The Economy Is Good For "Haves" But Not For "Have-Nots"

The following is from former Labor Secretary Robert Reich: 

The government measures all sorts of consumer behavior: consumer spending, consumer confidence, consumer sentiment. The business pages are filled with analyses about whether consumers are buying or holding back, flush or poor.

But there’s not one American consumer. There are really two — and increasingly they live in different worlds.

Lower-income consumers are paid in hourly wages, which have stagnated for years when adjusted for inflation. The pay of lower-income consumers is now rising a bit faster than inflation, but for most of the last three years it had not — which meant their paychecks bought less and less. 

Lower-income consumers have blown through their pandemic savings. They’re now racking up credit card and other loan debt and are being squeezed by high interest rates on that debt.

 

The average American household now owes $7,951 in credit card debt. That average includes a large number of higher-income consumers with little or no debt. While there’s no reliable data on the credit card debt of lower-income consumers, you can assume it’s much higher than the average. Also note that the average interest rate on credit card debt is now 20.66 percent.

There’s also been a surge in “buy now, pay later” programs that could be masking an even bigger lower-income consumer debt problem.

Not surprisingly, parts of the economy most dependent on purchases by lower-income consumers are under stress. Mass-market brands — such as the fast-food companies McDonald’s, KFC, and Starbucks — are reporting that consumers are pulling back on spending. 

Ramon Laguarta, PepsiCo’s CEO, says, “The lower-income consumer in the U.S. is stretched,” adding that this type of customer “is strategizing a lot to make their budgets get to the end of the month.” (Ironically, PepsiCo has so much monopoly power it’s been able to raise prices, blame inflation, shaft consumers, and score record profits.)

Higher-income consumers are in a different world. Mostly college educated with jobs in the knowledge economy, they’re the richest 10 percent. High interest rates don’t affect them because they tend to have comparatively little mortgage, car, student loan, or credit card debt.

 

These higher-income consumers also own more than half of all shares of stock owned by Americans. So as corporations pump up the stock market with stock buybacks, these higher-income consumers are scoring healthy gains.

Which is why the parts of the economy that cater to higher-income consumers are soaring. Airlines and hospitality are doing well. Higher-income consumers are busily booking flights, hotel rooms, and tables at pricier restaurants. And they’re buying big-ticket items.

 

Even Walmart is shifting to higher-income consumers. Over the past three years, households earning over $100,000 have provided the biggest gains in Walmart’s market share. Its merchandise now includes AirPods, MacBook Air, and other items that “appeal to a high-income demographic,” according to John David Rainey, Walmart’s chief financial officer. “The more we move into that space … the more we’re going to retain this cohort.” 

Given that lower-income consumers constitute the majority of Americans, the stark differences between them and higher-income consumers help explain why voters continue to give President Biden poor marks on the economy.

 

This is “an economy of the haves and have-nots,” Michael Reid, an economist for RBC Capital Markets, told the New York Times’s DealBook. “The haves just have so much more spending power.”

Even as convicted felon Trump promises huge tax breaks to America’s haves — including the biggest corporations and richest people in America — he’s channeling the anger, anxiety, and frustrations of the have-nots.

Biden Must Point Out The Unfairness Of Our Good Economy

President Biden has been touting how good the economy has been doing since he assumed office. And he is right. By all the normal economic indicators, the economy is doing very well. In fact, it is doing better than any of the other developed nations.

But poll after poll has shown that most Americans don't think the economy is doing well. And they are right. While the rich and upper middle classes are doing very well, most Americans still struggle to keep up with corporate inflation. This is because the booming economy is not a fair economy that benefits everyone.

How did this unfairness happen?

About 1980, the Republican Party gained enough power to change U.S. economic policy. Before then, the rising productivity was generally shared by the rich, the middle class, and the working class. And thanks to President Johnson's War on Poverty, even the poor got a share.

But the Republicans instituted their "trickle-down" economic policy. They tilted the economic playing field to favor the rich, telling Americans that when the rich got richer it would benefit everyone because that extra money for the rich would trickle down through the society and benefit everyone.

That didn't happen. While the rich got much richer, almost nothing trickled down. Rising productivity was no longer shared, but selfishly hogged by the rich and their corporations. The result was the biggest gap between the rich and other Americans since the 1920's - a gap that continues to grow larger every year!

President Biden should stop talking about how well the economy is doing, and start talking about the real economic issue - how unfair the Republican policies are to most Americans. And he needs to highlight what he (and a Democratic Congress) can do to return to an economy fair to all Americans. 

Our Economy Is Unfair Because We Are Ruled By The Rich

Why do millions of Americans work full-time jobs for a wage that keeps them in poverty? 

Why do working and middle class families struggle to keep up with inflation? 

Why do over 50 major corporations make billions in profits, but pay no income taxes?

Why do the super-rich pay a smaller income tax rate than many middle class families?

Why are giant corporations allowed to control so much of the market that they can raise prices at will (regardless of already record-breaking profits)?

The answer to these, and other inequities, is really very simple? We are being ruled by the rich.

Most of the elected officials in Congress are millionaires (and a great many are multi-millionaires). They make the laws that govern our society. And as one would expect, millionaires make laws that benefit millionaires. And none-elected millionaires have the money to fund propaganda to support the laws made by elected millionaires.

This could be fixed, but it would be difficult. An overwhelming number of voters would have to demand that change. Anything less could be ignored by the ruling rich.

Anyone can run for Congress, but not anyone can afford to run for Congress. It takes a good deal of money to get a person known by the voting public, and more money to get their views know. And it takes money to be able to raise money. This puts a working or middle class person at a serious disadvantage, since a rich opponent can simply outspend them with their own money (or easily fund a money-raising campaign).

The answer is public funding of federal campaigns. All candidates should receive a certain amount of funding from the government to run, and no candidate should be allowed to spend more than that amount. And MAGA-donors or other outside groups should not be allowed to spend money campaigning for any candidate. This would put all candidate on an equal footing, and probably results in more working and middle class candidates being elected to Congress.

Also, the Citizens United decision by the Supreme Court must be overturned. That decision said money was speech, and allowed the rich to have more speech than anyone else.

We must have fair elections before we can have a fair economy. That will not be easy to accomplish. It will only happen when the voters demand it, and will only vote for those who will reform our election funding laws and support Supreme Court nominees who will overturn Citizens United. 

Until this happens, we are destined to be ruled by the rich - to the detriment of everyone else.

The U.S. Economy Is Actually Doing Well (For The Rich)

The chart above ireflects the results of the newest Economist / YouGov Poll -- done between December 2nd and 5th of a nationwide sample of 1,500 adults, with a 3.1 point margin of error. 

It shows the same thing that almost all other polls show -- that most Americans think the U.S. economy is bad and getting worse. It seems strange considering that unemployment is low, GDP is above 5%, inflation is down significantly, the stock market is up, and sales are up for most businesses. In other words, all the indicators economists use to determine a healthy economy are good.

Is the public wrong? Well, Yes and No. The economy is booming, and rich people are doing better than ever before. But too many people are not sharing in the economy's increasing productivity (wealth). That's because while the economy is good, it is not fair.

In the three decades after World War II, the economy was also doing well -- and so were most Americans. The rising productivity was shred among the working class, the middle class, and the wealthy. 

That could have continued, but when the Republicans came to power about 1980, they changed the economic rules of the country -- tilting the economic playing field to benefit the rich. They claimed that their economic policies that favored the rich would benefit everyone, because the money given to the rich would trickle down to everyone else in the society.

That did not happen. Instead of sharing the increase in productivity, the rich just hoarded it. They fattened their own bank accounts to the detriment of 90% of Americans. Profits for corporations and incomes for the rich have skyrocketed up, while wages for workers have barely risen (and in too many cases have been eaten up by the rising inflation).

This leaves many people feeling the economy is not working for them, and they are right. They feel the economy is doing poorly -- not understanding that the GOP policies are just allowing the rich to hog most of the country's increasing wealth.

What do voters do when they feel the economy is bad? They vote out the party in the White House. Sadly, that would only make things worse for those feeling left out. Putting A Republican (especially Trump) back in the White House would not help the poor, the working class, or the middle class. It would only benefit the rich as the GOP would continue to pursue their "trickle-down" policy.

The economic unfairness is now greater than in the Gilded Age, and is growing more unfair each year. We don't need a new party in the White House. We need fairer economic policies -- policies supported by Democrats (but currently blocked by Republicans).

If Republicans are voted out of power, the economic policy can be changed -- to once again benefit everyone. Economic fairness worked in the post-war period, and if would work again. A truly healthy economy puts money in everyone's pocket -- not just the pockets of a few billionaires!

Record High Say Death Penalty Is Applied Unfairly

 

The chart above is from the Gallup Poll in a survey done between October 2nd and 23rd of a nationwide sample of 1,009 adults, with a 4 point margin of error.

The GOP's "Fair Tax" Bill Is Not Fair At All

 The following is part of an op-ed by Natasha Sarin in The Washington Post:

FairTax is rooted in the interests of the most privileged. In fact, it is the brainchild of three Houston entrepreneurs — Leo Linbeck Jr., Jack Trotter and Bob McNair, the former owner of the National Football League’s Houston Texans. The trio, who have all now passed away, raised millions in the late 1990s— much of it their own seed funding — to build a grass-roots movement for their policy.

FairTax proponents say it would simplify the system by eliminating income taxes and allowing Americans to keep everything in their paychecks. In reality, replacing the income tax system with a national sales tax shifts the tax burden to lower-income households and benefits higher-income ones.

The economics are simple: Wealthier households spend a smaller shareof their income than poorer households do, which means lower- and middle-income taxpayers would take on more of the overall tax burden. If Treasury Department estimates from 2005 — old, but directionally still accurate — reflected the distribution of taxes today, the bottom 50 percent of taxpayers would pay more than twice as much tax this year — roughly an extra $220 billion — under FairTax. The top 1 percent would pay about $320 billion less.

FairTax won’t die, despite its legion of detractors. Since 1999, it has been introduced in every Congress. And although most mainstream Republicans have moved away from public support of FairTax in recent years, it actually has some renewed momentum: It is on track for its first-ever floor vote, has spent weeks atop the list of most viewed bills this Congress, and could well be a campaign issue for Republicans in the 2024 cycle, given that many potential presidential nominees — including Ron DeSantis, Nikki Haley and Mike Pence — are past champions.

Inflation? More Important Is Employers Shafting Workers!

There's a lot in the news now about how inflation is hurting American workers. It's true, but more important is how employers are shafting American workers. If workers were treated fairly, inflation wouldn't hurt near as much.

The following is from former Labor Secretary Robert Reich: 

Yes, prices are increasing. But would you prefer a recession? As a practical matter, that’s the choice the Fed gives us. When the Fed puts on the brakes, it often pushes the economy into a ditch. A recession will cause far more hardship for many more Americans than inflation is now causing. . . .

Most importantly, focus on the real problems facing working Americans — the power imbalance that’s been keeping wages and working conditions down (adjusted for inflation) while pushing profits and stock prices up. 

Specifically, stop employers from using five tactics that are seriously harming working people. Three of them are legal but shouldn’t be. No other advanced nation allows its working people to be treated this way.

1. Forced overtime. Your employer can force you to work for more than 40 hours a week. If you refuse, you can be reprimanded, demoted, or even fired.

Forced overtime is at the heart of the explosion of strikes in 2021. Workers at a Frito-Lay plant in Topeka, Kansas went on strike for nearly three weeks, demanding an end to 12-hour “suicide shifts,” forced 84-hour workweeks, and working conditions that have led to heart attacks, electrocution, and even death.

How is this legal? Because federal overtime laws are wildly out of date. The Fair Labor Standards Act of 1938 established the 40-hour work week and that workers must be paid “time-and-a-half” for hours worked beyond 40 hours, but imposes no limit on the number of overtime hours -- unlike nearly every other industrialized nation.

The term “forced overtime” should not exist. Congress must pass legislation that bars employers from forcing workers to work more than 40 hours a week.

2. Forced arbitration. Under this often-hidden provision in employment contracts, you must waive your right to sue your employer or participate in a class action lawsuit against them. Employment disputes must be resolved by a private arbitrator — often chosen by the employer — rather than a judge or a jury in a court of law, and the outcome is not public. 

Forced arbitration means that workers cannot sue their employers for violating any of their labor rights, whether it be wage theft, discrimination, retaliation, or sexual harassment. You might not have any idea you’re agreeing to this because it’s buried in the fine print of your employment contract. Unsurprisingly, the practice overwhelmingly favors the employer. One study estimates that forced arbitration enabled employers to steal $12.6 billion from low-wage workers in 2019. 

As of 2019, forced arbitration affected 60 million workers. It’s particularly prevalent in low-wage jobs held by women and people of color.

Congress must pass legislation banning forced arbitration in employment contracts.

3. Unpredictable and unstable scheduling. Millions of American workers are subject to “just-in-time” scheduling, in which your employer changes your schedule with little or no advance notice. Over 40 percent of younger retail workers with hourly wages report receiving their schedules with one week or less notice.

Unpredictable scheduling puts workers at the whim of their employer and prevents them from planning for childcare, attending school, or holding down a second job. It also causes high levels of stress. And it prevents millions of working families from gaining financial stability and building wealth.

It’s time for Congress to enact a fair workweek law, requiring employers to send out schedules two weeks in advance or pay extra for last-minute changes.

Add to these, two other tactics that are illegal but have become standard practice nonetheless. 

4. Wage theft. Employers steal from you by working you off the clock, paying you below minimum wage, or not paying for overtime. A study of just three cities found that employers stole $3 billion in wages from low-wage workers in just a single year. On that basis, researchers estimate $50 billion is stolen from the country’s low-wage workforce every year. Many of them, as a result, have to rely on public assistance, meaning we all subsidize corporate theft.

What can be done? Tougher labor laws, better enforcement, harsher penalties for employers, and stronger unions. The Protecting the Right to Organize Act (PRO Act),passed in the House in March 2021, contains all these. But like many important bills that have been passed during the last year in the House, this is being held up in the Senate.

5. Misclassifying full-time employees as independent contractors. If you’re classified as an independent contractor, you’re not entitled to minimum wage, unemployment insurance, overtime pay, sick leave, workers’ compensation, protections against discrimination and sexual harassment, or the right to collectively bargain for better wages and working conditions. 

But full-time workers are being misclassified as independent contractors all the time. Many gig-based companies have built their entire business model on misclassification. Uber and Lyft, for example, saved at least $413 million from 2014 to 2020 by not paying into unemployment insurance.

The good news is that more than 20 states have passed laws prohibiting employers from misclassifying employees as independent contractors. The PRO Act would make this the national standard.

To summarize: Inflation is a sideshow. The real problem is a lopsided economic system that allows employers to exploit workers by forcing them to work overtime, makes it impossible for them to sue their employer for violating labor protections, difficult for them to plan their life outside of work, steals their wages, and misclassifies them as independent contractors when they’re full-time employees.

American workers have the power to change this — but only if they demand it (and aren’t distracted by “inflation” scares). 

Organize. If necessary, strike. Keep pressure on Congress to pass the PRO Act.

Our Tax System Is Broken - Trump's Returns Prove It

 

I wasn't too surprised to learn that Donald Trump paid no taxes in 10 of the last 15 years, and in two more of those years paid only $750 (less than any middle or working class person must pay). 

Our tax system is broken, and has been since the Republicans gained enough power to institute their economic policy a few decades ago. They believe the rich should not have to pay as much in taxes as the rest of us. 

They tell us that by allowing the rich to keep most of their money, through an unfair tax system, they will share that extra money with the rest of us. Of course that has never happened. The rich just fatten their own bank accounts, and nothing "trickles" down.

Our income tax system was originally designed to be progressive. It was intended to be that those who made the most should pay the most -- and that worked well for many years, creating a vibrant and growing middle class. That system benefitted everyone, including the poor and disadvantaged (who benefitted from government programs paid for through those taxes).

Sadly, that is no longer true (as Trump's tax returns have shown us). We must fix our broken system.

Here is a part of what the editorial board of The New York Times has to say about this: 

The portrait of a man who earned hundreds of millions of dollars, lived a life of comic excess and yet, in many years, paid nothing in federal income taxes is an indictment of the federal income tax system. It illustrates the profound inequities of the tax code and the shambolic state of enforcement.

The government has sharply reduced the share of income that it collects in taxes from the wealthiest Americans. One recent study found that the 400 wealthiest households paid 70 percent of their total income in federal, state and local taxes in 1950, 47 percent in 1980 and 23 percent in 2018. The cuts in tax rates have come mostly at the federal level.

The government allows income to be sheltered from taxation for hundreds of different reasons, but real estate investors have long enjoyed a particularly sweet set of loopholes. A homeowner can write off the interest payments on a mortgage loan, but the owners of commercial buildings get a host of other benefits, too. It’s relatively easy for real estate investors to use past losses to offset income, to defer income and to avoid reporting some kinds of income. Best of all, the law lets investors claim a building is depreciating in value — a theoretical loss of money — even as the actual value increases. . . .

Moreover, the formidable complexity of the tax code makes it difficult to tell when wealthy taxpayers have crossed legal lines. For the rich, taxation often becomes a kind of structured negotiation between the taxpayer’s experts and the government’s experts.

It’s not a fair fight: The rich keep getting richer, while the Internal Revenue Service keeps getting smaller. Republicans in Congress have slashed funding for the I.R.S., stripping the agency of expertise, resources and authority. The number of I.R.S. auditors has fallen by one-third since 2010. The government employs fewer people to chase deadbeats than at any time since the 1950s.

The share of all tax returns subject to an audit declined by 46 percent from 2010 to 2018, according to the Congressional Budget Office. Astonishingly, the decline was even steeper for millionaires — the audit rate fell 61 percent over the same period. . . .

On current trends, the federal government will fail to collect $7.5 trillion in taxes over the next decade — about 15 percent of the total amount owed.

Cracking down on rich tax cheats is law enforcement. It is a basic function of government to ensure that people are playing by the rules. Tax cheating is not a victimless crime. Every dollar hidden from the government is that much less money to spend on education, roads and research. The rich are benefiting at the expense of everyone else. . . .

Congress should restore every penny of funding stripped from the I.R.S. since 2010 — plus whatever is necessary for the agency to perform its critical work.

Paying taxes is a civic duty, and the government needs the money. Most Americans try to pay what they owe, even if they wish they owed less, and they take comfort in the assumption that most of their neighbors are conducting themselves in the same way.

Exploding The GOP Myths About Taxing The Rich More

The inequality of wealth and income between the rich and the rest of America is vast. It is as big as it was in the 1920's, and it continues to grow.

The reason for this is the economic policy (trickle-down economics) imposed by the Republicans for the last few decades. That policy favors the rich while working against the working and middle classes.

The recent tax cut by Trump and the congressional Republicans just made things worse -- by giving huge new tax cuts to the rich and next to nothing for working Americans. It also radically ballooned the deficit and national debt. Now Republicans want to cut programs that help needy Americans -- a move that will again exacerbate to growing inequality.

Most Americans agree that the rich no longer pay their fair share of taxes, and believe their taxes should be raised. The Republicans have offered 12 reasons why that should not happen. Those are just myths.

Robert Reich, former Labor Secretary, lists these 12 GOP myths, and explodes each of them with the truth. Here is what he says:

Myth 1: A top marginal tax rate applies to all of a rich person’s total income or wealth. 

Wrong. It would only apply to dollars in excess of a certain level. The 70 percent income tax rate proposed by Congresswoman Alexandria Ocasio-Cortez would apply only to dollars in excess of 10 million dollars a year. The 2 percent wealth tax proposed by Elizabeth Warren would apply only to wealth in excess of 50 million dollars. 

Myth 2 : Raising taxes on the rich is a far-left idea.

Baloney. 70 percent of Americans – including 54 percent of Republicans – support raising taxes on families making more than 10 million dollars a year.  And expecting the rich to pay their fair share is a traditional American idea. From 1930 to 1980, the average top marginal income tax rate was  78 percent. From 1951 to 1963 it exceeded 90 percent – again, only on dollars in excess of a very high threshold. Even considering all deductions and tax credits, the very rich paid over half of their top incomes in taxes.  

Myth 3: A wealth tax is unconstitutional.

Rubbish. Most locales already impose an annual wealth tax on the value of peoples’ homes – the main source of household wealth for most people. It’s called the property tax. The rich hold most of their wealth in stocks and bonds, so why should these forms of wealth escape taxation?  Article I Section 8 of the Constitution gives “Congress [the] power to lay and collect taxes.” 

Myth 4: When taxes on the rich are cut, they invest more and everyone benefits, when taxes on the rich are increased, economic growth slows.

Utter baloney. Trickle-down economics is a cruel joke. Donald Trump, George W. Bush, and Ronald Reagan all cut taxes on the rich, and nothing trickled down. There’s no evidence that higher taxes on the rich slows economic growth. To the contrary, when the top marginal tax rate has been high – between 71 to 92 percent – growth has averaged 4 percent a year. But when top rate has been low – between 28 and 39 percent – growth has averaged only 2.1 percent. 

Myth 5: When you cut taxes on corporations, they invest more, and create more jobs. 

Wrong again. After Trump and the Republicans lowered the corporate tax rate in 2018, America’s largest corporations cut more jobs than they created. They used their tax savings largely to increase their stock prices by buying back their own shares of stock – enriching executives and wealthy investors but providing no real benefit to the economy.  

Myth 6: The rich already pay more than their fair share in taxes. 

This is misleading, because it focuses only on income taxes – leaving out the large and growing tax burden on lower-income Americans; payroll taxes, state and local sales taxes, and property taxes take bigger bites out of the pay of lower-income families than higher-income.

Myth 7: The rich shouldn’t be taxed more because they already pay capital gains taxes. 

Misleading. Rich families avoid paying capital gains taxes by passing their wealth on to their heirs. In fact, the largest share of big estates transferred from generation to generation are unrealized capital gains that have never been taxed.

Myth 8: The estate tax is a death tax that hits millions of Americans.

Baloney. The current estate tax, which only applies to assets in excess of 11 million dollars, or 22 million dollars for couples, affects fewer than 2,000 families. 

Myth 9: If taxes are raised on the wealthy, they’ll find ways to evade them. So very little money is going to be raised.

More rubbish. For example, a 2 percent wealth tax, as proposed by Senator Elizabeth Warren, would raise around 2.75 trillion dollars over the next decade with very little tax evasion, according to research. A 70 percent tax on incomes over 10 million would raise close to 720 billion dollars over 10 years. 

Myth 10: The only reason to raise taxes on the wealthy is to collect revenue.

No. Although these proposals would generate lots of revenue – and help us reduce the national debt while investing in schools, roads, and all the things we need – another major purpose is to reduce inequality, and thereby safeguard democracy against oligarchy.

Myth 11: It’s unfair to raise taxes on the wealthy.

Actually, it’s unfair not to raise taxes on the rich.  For the last 40 years, most Americans have seen no growth in their incomes at all, while the incomes of a minority at the top have skyrocketed. We’re rapidly heading toward a society dominated by a handful of super-rich, many of whom have never worked a day in their lives. More than 60 percent of wealth in America is now inherited. 

Myth 12: They earned it. It’s their money.

Hogwash. It’s their country, too. They couldn’t maintain their fortunes without what America provides – national defense, police, laws, courts, political stability, and the Constitution. They couldn’t have got where they are without other things America provides – education, infrastructure, and a nation that respects private property. And to argue it’s “their money” also ignores a lot of other ways America has bestowed advantages on the rich – everything from bailing out Wall Street bankers when they get into trouble, to subsidizing the research of Big Pharma.

So the next time you hear one of these myths, know the truth.

A Fair Economy Is A Productive And Prosperous Economy

The Republicans like to paint themselves as the party of fiscal responsibility and economic growth. And their path to both is "trickle-down" economics. They tell us that giving more to the rich and the corporations will be good for all Americans.

The problem is that silly economic theory has never worked -- except to make the rich richer and everyone else poorer. The true path to economic prosperity is a fair economy -- because when ordinary Americans have money to spend, everyone benefits (even the rich and corporations). And it is the Democrats who support policies to make our economy fairer for all Americans.

Here is how former Labor Secretary Robert Reich (pictured) explains it:

It’s often thought that Democrats care about fairness and not economic growth, while Republicans care about growth even at the cost of some fairness.

Rubbish. Growth and fairness aren’t opposites. In reality, Democrats are the party of economic growth and fairness. Republicans are the party of neither. 

The only way to grow the economy is by investing in the education, healthcare, and infrastructure that average Americans need in order to be more productive. Growth doesn’t “trickle down.” It rises up. 

Consider the two biggest legislative initiatives over past decade – the Affordable Care Act, achieved without a single Republican vote, and the current Trump-Republican tax overhaul, speeding ahead without a single Democrat. 

The ACA extends coverage to 21 million mostly lower-income Americans, including millions of children. 

It’s largely paid for by two tax increases on the rich – a 3.8 percent increase on their capital gains taxes and other investment-related income, and a 0.9 percent surcharge on their Medicare taxes. Those tax increases are a major reason why Republicans have wanted to repeal it.

But the ACA isn’t just about fairness. Healthier Americans are also more productive workers. Children who receive health care are better learners. The Act thereby fuels economic growth and widens prosperity.  

Republicans say their tax overhaul will promote growth by increasing the profits of American corporations and investors. This is trickle-down nonsense.

Every major study (including Congress’s own Congressional Budget Office and Joint Committee on Taxation) finds that its benefits would go mainly to big corporations and the wealthy. 

Share prices may rise for a time. They’re already at record highs in anticipation of the tax cut. But higher share prices don’t trickle down, either. The richest 1 percent owns almost 38 percent of the stock market. Eighty percent of Americans together own just 8 percent of all shares of stock.

This won’t fuel growth. Corporations expand and invest only when customers are eager to buy what they produce. And most of these customers are middle-income and below, who spend just about all they earn. The rich spend only a small fraction. 

Profits are now at record levels but corporations aren’t investing them. They’re using them instead to pump up share prices and executive pay. 

After the Bush tax cuts of 2001 and 2003, economic growth stalled and then dissolved in recession. After the 2004 corporate tax holiday for bringing foreign profits home, corporations didn’t invest or expand. The Reagan tax cut of 1981 didn’t cause wages to rise; they flattened.

What’s the real formula for growth? Better access to education, healthcare, and transportation, all of which make workers more productive. 

These more productive workers command higher wages. With higher wages, they purchase more goods and services. These purchases motivate companies to expand and invest, and create more and better jobs. 

American experienced this virtuous cycle for thirty years after World War II. We invested unprecedented sums in education, healthcare, and infrastructure. We financed these investments through higher taxes on the rich and on big corporations. 

The economy boomed and wages shot upward. The wages of the bottom fifth rose even faster than the wages of the top fifth. This unleashed consumer spending, which generated more growth. 

The Clinton administration tried this formula on a much smaller scale in the 1990s, raising taxes on the top and investing in education and infrastructure. The economy boomed, 23 million new jobs were created, and for the first time since the late 1970s the typical American’s wage rose.

The Trump-Republican tax overhaul would take us in the opposite direction. It raises taxes on the middle class, which would reduce their purchasing power. The Senate version would cut the Affordable Care Act, causing millions to lose coverage. 

It also explodes the federal debt, which will stymie growth. Debt service itself would likely require cuts in other programs such as Medicare, Medicaid, education, and transportation.  

Senator Orrin Hatch warned last week that the Children’s Health Insurance Program may not be refunded “because we don’t have money anymore.”

The current tax proposal would also eliminate the state and local tax deduction, which would likely cause states to cut back spending, including education and infrastructure. 

All of this would slow economic growth.

For years, Republicans have been selling tax cuts by lying that they spur growth, which trickles down to average Americans. 

For just as long, Democrats have been selling fairness, but without explaining why a fairer economy is also more productive and prosperous. 

It’s time for Democrats to make the case. It has the virtue of being true.