Commentary, Editorial, Featured

GOP Takes Another Shot at Obamacare in Tax Plan

November 17, 2017

By Arturo Castañares / Publisher and CEO

Republicans in Washington, D.C. just can’t stop looking for ways to try to undo Obamacare, even as they know it would throw millions of people off their health care coverage.

After dozens of tried in the House of Representatives to unfund the Affordable Care Act over the past eight years, the Republicans have failed during the first 10 months of Trump’s term to find a way to kill off the biggest legislative accomplishment of President Barack Obama’s presidency.

In May, the Republican-controlled House barely passed a repeal and replace bill that would have force millions of Americans to lose their health coverage. The nonpartisan Congressional Budget Office estimated that 23 million people would lose their health coverage if that bill had became law.

The largely unpopular bill then landed in the Senate where it was abandoned for
a slightly less damaging bill that was still estimated to leave over 20 million people without health care coverage. When that bill went up for a vote, three moderate GOP Senators voted against it, killing the flawed bill in dramatic form when Senator John McCain signaled his vote with a single down thumb.

Although Republican leaders and Trump vowed to find another path toward ending Obamacare, it seemed like the fight was over for the foreseeable future. The public had gotten used to the health coverage expansion that saw more than 20 million people gain access to medical coverage since President Obama signed the expansive program into law.

Desperate for a legislative win nearly a year into Trump’s presidency, Republicans moved on to another staple of conservative campaigns promises: tax reform.

But tax reform in the eyes of Republicans usually means reducing the burden on the richest of Americans, not the average taxpayers. Unless the country is enjoying massive budget surpluses (which we are not), cutting taxes creates massive budget deficits for the federal government when people pay trillions less in taxes.

The popular Republican argument for tax cuts has always been that reducing taxes for the rich means they will invest those new dollars into businesses that will, in turn, eventually lead to more economic activity that should eventually create more tax revenues in the long run.

It’s called trickle-down economics, where the benefit should fall from the rich to the average American in indirect ways.

But does it work?

The most famous example of trickle-down economics is President Ronald Reagan’s 1981 tax reform that drastically cut taxes on the rich. The highest marginal tax rate was slashed from 70 percent to 50 percent, a cut that is still considered the single largest reduction in rates in modern history.

The tax cut was such a big deal for Republicans and their iconic leader that it has since been called Reaganomics.

The tax cuts immediately reduced revenues for the government and led to a massive projected budget deficit. The effects were so drastic that Reagan had to follow the cuts with increases to payroll taxes in 1982 and a bill to close tax loopholes in 1984 that, together, were called the largest tax increases in peacetime.

Just two years later, Reagan followed up his tax cuts and increases with a massive tax reform package in 1986 that was hailed by Republicans as much-needed changes to our complex tax system.
The package included tax cuts for the highest earners, eliminating deductions, and reducing the number of tax brackets. The plan was sold as being revenue-neutral, meaning that the cuts would be offset by revenue increases from the simplified tax code.

In actuality, during Reagan’s eight years in office, the national debt grew, and the U.S. went from being the world’s largest creditor to that of the biggest debtor, nearly tripling the national debt from $997 billion to over $2.85 trillion.

By the end of Reagan’s two terms in office, the economy’s aggregate growth was lower (35.9 percent) than in the 1970s (39.2 percent). Additionally, real wages for average workers fell during the 1980s, and the stock market experienced massive crashes in 1987 and 1989.

Now, fast forward to 2017, more than 30 years after Reagan’s historic tax reform, and we find ourselves in nearly the exact same situation. Deja vú all over again.

Republicans have again proposed a tax reform package that includes tax cuts for the highest earners, eliminating deductions, and reducing the number of tax brackets. The stated goal is to simplify the tax code and give the richest of Americans more money in hopes that it will trickle down to the average working families.

Sound familiar?

Again, estimates show the plan would create massive reductions in tax revenues with vague and indirect benefits down the road. The plan is estimated to add nearly $1.5 trillion to the budget deficit over the first ten years.

Desperate for a victory to point to, Republicans in the Senate last week threw out a new way to fund their historic tax cuts for the rich: attack Obamacare’s individual mandate to help save an estimated $400 billion.

By ending the mandate to have health insurance, Republican expect up to 20 million people will drop their coverage, thereby saving the federal government in subdivides provided under Obamacare.
In the end, millions of working families that obtained health coverage in the past eight years would again be susceptible to sickness and death, all to help pay for tax cuts for people millionaires and billionaires.

This tax plan has been hailed by Republicans as historic for its proposed cuts to tax rates, but, if passed, it could be historic in the negative impacts it would have on millions of America’s most vulnerable.

As with the many ham-handed attacks on Obamacare earlier this year, this latest proposal should fail to pass.

It is just the latest partisan proposal that was written behind closed doors without any committee hearings and passed on a party line vote without no attempt at bipartisan cooperation.

Republicans should have the courage to propose legislation, allow public debate, and work to find common ground with their Democratic colleagues.

Stubborn adherence to strict partisan politics is damaging our democracy, and is leading to flawed legislative proposals with only political goals in mind.

For all their flag waving and proclaimed love for this country, Trump and Republicans leaders seem to be more interested in short-term personal victories than the long-term prosperity of America.

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