As a young high-school American government teacher, I compared our system to an automobile that was useful if it could start, speed up, slow down and stop. When the people thought government needed to be more active, they elected liberal Democrats to press down on the accelerator. When people thought government’s role was getting too large and expensive, they elected Republicans to apply the brakes and slow things down.
Our national debt is now $20 trillion and rising. That amounts to about $155,000 in tax liability for the average family of four, and to about $320,000 for each individual American under the age of 18, and not old enough to vote. They are the folks who will have to make good on the hot checks cashed by those of us who are old enough to protect ourselves, and pass on the pain to them.
The monstrous debt is clearly no priority to either of today’s political parties. We now have two accelerator parties, and each is so committed to its base of supporters that neither will work with the other on a strategy for the essential public purpose of slowing down the debt.
In defiance of demographics, the Democrats still want to expand the reach of social programs, appearing unable to deal with the ever-increasing costs. In defiance of history, the Republicans want to speed up the economy so corporate businesses will create more jobs, thus “trickling down” prosperity, and limiting the need for the social safety net.
By this argument the Republicans claim their proposal benefits all the people. But it’s unquestionably clear that the people who are corporations will benefit far more than those who are mere human organisms. Corporations are currently fat with cash — an estimated $2.3 trillion — which could be invested in job expansion now, without the government assistance the “Tax Cut and Jobs Act” provides them with $1.5 trillion in borrowed money. Why gamble their gains making capital investments in an unstable world made more unpredictable by racing trends in technology?
So, increasingly prosperous corporations probably won’t invest much in creating jobs. They will continue to invest in their stockholders. The stock market bubble, accelerated by a new infusion from public debt, will continue its abnormal rise. Common folks who are not investors will see only a minimal and temporary benefit in their taxes. They will be hurt the most, however, when the market “correction” inevitably comes.
A not-well-publicized aspect of the tax bill is its shifting of costs to the states. On the heels of a budget-cutting special legislative session, Montana Department of Revenue analysts have so far identified provisions within the 1,100-page bill that they estimate will result in a net loss of revenue to the state of about $122 million.
The economy likely won’t get much better, but count on the debt to get bigger as a result of the “Tax Cut and Jobs Act.” Beyond impacts on states, other unforeseen consequences of the massive tax bill are yet to be discovered. Proceeding more slowly and cooperatively, Congress could have produced positive tax reform. Now, undoing the damage done will require more than a brake pedal.