Republicans Consider Sharp Cut in 401(k) Contribution Limits

The proposals under discussion would potentially cap the annual amount workers can set aside to as low as $2,400 for 401(k) accounts, several lobbyists and consultants said on Friday. Workers may currently put up to $18,000 a year in 401(k) accounts without paying taxes upfront on that money; that figure rises to $24,000 for workers over 50. When workers retire and begin to draw income from those accounts, they pay taxes on the benefits.

.. Reducing contribution limits would be, in effect, an accounting maneuver that would create space for tax cuts by collecting tax revenue now instead of in the future.

.. Such a move would be likely to push Americans to shift their savings to so-called Roth accounts, where contributions are taxed immediately, and not when they are drawn out as benefits. That would increase federal tax receipts for the short run.

.. Under the rules of budget reconciliation — the method Republicans are employing to avoid a Democratic filibuster of the bill — legislation cannot increase budget deficits after a decade. Shifting revenue by lowering 401(k) limits “raises money early, but loses money late, and that’s exactly the opposite of what you want in a reconciliation bill,”

The Antidote to Steve Bannon

One irony of Washington these days is that a press corps that claims to loathe right-wing political operative Steve Bannon can’t get enough of him. The media broadcast his every utterance, cheering on his declaration of “civil war” against Republicans in Congress.

.. “It’s a symptom of a greater problem. If we don’t cut taxes and we don’t eventually repeal and replace ObamaCare, then we’re going to lose across the board in the House in 2018. And all of my colleagues running in primaries in 2018 will probably get beat. It will be the end of [Majority Leader] Mitch McConnell as we know it.”

..  “Mitch McConnell is not our problem. Our problem is that we promised to repeal and replace ObamaCare, and we failed. We promised to cut taxes, and we’ve yet to do it. If we’re successful, Mitch McConnell is fine. If we’re not, we’re all in trouble, we lose our majority, and I think President Trump will not get re-elected.”

.. Mr. Bannon is recruiting carpetbaggers or multiple-race losers, but they’ll have a chance if Republicans can’t deliver on their campaign promises. Mr. Bannon’s best enablers are the GOP Senators who killed health reform: Susan Collins, John McCain, Rand Paul and Lisa Murkowski. If they want to make Mr. Bannon a kingmaker, they’ll do the same on tax reform.

Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies

Lie #1: America is the most highly-taxed country in the world

Why does Trump keep repeating what even he has to know by now is a flat lie? I suspect it’s a power thing: he enjoys showing that he can lie repeatedly through his teeth, be caught red-handed in his lie again and again, and his followers will still believe him rather than the “fake news” media.

Lie #2: The estate tax is destroying farmers and truckers

Lie #3: Taxation of pass-through entities is a burden on small business

High-income individuals, however, would gain a lot by paying 15 percent instead of the much higher rates they pay at the margin – 39.6 percent right now. And they’d also have a strong incentive to rearrange their affairs so that more of their income pops up in their pass-throughs.

This wouldn’t be small-business creation; it wouldn’t add jobs; it would just be tax avoidance. That’s what happened when Kansas tried something similar, and played a big role in the state’s fiscal disaster.

Lie #4: Cutting profits taxes really benefits workers

Think about what happens if you cut the taxes on corporate profits. The immediate impact is that (duh) corporations have more money. Why would they spend that extra money on hiring more workers or increasing their wages?

Not, surely, out of the goodness of their hearts – and not in response to worker demands, because these days nobody cares what workers think.

.. But the flip side of those capital inflows would be a bigger trade deficit – hardly what the proponents of tax cuts are advertising – and in any case running trade deficits on the required scale is a much more problematic thing than people seem to realize. The dollar would have to rise sharply – and the strength of the dollar would itself deter foreign investment, very much slowing the process of wage rise.

.. Many of the companies with big overseas hoards also have plenty of idle cash at home; what’s holding them back is a lack of perceived opportunities, not cash flow. And even those who don’t have surplus cash can easily borrow at near-record low interest rates; remember, they can always use the overseas cash to secure their loans.

..  In 2004 the U.S. enacted the Homeland Investment Act, which offered a tax holiday for repatriation of foreign earnings by U.S. multinationals. Careful study of its effects tells us that

.. a $1 increase in repatriations was associated with an increase of almost $1 in payouts to shareholders.

Lie #7: It’s a big tax cut for the middle class

.. In total, by 2027, according to TPC, 80 percent of the tax cut goes to the top 1 percent; only 12 percent to the middle three quintiles.

.. How can this not increase the budget deficit?

The only answer would be if the tax proposal eliminated vast swathes of the existing set of tax deductions, massively broadening the tax base. It doesn’t.

Lie #9: Cutting taxes will jump-start rapid growth

Lie #10: Tax cuts will pay for themselves

The Ezra Klein Show: How the Republican Party created Donald Trump

Mitch McConnell promised bipartisanship in his speech about healthcare and delivered the exact opposite.  The speech had very little “truth content”.  (38 min)

The Koch brothers announced that they had 360 million dollars to spend on the next election if the Republicans passed healthcare and tax cuts.  (48 min)

Tucker Carlson condemned the right wing media ~6 years ago and said the right needs its own institutions comparable to the New York Times.  He started the Daily Caller which now makes money putting up bikini pictures, and then plays a host on Fox News that does nothing to challenge his audience, preferring to embarrass guests and make its visitors feel good. (1 hr 25 min)

Ezra: I think many of the criticism of the mainstream media are right.  It has a cosmopolitan bias.

Tucker Carlson is all about business model.  Dinesh D’hsousa is doing well because the Ann Coulter principle — the more extreme you are, the better you do.  Authors always check their Amazon ratings.

Many Conservatives don’t consume mainstream media.

The media knew that the John Podesta leaks were coming from the Russians, but the business is comptetitive and people were concerned about appearing biased.  (1 hr 38 min)

 

Thomas Mann and Norman Ornstein have studied American politics for more than three decades. They are the town’s go-to experts on the workings of Congress. In 2012, they rocked Washington when they published It’s Even Worse Than It Looks, a book that marshaled their considerable authority to argue that the dysfunction poisoning American government was the result of “asymmetric polarization,” notably a Republican Party that “has become an insurgent outlier in American politics — ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.”

This was a controversial diagnosis then. After Trump, it’s closer to the conventional wisdom.

E.J. Dionne is a columnist at the Washington Post, a senior fellow at the Brookings Institution, and the author of the classic book Why Americans Hate Politics. He’s one of the sharpest political observers alive.

And now, like a Canadian indie-rock supergroup, the three of them have come together to write One Nation After Trump, a dive into how the Republican Party created Trump, how Trump won, and what comes next.

As Dionne says in this interview, the American system was “not supposed to produce a president like this,” and so a lot of our conversation is about how the guardrails failed and whether they can be rebuilt. Mann, Ornstein, and Dionne may be political sages, but they’re also a lot of fun, and they have a lot of fun together. You’ll hear that in this conversation.

Books:

Franklin D. Roosevelt and the New Deal by William Leuchtenburg

Strength to Love by Martin Luther King, Jr.

The First Congress by Fergus Bordewich

Thinking, Fast and Slow by Daniel Kahneman

Democracy for Realists by Christopher Achen and Larry Bartels