America's Massive Deficit Saves the Rich, Slays the Poor
No, this is not another tax-the-rich-more-to-save-the-poor article. It is a tax-them-the-SAME article by ending all their privileged welfare!
The Biden-Trump deficit is off the charts. Yes, blame for the nation’s record deficit, gaping wider by the day, belongs equally to both. Both parties are saturated with and ruled by what I call the “pocket politicians” of the rich.
Bidenomics requires massive government debt expansion because of its mammoth spending increases. That is all debt taken out by the government to fund projects that will be fully owned by the rich, profiting them down the road more than anyone, while saving the rich from having to make the full investment for those projects (unadulterated corporate welfare).
Trumponomics created massive tax cuts that went grossly toward the rich, too. Today, I’m going to focus more on the tax side because that is where the slyest lies have been told and sold to America for decades. Those tax cuts plainly blew the deficit much wider, and then Biden blew it much wider again.
There was one period in my lifetime, though, where we ran a government surplus and were actually paying down our debt, and those fiscally responsible times felt a whole lot better than the present. They weren’t perfect, but they were nothing like today’s economic madness...
Where it all ran off the rails
That golden period blew up with the Bush Tax Cuts that threw candy to the lower middle class by saving them about $4,000 a year while heaping tens of millions, maybe even billions, in savings into the vaults of each rich individual (the amount depending on the individual) at the cost of much greater government deficits from there to eternity.
Bush knee-capped a nation that was finally actually running on a SURPLUS budget thanks to the tax increases of Clinton AND the spending cuts of Gingrich. I, who had voted for Bush, was incensed by my $4,000 savings because I knew instantly, we would never see that kind of responsible fiscal management again in my lifetime, and we certainly never have! My nation was worth more to me than $4,000. It has only gotten worse by the year.
We ended the Bush years, as Republican Speaker of the House John Boehner proclaimed, “Broke!” Not a good finish for America from a time that started in surplus due to reasonable taxes that paid for everything as we did it and expense cuts that bit deeply into wasteful pork-barrel projects and abused welfare … and stripped away a huge chunk of easy money that enriched the military-industrial complex. As I’ve long said, you have only a choice between the Welfare Party or the Warfare Party. Both are willing to spend us into oblivion. The only difference is what they are willing to spend all of the nation’s credit on.
That tough Clinton-Gingrich deal hit the sweet spot of reality where no one gets everything they want. All of us tax payers pretty much want to eat our cake and avoid our broccoli, but under the Clinton-Gingrich agreement each party had to eat a little of what was good for them … or for the nation … and so we ran a nation that was actually paying down its debt for the first time in my lifetime. What sweet days those seem like compared to where we are today! (Far from perfect, but SO much better.)
Why the rich get richer until they practically own it all
Ever since Ronald Reagan, the rich have received an absolutely massive tax benefit that the average person can never get. It’s called the “Capital Gains Tax.” It says that, all the money you make for doing the least amount of work gets to be taxed less than the money people slave for with the most amount of sweat and blood.
Capital gains already had the benefit of being 401k plans for the wealthy in that those making money off of gains have been able to defer those gains until the profit was realized via a sale of the assets. That’s fair enough in my book because those paper profits can just as quickly become real losses if you don’t sell with the right timing. HOWEVER, let’s admit it: throughout their history the stock market and real-estate market have had far longer periods of bull markets than bear markets.
That means there is a lot of built in deferral where your wealth gets to keep accruing tax free until you take it out of those assets — like a 401k. That, in itself, is a huge benefit that helps the rich get richer, which I’m fine with, but they certainly don’t merit a special cut-rate on their taxes, to boot. The poor man never has enough money to even play in the stock casino because he has to spend all he has to stay alive. So, he never realizes that benefit because he cannot afford the risk of playing the game.
Republicans have long liked to claim that the rich are paying an inordinate amount of the nation’s tax burden by saying things like “The top 20% of America is already paying 80% of the taxes.” On the face of it, that sounds like a truthful basis for claiming the rich are paying more than their fair share. What the Republicans have always counted on, though, is that Americans hate doing math and would never figure out the obscene truth behind that statement: The top 20% of America IS paying 80% of the taxes (or whatever the equation of the day is) BECAUSE the top 20% of America is making 80% of the income!
They are not paying more than their fair share at all! And how is that the case when we know they pay higher income-tax rates?
Simple as that. The higher income-tax rate is a game of smoke and mirrors. You see, the other part of the equation that Republicans never mention and most people never think about is that the rich do not make their money off wages or salaries like poor working dolts. They make the bulk of their income off of investments. Why do you think billionaire CEOs prefer to be paid in lavish stock options, rather than cash? Well, one obvious reason is any gains they make on those options will get taxed at a lower rate than what many less-rich Americans pay on their wages.
It is not hard to figure out why the top 1% have grown in wealth so very, very much faster and higher than the rest of America. The advantages are solidly in their court. The places where they make most of their money get a cut rate on taxes. And little of that created jobs in America as was promised back in the Reagan days. Just the opposite happened because those greedy CEOs soon took all their corporate money and created factories in China under Reagan’s VP, when GHW Bush became president, to make China richer (and in Mexico and India) because they could save money for the corporation and make even greater earnings off their stocks while paying lower taxes on all of the gains when they sold those stocks, too!
That is exactly how and why China grew to nearly dominate America in global economics. It wasn’t without its problems of course. Eventually the sweat-shop workers started demanding better pay and better conditions because you can’t keep a good man down forever … I guess. China stole the plan and ran, capturing many of America’s best designs and production methods. And then the Trump trade wars started breaking that efficiency down as it became harder to sell back into the American market, and then Covid really broke the system down with larger supply-chain disruptions.
It was from there that Biden started enticing corporations to move their factories back to America with Fascist economics. Yes, that is what economic Fascism is. It is the combining of massive government investment with massive capitalist investment in huge projects where the profits go to the capitalists, instead of requiring capitalists to make the entire investment, themselves. In other words, it is more massive corporate welfare for the people who also have the special lowered tax rates on those investments.
The greed of this system is beyond belief … and both parties share the culpability.
Now we come to the years of Republicans trying to claim that the only way to solve what has become the greatest deficit in history is with Social Security cuts, another story in today’s headlines. That is another outright lie just like the one fed to you about capital-gains tax breaks being necessary to build up America’s factory investments. (Factory investments never got worse!) Those factory jobs were promised to improve wages for American workers, too. (Real wages remained stagnant the entire time because NOTHING “trickled down.”)
Republicans used to claim Social Security was a ruse — a lie sold by Democrats — because Americans would never get back the money they were paying into the program. Now Republicans are the ones trying their hardest to make certain you never get back the money you paid into it! They want to balance Social Security by cutting how much you get back or pushing your retirement age even higher than they already pushed it back in the Reagan days.
To engage in this warfare, their disinformation campaign has turned “entitlements” into a dirty word — to make you sound like you are some spoiled trust-fund brat if you want your Social Security trust money paid back to you. The problem with that twisted thinking is that, unlike a real spoiled trust-fund brat who is getting daddy’s money without ever working for it, this is YOUR money that YOU already worked for, which was TAKEN away from you and held IN TRUST by the government that PROMISED you would get it back when you retired or became disabled. You ARE entitled to what was ALREADY YOURS.
Republicans want to wrench blood out of the turnips by making certain that you DO NOT get most of YOUR money that you worked so hard for back, after decades in which they claimed you wouldn’t because of Democrats creating a flawed Social Security system, AND they want to do that solely to protect the riches of the rich.
They never mention the alternative: There is a very simple way that Social Security can be made solvent for decades to come and cut your retirement age back to 65, as it once, was AND make good on real inflation, instead of the government’s fake inflation. Republicans could return the whole program back to the promise it once was, and it wouldn’t cost most Americans a cent and would be entirely equitable between the richest and the poorest: End the special Social-Security tax BREAK that, like the capital-gains break, benefits only the rich.
Most of us have to pay Social Security (FICA) tax on 100% of our income, and 100% of our income barely stretches to cover our living expenses as it is. The top 1% might as well be called “the One Percent” because they only pay Social Security tax on 1% of their income! It is time to remove the cap that shields almost all of the easy money of the rich from Social Security taxes — at least on all their wage and salary income, if not also on all their capital-gains income. Why should the most disposable income in America escape all Social-Security tax, while income that is entirely essential gets fully taxed? None of my income gets that exemption!
As it stands right now, all income above $160,200 is completely Social-Security tax free! Most of us pay that tax on all our income, but we’ve been sold a lie of disparity that claims somehow it would not be fair to the rich to expect them to also pay that percentage on all their income. After all, they worked so hard to get to the point of being fabulously wealthy that they surely should have all of their gains and 99% of their salaries shielded from that nasty tax. So, they pay that tax on what is, for them, chump change. You pay it one what is your entire livelihood, and for some reason you are supposed to think it would unfair for them to have to pay it on their entire livelihood.
Don’t buy the lie.
This major overhaul of removing that cap for the rich would not “save social security on the backs of the rich.” It would finally make them shoulder the same percentage of the total load you have to shoulder! Nothing more. It would STOP saving social security all on YOUR back! The true working class may fantasize that someday they will be rich, and they wouldn’t want the government taking all that money away from them when they finally get there, but the whole tax system is skewed to make sure they never do get there by giving these special tax rates, special exemptions, and numerous tax loopholes to the wealthiest of Americans.
Why do you think both Warren Buffet and Donald Trump pay a FAR smaller percentage of their realized income in taxes than their secretaries or the person who delivers their Coke and cheeseburgers to them?
You can get all the headlines every weekday PLUS all the analysis in the privileged weekly “Deeper Dive” articles that include my economic predictions for a full year PLUS know you are helping this kind of writing survive with this special, one-time, low price offer that ends this week:
Keep reading with a 7-day free trial
Subscribe to The Daily Doom to keep reading this post and get 7 days of free access to the full post archives.