Vice President Mike Pence came to Council Bluffs yesterday, trying to convince Iowans that they should be happy with the Trump/Republican tax scam. He wants Iowans to believe a tax cut that is going primarily to the richest companies and the wealthiest Americans is good for them. In addition, he wants Iowans to celebrate a massive budget busting $1.5 trillion tax cut that can’t be paid for.
The Republicans’ reckless raid on the national treasury in order to give a giant gift to the rich is incredibly irresponsible. They claim to be conservatives yet their tax cut will blow-up the deficit and balloon the debt. For eight years under President Obama, Republicans were penny-pinching misers when the economy desperately needed more stimulus. Now that they are in control with a booming economy, and they want to give away $1.5 trillion and get nothing in return.
The Committee for a Responsible Federal Budget is predicting that the tax cuts will push deficits to historic highs. “These projections show a fiscal situation that is clearly unsustainable… “Revenue is lower, spending is higher, deficits are larger and the national debt is rapidly headed toward a new record,” the report says.
Republicans are facing reelection in November and are getting pretty nervous about trying to explain to Iowans why they voted to explode the deficit with monster tax giveaways to the rich. Republicans have been claiming that by February the public would see the benefits from their December tax cut.
They assured the public that companies would spend all that extra cash on creating jobs and investing in new factories. They promised the middle class that they would be benefiting and not the most profitable companies and the richest one percent. The Tax Policy Center dispute the Republicans’ claims. “It (Republican tax cut) would by far benefit the richest Americans the most. Meanwhile, many lower and middle-class Americans would have higher taxes a decade from now.”
The purpose of the Pence trip is to continue their false narrative that this tax cut will assist the middle class. They are rolling out stories of Iowans that have gotten modest tax cuts. But they don’t talk about the millions in windfall profits that companies have received.
Unfortunately for them, the factual evidence on the tax cuts is coming in and its bad news for both Pence and every other Republican. They slashed the corporate tax rate from 35 percent to 21 percent and promised that these giant corporations would use that extra money to build factories, raise wages, award bonuses and invest in research and development.
Some companies have increased wages and awarded some temporary bonuses, but the majority of the massive windfall tax savings are going to improve company’s profitability. Rather than hiring workers, raising wages or investing in new factories, they’re using their windfall tax cuts to buy back shares of their stock. Companies that spend money buying back shares of stock increase the value of those shares and the value of the company. It’s the shareholders that get bigger dividends and increases the value of stock.
The top 1 percent owns 40 percent of all stocks. The top 10 percent owns 84 percent of all stocks. These are the folks that get the giant profits from the Republicans’ tax cuts.
The Wall Street Journal analysis of data for S&P 500 companies in March reveals the extent of the tax cuts going toward buybacks. “Share buybacks announced by large U.S. companies have exceeded $200 billion in the past three months, more than double the prior year. Among the biggest: Cisco Systems Inc. at $25 billion, Wells Fargo & Co. at about $21 billion, PepsiCo Inc. at $15 billion, AbbVie Inc. and Amgen Inc. at $10 billion apiece, and Alphabet Inc. at $8.6 billion.”
The head of the White House’s Council of Economic Advisers, Kevin Hassett, contradicted Republicans claims that companies were raising wages. He admitted that many companies were spending their money on buying their own shares back rather than investing in workers.
“Right now we’re going to have an adjustment where you see probably more dividends and share buybacks than wage increases, said Hassett.
Yesterday in Council Bluffs, Pence bragged about the Trump administration’s accomplishments. “We’re only one year into this administration, and the results are nothing short of remarkable,” Pence said.
He’s right, they’re remarkably bad!
by Rick Smith