On TAP: Kuttner + Meyerson

November 16, 2017

It’s Judgment Day in the House, which is scheduled to vote today on its version of the Republican tax reform, while the Senate vote may be upon us soon as well. If nothing else, the squalid deliberations leading up to the vote have shown the historic link of the GOP to corporate America is all but indissoluble, notwithstanding all the populist rhetoric coming from Republican ranks, and all the social-issue moderation oozing from the boardrooms of the Fortune 500.

To curry continual corporate favor, the GOP bills make the corporate tax cut permanent, while putting a ten-year expiration date on its tax cuts for individuals. They also allow corporations to retain their deductions for the state and local taxes they pay, while eliminating such deductions on mere humans.

So much for “corporations are people.” They’re better than people, the Republicans insist, and a damned sight more worthy.

The House vote will throw a spotlight on California’s 14 Republican members, most of whom have expressed no reluctance to support a bill that not only eliminates the state and local deductions that roughly a third of their constituents take, but also clearly singles out California for GOP perdition by refusing to allow deductions for earthquake or fire damage, while allowing them for damage from hurricanes and floods. To date, only one of the 14—the most electorally endangered, Darrell Issa—has said he’ll oppose the bill. It’s no surprise that all 14 voted for earlier efforts to repeal the ACA, despite the fact that it would have cost millions of Californians their insurance, or that all 14 oppose California’s new sanctuary state law, though many thousands of undocumented immigrants live, work, go to school, and pay taxes in their districts. Now, however, the California members are poised to inflict major tax increases on their middle- and upper-middle-class constituents, many of whom have been known to vote Republican. These members’ faith—in their legislative leaders, in empirically refuted pseudo-economic dogma, in corporate campaign contributions, and just maybe in corporate sinecures when their voters toss them out of office—remains unbroken and whole.

November 15, 2017

The unmistakable wave of revulsion against Donald Trump includes a heartening upsurge in authentic grassroots groups, with names like Flippable, Run for Something, and a dozen more. It suggests that our Constitution will survive even Trump, and it represents a healing of American democracy.

But the wave is imperiled by an undertow of other groups that are mostly astroturf, with names like Americans for Prosperity and the other front organizations of the Koch brothers, Robert Mercer, and other far-right billionaires. Two of the legacies of this undertow are systematic voter suppression and gerrymandering.

Without gerrymandering, Democrats would already have about 20 more House seats, and hundreds more in state legislatures. Without gerrymandering, Democrats would have won control of the Virginia House of Delegates instead of being one or two seats short of a majority, pending recounts. The undertow gives Republicans a structural head start of about five points depending on the state.

Democrats may well beat that in 2018 and 2020. They could even take the presidency and win a working majority in both houses. But then comes the much harder task of undoing the structural tilt. That will be the work of a generation. And unless it succeeds, democracy will not fully return.

November 14, 2017

Today, the Prospect’s daily email inaugurates a new feature: our “On TAP” blog posts by two of our editors. Every Monday, Wednesday, and Friday, we’ll be including in our daily emails a new blog post, under the heading “Kuttner on TAP,” by Prospect Co-founder and Co-editor Bob Kuttner. Every Tuesday, Thursday, and the occasional Friday as well, we’ll include a new blog post, under the heading “Meyerson on TAP,” by Prospect Executive Editor Harold Meyerson (me).

To begin, then: This week the House is expected to vote on its own version of the Republicans’ tax reform bill, while the GOP-controlled Senate Finance Committee continues its deliberations in the hope that it can find new and exciting ways to make our tax code even more pro-plutocratic. Once these bills reach the floor of their respective houses, there’s no chance in hell Democrats will be allowed to offer amendments, but so long as the Senate bill lingers in committee, Democrats will still be able to introduce amendments, albeit with no chance of seeing them pass.

To date, congressional Democrats have focused more on opposing the Republican proposals than advancing their own. There’s some logic to that, as the Republicans’ brainstorms stay in the bills and, hence, in the news for some time—at least until the Republicans come up with something even more regressive—while the Democrats’ proposals come and go in a flash. Nonetheless, by failing to make a serious case for a fairer tax code, the Democrats have largely blown an opportunity to put their stamp on an issue where their priorities are more in tune than the GOP’s with those of the electorate.

The main Republican selling point for the central element of their proposal—a major reduction of the tax on corporations—is that by increasing the level of untaxed profits, corporations will choose to invest more, hire more, and pay their workers more. That there is not a shred of empirical evidence substantiating this claim—that, for instance, profits have soared since the recovery began in 2009 while wages have barely budged—is no deterrent to a party whose rise to power has been fueled by fake news. Moreover, as demonstrated by every poll in the past half-decade that’s asked about such matters, a decisive majority of Americans understands that the rich are getting richer while the wages of most Americans are heaving and puffing to keep up with the cost of living.

This presents Democrats with an opportunity both to align themselves with public sentiment and outline a plausible vision for a more broadly shared prosperity. Why not introduce an amendment in the Senate Finance Committee that would hugely reduce the tax on corporations that divided the seats on their boards equally between representatives of their shareholders and representatives of their workers? The only real way to dethrone the doctrine of “maximizing shareholder value”—which virtually all our corporations have taken to mean “at the expense of investment and worker compensation”—is to diminish the near complete control that major shareholders wield over corporate managers. Giving workers an equal say over the conduct of corporations is one way to begin that process. A version of this arrangement is required by law in Germany, and it’s no accident that Germany has done a far better job than we have in maintaining a large and vibrant middle class.

So, how about reducing to, say, 5 percent the tax on corporations that go this route and raising to a nominal 40 percent the tax on corporations that don’t? Up to now, Democrats have largely kept their critiques of our pervasive economic inequality out of their discussions of corporate tax reform. That’s a strategy that has yielded them precisely nothing. With the window on their ability to present and publicize amendments to the tax reform bill still open for a few more days, there’s time yet for one big anti-plutocratic push.