deficits. Nor will it be easy to reverse those tax cuts: the tax-cut movement has convinced many Americans — like Tinsley — that everybody still pays far too much in taxes.

.. A result of the tax-cut crusade is that there is now a fundamental mismatch between the benefits Americans expect to receive from the government and the revenues government collect. This mismatch is already having profound effects at the state and local levels: teachers and policemen are being laid off and children are being denied health insurance. The federal government can mask its problems for a while, by running huge budget deficits, but it, too, will eventually have to decide whether to cut services or raise taxes. And we are not talking about minor policy adjustments. If taxes stay as low as they are now, government as we know it cannot be maintained. In particular, Social Security will have to become far less generous; Medicare will no longer be able to guarantee comprehensive medical care to older Americans; Medicaid will no longer provide basic medical care to the poor.

.. The reason Tinsley’s comic strip about the angry taxpayer caught my eye was, of course, that the numbers were all wrong. Very few Americans pay as much as 50 percent of their income in taxes; on average, families near the middle of the income distribution pay only about half that percentage in federal, state and local taxes combined.

.. In fact, though most Americans feel that they pay too much in taxes, they get off quite lightly compared with the citizens of other advanced countries. Furthermore, for most Americans tax rates probably haven’t risen for a generation. And a few Americans — namely those with high incomes — face much lower taxes than they did a generation ago.

.. In the United States, all taxes — federal, state and local — reached a peak of 29.6 percent of G.D.P. in 2000. That number was, however, swollen by taxes on capital gains during the stock-market bubble.

By 2002, the tax take was down to 26.3 percent of G.D.P., and all indications are that it will be lower still this year and next.

This is a low number compared with almost every other advanced country. In 1999, Canada collected 38.2 percent of G.D.P. in taxes, France collected 45.8 percent and Sweden, 52.2 percent.

.. Meanwhile, wealthy Americans have seen a sharp drop in their tax burden. The top tax rate — the income-tax rate on the highest bracket — is now 35 percent, half what it was in the 1970’s. With the exception of a brief period between 1988 and 1993, that’s the lowest rate since 1932. Other taxes that, directly or indirectly, bear mainly on the very affluent have also been cut sharply. The effective tax rate on corporate profits has been cut in half since the 1960’s. The 2001 tax cut phases out the inheritance tax, which is overwhelmingly a tax on the very wealthy: in 1999, only 2 percent of estates paid any tax, and half the tax was paid by only 3,300 estates worth more than $5 million. The 2003 tax act sharply cuts taxes on dividend income, another boon to the very well off. By the time the Bush tax cuts have taken full effect, people with really high incomes will face their lowest average tax rate since the Hoover administration.

.. Yet a significant number of Americans rage against taxes, and the party that controls all three branches of the federal government has made tax cuts its supreme priority. Why?

3. Supply-Siders, Starve-the-Beasters and Lucky Duckies

It is often hard to pin down what antitax crusaders are trying to achieve. The reason is not, or not only, that they are disingenuous about their motives — though as we will see, disingenuity has become a hallmark of the movement in recent years. Rather, the fuzziness comes from the fact that today’s antitax movement moves back and forth between two doctrines. Both doctrines favor the same thing: big tax cuts for people with high incomes. But they favor it for different reasons.

One of those doctrines has become famous under the name ”supply-side economics.” It’s the view that the government can cut taxes without severe cuts in public spending. The other doctrine is often referred to as ”starving the beast,” a phrase coined by David Stockman, Ronald Reagan’s budget director. It’s the view that taxes should be cut precisely in order to force severe cuts in public spending. Supply-side economics is the friendly, attractive face of the tax-cut movement. But starve-the-beast is where the power lies.

.. So the standard view of economists is that if you want to reduce the burden of taxes, you must explain what government programs you want to cut as part of the deal. There’s no free lunch.

What the supply-siders argued, however, was that there was a free lunch. Cutting marginal rates, they insisted, would lead to such a large increase in gross domestic product that it wouldn’t be necessary to come up with offsetting spending cuts.

.. The other camp in the tax-cut crusade actually welcomes the revenue losses from tax cuts. Its most visible spokesman today is Grover Norquist, president of Americans for Tax Reform, who once told National Public Radio: ”I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” And the way to get it down to that size is to starve it of revenue. ”The goal is reducing the size and scope of government by draining its lifeblood,” Norquist told U.S. News & World Report.

.. Edwin Feulner, the foundation’s president, uses ”New Deal” and ”Great Society” as terms of abuse, implying that he and his organization want to do away with the institutions Franklin Roosevelt and Lyndon Johnson created. That means Social Security, Medicare, Medicaid — most of what gives citizens of the United States a safety net against economic misfortune.

.. The starve-the-beast doctrine is now firmly within the conservative mainstream. George W. Bush himself seemed to endorse the doctrine as the budget surplus evaporated: in August 2001 he called the disappearing surplus ”incredibly positive news” because it would put Congress in a ”fiscal straitjacket.”

.. to starve the beast, you must not only deny funds to the government; you must make voters hate the government. There’s a danger that working-class families might see government as their friend: because their incomes are low, they don’t pay much in taxes, while they benefit from public spending. So in starving the beast, you must take care not to cut taxes on these ”lucky duckies.” (Yes, that’s what The Wall Street Journal called them in a famous editorial.) In fact, if possible, you must raise taxes on working-class Americans in order, as The Journal said, to get their ”blood boiling with tax rage.”

.. The supply-side movement likes to present itself as a school of economic thought like Keynesianism or monetarism — that is, as a set of scholarly ideas that made their way, as such ideas do, into political discussion. But the reality is quite different. Supply-side economics was a political doctrine from Day 1; it emerged in the pages of political magazines, not professional economics journals.

.. That is not to deny that many professional economists favor tax cuts. But they almost always turn out to be starve-the-beasters, not supply-siders.

.. And they often secretly — or sometimes not so secretly — hold supply-siders in contempt. N. Gregory Mankiw, now chairman of George W. Bush’s Council of Economic Advisers, is definitely a friend to tax cuts; but in the first edition of his economic-principles textbook, he described Ronald Reagan’s supply-side advisers as ”charlatans and cranks.”

..Douglas Holtz-Eakin  .. his conclusion was that unless the revenue losses from the proposed tax cuts were offset by spending cuts, the resulting deficits would be a drag on growth, quite likely to outweigh any supply-side effects.

.. since the 1970’s almost all of the prominent supply-siders have been aides to conservative politicians, writers at conservative publications like National Review, fellows at conservative policy centers like Heritage or economists at private companies with strong Republican connections. Loosely speaking, that is, supply-siders work for the vast right-wing conspiracy.

.. What gives supply-side economics influence is its connection with a powerful network of institutions that want to shrink the government and see tax cuts as a way to achieve that goal. Supply-side economics is a feel-good cover story for a political movement with a much harder-nosed agenda.

.. Irving Kristol, in his role as co-editor of The Public Interest, was arguably the single most important proponent of supply-side economics. But years later, he suggested that he himself wasn’t all that persuaded by the doctrine: ”I was not certain of its economic merits but quickly saw its political possibilities.” Writing in 1995, he explained that his real aim was to shrink the government and that tax cuts were a means to that end: ”The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

.. In effect, what Kristol said in 1995 was that he and his associates set out to deceive the American public. They sold tax cuts on the pretense that they would be painless, when they themselves believed that it would be necessary to slash public spending in order to make room for those cuts.

.. But one supposes that the response would be that the end justified the means — that the tax cuts did benefit all Americans because they led to faster economic growth. Did they?

.. skeptics say that rapid growth after 1982 proves nothing: a severe recession is usually followed by a period of fast growth, as unemployed workers and factories are brought back on line. The test of tax cuts as a spur to economic growth is whether they produced more than an ordinary business cycle recovery. Once the economy was back to full employment, was it bigger than you would otherwise have expected? And there Reagan fails the test: between 1979, when the big slump began, and 1989, when the economy finally achieved more or less full employment again, the growth rate was 3 percent, the same as the growth rate between the two previous business cycle peaks in 1973 and 1979. Or to put it another way, by the late 1980’s the U.S. economy was about where you would have expected it to be, given the trend in the 1970’s. Nothing in the data suggests a supply-side revolution.

.. Does this mean that the Reagan tax cuts had no effect? Of course not. Those tax cuts, combined with increased military spending, provided a good old-fashioned Keynesian boost to demand.

.. While the Reagan tax cuts didn’t produce any visible supply-side gains, they did lead to large budget deficits. From the point of view of most economists, this was a bad thing. But for starve-the-beast tax-cutters, deficits are potentially a good thing, because they force the government to shrink. So did Reagan’s deficits shrink the beast?

..  In response to these deficits, George Bush the elder went back on his ”read my lips” pledge and raised taxes. Bill Clinton raised them further. And thereby hangs a tale.

.. Clinton did exactly the opposite of what supply-side economics said you should do: he raised the marginal rate on high-income taxpayers. In 1989, the top 1 percent of families paid, on average, only 28.9 percent of their income in federal taxes; by 1995, that share was up to 36.1 percent.

Conservatives confidently awaited a disaster — but it failed to materialize. In fact, the economy grew at a reasonable pace through Clinton’s first term, while the deficit and the unemployment rate went steadily down. And then the news got even better: unemployment fell to its lowest level in decades without causing inflation, while productivity growth accelerated to rates not seen since the 1960’s. And the budget deficit turned into an impressive surplus.

Tax-cut advocates had claimed the Reagan years as proof of their doctrine’s correctness; as we have seen, those claims wilt under close examination. But the Clinton years posed a much greater challenge: here was a president who sharply raised the marginal tax rate on high-income taxpayers, the very rate that the tax-cut movement cares most about. And instead of presiding over an economic disaster, he presided over an economic miracle.

.. the Clinton-era surge probably reflected the maturing of information technology: businesses finally figured out how to make effective use of computers, and the resulting surge in productivity drove the economy forward. But the fact that America’s best growth in a generation took place after the government did exactly the opposite of what tax-cutters advocate was a body blow to their doctrine.

.. They tried to make the best of the situation. The good economy of the late 1990’s, ardent tax-cutters insisted, was caused by the 1981 tax cut. Early in 2000, Lawrence Kudlow and Stephen Moore, prominent supply-siders, published an article titled ”It’s the Reagan Economy, Stupid.”

.. But anyone who thought about the lags involved found this implausible — indeed, hilarious. If the tax-cut movement attributed the booming economy of 1999 to a tax cut Reagan pushed through 18 years earlier, why didn’t they attribute the economic boom of 1983 and 1984 — Reagan’s ”morning in America” — to whatever Lyndon Johnson was doing in 1965 and 1966?

.. By the end of the 1990’s, in other words, supply-side economics had become something of a laughingstock

..  the most striking example of what skillful marketing can accomplish is the campaign for repeal of the estate tax.

.. the estate tax is a tax on the very, very well off. Yet advocates of repeal began portraying it as a terrible burden on the little guy. They renamed it the ”death tax” and put out reports decrying its impact on struggling farmers and businessmen — reports that never provided real-world examples because actual cases of family farms or small businesses broken up to pay estate taxes are almost impossible to find. This campaign succeeded in creating a public perception that the estate tax falls broadly on the population. Earlier this year, a poll found that 49 percent of Americans believed that most families had to pay the estate tax, while only 33 percent gave the right answer that only a few families had to pay.

.. the public rationale for tax cuts has shifted repeatedly over the past three years.

.. During the 2000 campaign and the initial selling of the 2001 tax cut, the Bush team insisted that the federal government was running an excessive budget surplus, which should be returned to taxpayers. By the summer of 2001, as it became clear that the projected budget surpluses would not materialize, the administration shifted to touting the tax cuts as a form of demand-side economic stimulus: by putting more money in consumers’ pockets, the tax cuts would stimulate spending and help pull the economy out of recession. By 2003, the rationale had changed again: the administration argued that reducing taxes on dividend income, the core of its plan, would improve incentives and hence long-run growth — that is, it had turned to a supply-side argument.

.. So what were the Bush tax cuts really about? The best answer seems to be that they were about securing a key part of the Republican base. Wealthy campaign contributors have a lot to gain from lower taxes, and since they aren’t very likely to depend on Medicare, Social Security or Medicaid, they won’t suffer if the beast gets starved. Equally important was the support of the party’s intelligentsia, nurtured by policy centers like Heritage and professionally committed to the tax-cut crusade. The original Bush tax-cut proposal was devised in late 1999 not to win votes in the national election but to fend off a primary challenge from the supply-sider Steve Forbes, the presumptive favorite of that part of the base.

..  the selling of the tax cuts has depended heavily on chicanery. The administration has used accounting trickery to hide the true budget impact of its proposals, and it has used misleading presentations to conceal the extent to which its tax cuts are tilted toward families with very high income.

.. The most important tool of accounting trickery, though not the only one, is the use of ”sunset clauses” to understate the long-term budget impact of tax cuts.

.. But, of course, nobody expects the sunset to occur: when 2011 rolls around, Congress will be under immense pressure to extend the tax cuts.

.. the administration has carried out a very successful campaign to portray these tax cuts as mainly aimed at middle-class families. This campaign is similar in spirit to the selling of estate-tax repeal as a populist measure, but considerably more sophisticated.

.. the 2001 tax cut, once fully phased in, will deliver 42 percent of its benefits to the top 1 percent of the income distribution.

.. It might seem impossible to put a populist gloss on tax cuts this skewed toward the rich, but the administration has been remarkably successful in doing just that.

.. One technique involves exploiting the public’s lack of statistical sophistication. In the selling of the 2003 tax cut, the catch phrase used by administration spokesmen was ”92 million Americans will receive an average tax cut of $1,083.’‘ That sounded, and was intended to sound, as if every American family would get $1,083. Needless to say, that wasn’t true.

.. About half of American families received a tax cut of less than $100; the great majority, a tax cut of less than $500.

.. David Stockman famously admitted that Reagan’s middle-class tax cuts were a ”Trojan horse” that allowed him to smuggle in what he really wanted, a cut in the top marginal rate.

.. If a couple had multiple children, if the children were all still under 18 and if the couple’s income was just high enough to allow it to take full advantage of the child credit, it could get a tax cut of as much as 4 percent of pretax income. Hence the couple with two children and an income of $40,000, receiving a tax cut of $1,600

.. But while most couples have children, at any given time only a small minority of families contains two or more children under 18 — and many of these families have income too low to take full advantage of the child tax credit. So that ”typical” family wasn’t typical at all. Last year, the actual tax break for families in the middle of the income distribution averaged $469, not $1,600.

.. through a combination of hardball politics, deceptive budget arithmetic and systematic misrepresentation of who benefits, Bush’s team has achieved a major reduction of taxes, especially for people with very high incomes.

.. Alan Auerbach, William Gale and Peter Orszag, fiscal experts at the Brookings Institution, have estimated the size of the ”fiscal gap” — the increase in revenues or reduction in spending that would be needed to make the nation’s finances sustainable in the long run. If you define the long run as 75 years, this gap turns out to be 4.5 percent of G.D.P. Or to put it another way, the gap is equal to 30 percent of what the federal government spends on all domestic programs. Of that gap, about 60 percent is the result of the Bush tax cuts. We would have faced a serious fiscal problem even if those tax cuts had never happened. But we face a much nastier problem now that they are in place. And more broadly, the tax-cut crusade will make it very hard for any future politicians to raise taxes.

So how will this gap be closed? The crucial point is that it cannot be closed without either fundamentally redefining the role of government or sharply raising taxes.

.. Politicians will, of course, promise to eliminate wasteful spending. But take out Social Security, Medicare, defense, Medicaid, government pensions, homeland security, interest on the public debt and veterans’ benefits — none of them what people who complain about waste usually have in mind — and you are left with spending equal to about 3 percent of gross domestic product. And most of that goes for courts, highways, education and other useful things. Any savings from elimination of waste and fraud will amount to little more than a rounding-off error.

.. Let’s assume that interest on the public debt will be paid, that spending on defense and homeland security will not be compromised and that the regular operations of government will continue to be financed. What we are left with, then, are the New Deal and Great Society programs: Social Security, Medicare, Medicaid and unemployment insurance. And to close the fiscal gap, spending on these programs would have to be cut by around 40 percent.

.. It goes almost without saying that the age at which Americans become eligible for retirement benefits would rise, that Social Security payments would fall sharply compared with average incomes, that Medicare patients would be forced to pay much more of their expenses out of pocket — or do without. And that would be only a start.

.. All this sounds politically impossible. In fact, politicians of both parties have been scrambling to expand, not reduce, Medicare benefits by adding prescription drug coverage

.. I think within a decade, though not everyone agrees — the bond market will tell us that we have to make a choice.

In short, everything is going according to plan.

.. Some supporters of President Bush may have really believed that his tax cuts were consistent with his promises to protect Social Security and expand Medicare; some people may still believe that the wondrous supply-side effects of tax cuts will make the budget deficit disappear. But for starve-the-beast tax-cutters, the coming crunch is exactly what they had in mind.

.. In Norquist’s vision, America a couple of decades from now will be a place in which

  • elderly people make up a disproportionate share of the poor, as they did before Social Security. It will also be a country in which
  • even middle-class elderly Americans are, in many cases, unable to afford expensive medical procedures or prescription drugs and in which
  • poor Americans generally go without even basic health care. And it may well be a place in which only
  • those who can afford expensive private schools can give their children a decent education.

The Republican War on Children

Would you be willing to take health care away from a thousand children with the bad luck to have been born into low-income families so that you could give millions of extra dollars to just one wealthy heir?

.. The other day Senator Orrin Hatch, asked about the program (which he helped create), once again insisted that it will be funded — but without saying when or how (and there don’t seem to be any signs of movement on the issue). And he further declared, “The reason CHIP’s having trouble is that we don’t have money anymore.” Then he voted for an immense tax cut.

..  The number of taxable estates is also, by the way, well under one one-thousandth of the number of children covered by CHIP.

..  but children’s health care is relatively cheap compared with care for older Americans. In fiscal 2016 the program cost only $15 billion, a tiny share of the federal budget.

As you see, then, my question wasn’t at all hypothetical. By their actions, Republicans are showing that they consider it more important to give extra millions to one already wealthy heir than to provide health care to a thousand children.

.. And when you hear about family farms broken up to pay estate tax, remember: Nobody has ever come up with a modern example.

.. Then there’s the argument of Senator Chuck Grassley that we need to eliminate estate taxes to reward those who don’t spend their money on “booze or women or movies.” Yes, indeed, letting the likes of Donald Trump Jr. inherit wealth tax-free is a reward for their fathers’ austere lifestyles.

.. there’s considerable evidence that aiding lower-income children actually saves money in the long run.

.. Children who get adequate care are more likely to be healthier and more productive when they become adults, which means that they’ll earn more and pay more in taxes. They’re also less likely to become disabled and need government support. One recent study estimated that the government in fact earns a return of between 2 and 7 percent on the money it spends insuring children.
.. broadly similar results have been found for the food stamp program: Ensuring adequate nutrition for the young means healthier, more productive adults, so that in the long run this aid costs taxpayers little or nothing... That is, however, exactly what’s happening. And it’s as bad, in its own way, as that same party’s embrace of a child molester because they expect him to vote for tax cuts.