GOP’s Ugly Secret: Tax Plan Would Force Quarter-Trillion Dollar Cut In Medicare

Not exactly what most Trump voters bargained for.
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Aaron Bernstein / Reuters

GOP leaders have done their best to sweep an ugly – politically toxic ― secret under the rug: under current Congressional rules, their tax plan would force a quarter-trillion dollar cut in Medicare starting next year.

In 1990, Congress passed the “Pay As You Go” (paygo) rules. They require that if Congress passes a law that will increase the deficit, the same amount will be cut from government spending – automatically – beginning immediately.

The Republican plan to cut taxes for millionaires, billionaires and wealthy corporations would increase the deficit by about $1.5 billion dollars over the next decade. That would mean that if it passes, there would be mandatory, automatic spending cuts of at least $150 billion in each of the next ten years, including $25 billion per year from Medicare.

Over ten years that amounts to a quarter-trillion dollars of Medicare cuts right at the same time that the baby boom generation is demanding more and more from Medicare.

Of course the GOP leadership says that Congress will likely not allow such cuts to proceed and would – at some point – lift the “paygo” requirement. But that would require the Senate to pass such a waiver with a bipartisan super majority of 60 votes at some time in the future – well after the tax cut bill is signed into law.

On the one hand, it’s not clear that Democrats would go along with such a fix. More important, there are many GOP lawmakers who would actually be perfectly happy to see big cuts in Medicare.

Bottom line is that the odds are very, very good that much of the cost of giving a trillion and a half dollars of tax cuts for millionaires, billionaires and wealthy corporations would be paid for by taking money out of the pockets of Medicare beneficiaries.

It’s worth pointing out that many of those Medicare beneficiaries were Trump supporters, who could see their Medicare jeopardized and be forced to pay higher income taxes by the GOP bill as well. And this would all be accomplished to make sure that the sons and daughters of multi-millionaires, like Donald Trump, Jr. save a billion dollars on their estate taxes, and companies like Wells Fargo can salt away more profits for wealthy stockholders.

Far better for seniors to pay higher Medicare premiums, or risk the solvency of the program altogether than miss the opportunity to make it easier for Wall Street Bankers to fly off to the South of France in their corporate jets.

And we certainly wouldn’t want to pass up the chance to hand billions to kids like Trump, Jr. who won the birth lottery. Let’s remember it was really hard work for these members of the “lucky sperm club” to pick the right uterus.

Slash Medicare to give tax breaks to the rich? Not exactly what most Trump voters bargained for.

But not to worry, we have been reassured that the Republican Tax plan will magically raise everyone’s incomes by $4,000 a year by stimulating the economy. If anyone believes that, I’ve got a bridge to sell you.

As Nobel Prize winning economist Paul Krugman pointed out in last weekend’s New York Times:

…. It’s still voodoo economics after all of these years, and nothing – not the boom after Clinton raised taxes, not the failure of the Bush economy, not the debacle in Kansas – will change the party’s commitment to a false economic doctrine that serves its donors’ interests.

There is absolutely no evidence that trickle-down economics has ever worked. And recall that as a country we tried it quite recently. George Bush made the same kinds of promises when he got Congress to pass the Bush tax cuts after he was elected in 2000. That worked out so well: economic stagnation and the deepest recession since the Great Depression.

In fact, of the 42 professional economists surveyed by the University of Chicago Booth School of Business, only one agreed that the GOP tax cut plan would help the economy.

And you don’t have to have a Ph.D. in Economics to understand why. Right now, the wealthy investor class is rolling in money and looking for ways to invest it where they get a really good return. Giving them more money will not make them invest more. The rich and wealthy corporations will only invest and hire more workers if there is more demand for products and services – if there are a growing number of customers with money in their pockets.

To grow the economy we need to assure that a larger percentage of every dollar spent in the economy ends up in the hands of ordinary consumers in the form of more disposable income — not in the swollen bank accounts of the rich and wealthy corporations. That requires consumers to make higher wages, and it requires policies that reduce increases in the cost of goods and services like health care. It means that workers get more of every dollar spent in the economy – not rich owners of capital. It requires less economic inequality, not more.

But this tax plan does exactly the opposite. It gives most of its benefits to the top one percent. Worse, the non-partisan Congressional Budget Office (CBO) has found that half of ordinary taxpayers would actually experience tax increases by the year 2027.

And far from bending the cost curve and reducing the rising costs of necessities like health care, the GOP is trying to make things worse by eliminating the requirement that everyone has insurance. Most experts agree that would make insurance premiums go up by double digits.

Meanwhile, the GOP wants to gut the Consumer Financial Protection Bureau so that credit card companies and payday lenders can use every trick in the book to put their hands into pockets of the middle class and the poor. And, it wants to deregulate Wall Street so the big bankers can make a fortune with precisely the kind of schemes that led to the collapse of world financial markets and cost eight million Americans their jobs just nine short years ago.

As Krugman points out, none of this is anything more than “voodoo economics in the service of plutocracy. “

It is also horrible politics for the GOP.

If the GOP tax plan passes, scores of GOP House Members will face the wrath of voters who are furious that they voted to eliminate the state and local tax deduction and forced them to pay more taxes in states like Illinois, New York, New Jersey, Connecticut and California.

And the ads that explain how they voted to cut Medicare to give tax cuts to the rich will be downright deadly.

As Virginia just demonstrated, Democratic challengers already have a mighty wind at their backs. The combination of the GOP tax bill and their continued attempt to take away people’s health care will turn that wind into a gale.

But as they have demonstrated time and time again, those plutocrats really could care less about the careers of the GOP Members of Congress who will serve as the cannon fodder in their drive for big, permanent tax cuts. They were perfectly happy to sully the GOP brand in their ill-fated attempt to take away health care from 40 million people in order to give a huge tax cut to the rich. And they are equally happy to sacrifice their GOP front line troops for the sake of their own greed.

Before they vote, GOP members of the House and Senate best think twice before they rush onto political killing fields of 2018 and try to convince the voters that the two most unpopular major bills in recent history – ACA repeal and the GOP tax plan – were really good for them. Before they cast their votes, they should decide whether it is smart to sacrifice their careers for the plutocratic donor generals that are sending them into the battle.

They might want to conjure up the image of those plutocrats ― far behind the lines of political warfare – exchanging toasts and laughing at how stupid anyone could have been to believe that the hundreds of billions of new wealth handed them by the GOP tax plan would actually “trickle down” to ordinary Americans.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on He is a partner in the firm Democracy Partners. Follow him on Twitter @rbcreamer.

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