The reason that Ronald Reagan’s support of trickle-down economics was so frustrating to most Americans was that it was so obviously a money-grab ploy by the wealthiest entities and individuals in our country. George Bush Sr. gave it the name “voodoo economics,” in part because George Bush Sr. is basically a racist, but he’s not stupid. Reagan’s popularity with the unpopular Republican Party (sound familiar?) led to everyone—Bush Sr. included—adopting full-throated support for the circling-the-drain economic policy of big tax cuts for the wealthy and big business, supported by massive cuts to social programs and education. When Donald Trump and the Republican Party attempted to sell this same failure of an idea last fall, the American people said No, thank you.
The Republicans proceeded with it anyway, promising that big corporations would do what they had never done: put those tax savings back into infrastructure and expansion and jobs! In fact, corporate executives promised Trump’s administration that they would definitely NOT do it.
Guess what? The corporations didn’t do it!
JPMorgan Chase analysts estimate that in the first half of 2018, about $270 billion in corporate profits previously held overseas were repatriated to the United States and spent as a result of changes to the tax code. Some 46 percent of that, JPMorgan Chase analysts said, was spent on $124 billion in stock buybacks.
The flow of repatriated corporate cash is just one tributary in what has become a flood of payouts to shareholders, both as buybacks and dividends. Such payouts are expected to hit almost $1.3 trillion this year, up 28 percent from 2017, according to estimates from Goldman Sachs analysts.
What Republicans banked on was that corporations would make initial big splashes, including corporate statements that attempted to mislead the public by conflating deals already in place, negotiated between unions and executives, with the tax breaks. In many cases, those businesses are slashing jobs, continuing forward with the plans they had in place before Trump and the Republican Party robbed the nation’s coffers. Report after report has come out showing that big business is indeed making economic “history”… with record-setting corporate buybacks.
This says nothing about the now infamous “revenue-neutral” assertions made by Republican leadership, which have turned out to be the opposite of true. Tax revenue is at an all-time low, and our deficit is going to run through one trillion dollars in the next few minutes. If the Republican Party had been able to hold on to the House this November, you can be assured they would have moved to
cut down restructure Medicaid, Medicare, and Social Security. But just to highlight how our country’s debt growth is bothersome, the New York Times gave this explanation.
It’s highly unusual for deficits and borrowing needs to grow this much during periods of prosperity. A broad variety of analysts attribute the widening deficit to the tax cuts (along with increased military and other domestic spending ushered in through a bill Mr. Trump signed earlier this year).
But of course, it’s not “highly unusual” at all. This is what happens when a bunch of “fiscally conservative” swamp creatures inherit an economy that was stewarded out of the abyss by a Democratic-run Congress and executive branch. They plunder it.
This is a Creative Commons article. The original version of this article appeared here.