After the Tax Cuts

E. Tammy Kim

Just before Christmas, President Trump signed the Tax Cuts and Jobs Act into law. The name of the bill begins with a truth and ends in a lie: there are indeed tax cuts – regressive ones, for large corporations and the super-rich – but there are no jobs. The law will put the country $1.5 trillion in the red over the next decade, despite drastic cuts to social services.

‘We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and deficit,’ Paul Ryan, the speaker of the House of Representatives, said last month. ‘We have a welfare system that’s trapping people in poverty and effectively paying people not to work.’ By ‘welfare’ and ‘entitlement’, Ryan means the safety net of public health insurance, food stamps, emergency cash assistance and housing subsidies for children, the working poor, the elderly and people with disabilities. The Trump administration said today that it would support states that wanted to make people on low incomes work to qualify for Medicaid.

I met Gail Logan last summer, when the Republicans in Congress were trying to dismantle Obamacare, which had expanded Medicaid. We spoke in a dreary recreation room at a nursing home in upstate New York. Logan was born with cerebral palsy, but told me she had ‘always lived independently’. For most of her life, she’d been in her own apartment, helped by a carer for two hours a day. But in 2014, when she was in her late sixties, she was admitted to hospital after a fall. She was discharged to the nursing home for what was supposed to be temporary rehabilitation. But the staff too often left her in bed or wheeled her into a room with residents who couldn’t speak or were ‘not even aware’, Logan said. ‘They probably don’t think I can take care of myself.’ Her discharge was delayed by legal tangles with the privatised public insurance system. The longer she stayed there, doing nothing and gaining weight, the harder it was for her to return home.

Logan's recent experiences were evidence of a fraying safety net, but her life also bore witness to the system’s incalculable good. She has benefited from Medicare, Social Security Disability and Medicaid. More and more of us will need help from publicly funded carers, therapists, nurses and doctors in the coming years: by 2060, the number of Americans over the age of 65 will more than double, from 46 million to 98 million.

This isn’t the first time that Republican tax cuts have gutted the welfare state. It happened under Ronald Reagan three decades ago. But Reagan's second act is unfolding in a very different economy, one already denuded by Reaganomics. Inequality is at an all-time high – Bill Gates, Warren Buffet and Jeff Bezos between them have more money than 50 per cent of Americans – and jobs aren’t what they used to be. The private sector is dominated by a desiccated collection of gig employers offering provisional wages and no benefits except ‘flexibility’. Public health insurance and other social programmes are more important than ever.

But in the US, as in the UK and elsewhere, our social programmes are contracting, our roads and bridges are failing, and our schools and libraries are being closed. The very notion of shared goods seems to be disappearing. When Republicans are pressed about the impact of tax cuts on the poor, they highlight the shadow state of volunteer groups, religious charities and foundations backed by billionaires. Will the children of the Trump era mistake these substitutes for the public sector?


  • 12 January 2018 at 4:39pm
    Timothy Rogers says:
    Don’t forget the biggest “entitlement program” of them all, the US “defense” budget”. The public part of this is bad enough – Trump should have requested a $50 billion cut rather than a $50 billion expansion. That would have been consistent with his campaign rhetoric about withdrawing from unnecessary military commitments all around the globe. Then there are the hidden billions that go along with maintaining and expanding the already bloated “national security apparatus” (a dozen or so agencies, all with hefty budgets). A leftist populist might be able to sell such a program of cuts on military expenditures, but would be opposed (with immense press support) by the vast neo-liberal-neo-conservative “consensus” that we are still the so-called indispensable nation when it comes to policing the globe (only a fraction of this policing is actually related to realistic security concerns for the US). This is the elephant in the room of which no conventional American politician dare speak, and we may never see it slain or cut down to size. Too much pious fuzzy thinking about the matter creates a climate that puffs out fog and fear as soon as the issue is raised in a serious way.

    • 12 January 2018 at 6:42pm
      Stu Bry says: @ Timothy Rogers
      US Dollar hegmenony is underwritten by US military supremacy.

      As long as no country challenges the value of the Dollar the USA has access to whatever resources it desires. Any domestic austerity has nothing to do with a lack of resources for health or education spending, it is simply a method of control to further entrench the dominance of a small elite.

  • 13 January 2018 at 7:52pm
    Graucho says:
    It is, alas, unlikely that Mr. Bannon will end up using food stamps. It would be poetic justice if he did.

  • 14 January 2018 at 9:36am
    cufflink says:
    The answer must be, no second term for Trump. The Democratic voice must speak out now.
    But what conditions will the IMF impose on the US economy at this term's end? It is astonishing that the credit rating agencies are not even now readjusting this factor.
    A new Administration of whatever animal will have to act in austerity once again well before a dire second sub-prime fiasco re-appears.
    From a European perspective, it is astonishing that no take-up of necessary employment in social amelioration is envisaged.
    A New Deal is called for - I personally feel completely alienated by what is happening to my view of a Just America. Where are your shining lights?

  • 15 January 2018 at 6:24pm
    Stu Bry says:
    The USA print the world's reserve currency. They have infinite credit unless someone successfully challenges that status.