Robin Hood in reverse
If passed, the GOP's One Big Ugly Bill will cap off more than a half century of upward redistribution of wealth and income, making America more unequal than any time in its history.
There’s nothing new about Congress passing tax laws that shower most of their benefits on the rich while doing nothing to help or even harming average wage earners and the poor. There’s also nothing new about conservative-dominated Congresses cutting the nation’s social safety net programs, which were never generous to begin with.
Tax policies enacted during Ronald Reagan’s eight years in the White House set the tone for the past half century’s upward redistribution of wealth and income. The trickle-down economics tax cut of 1981, which lowered the maximum tax rate from 70% to 50% while cutting the lowest tax rate to 11% from 14%, gave most of its benefits to the rich. When Congress raised taxes in 1986 to close some of the deficits caused by the first bill, it further lowered the top tax rate to 28% while raising the bottom tax rate to 15%, higher than it had been when Reagan entered office.
During the early years of this GOP-dominated era, Congress also implemented cuts to Medicare; raised the retirement age; reduced Social Security benefits; introduced work requirements for welfare; and sharply cut support for public housing and low-income rental assistance programs. Smaller cuts in the social safety net were imposed during the presidencies of both Bushes and Bill Clinton, who famously declared during his state of the union address in 1996 that the era of big government was over. Five months later, he signed legislation ending cash guarantees for poor mothers with dependent children, imposed work requirements on welfare recipients and restricted benefits for immigrants.
Before the Joe Biden presidency, the only exceptions to these tax-cuts-for-the-rich/safety-net-cuts-for-the-poor policies came through expanding the nation’s health insurance system. Clinton signed a law guaranteeing coverage for children. George W. Bush added a drug benefit to Medicare. Barack Obama’s Affordable Care Act subsidized private insurance for the uninsured and expanded Medicaid to cover low-wage workers. President Biden’s pandemic relief packages beefed up those programs as well as expanded income and food stamp support for folks in the bottom third of the income distribution.
But all those half-measures combined barely put a dent in the inequality engendered by the GOP’s previous tax-and-spend policies, which benefited mostly the rich. By the 2020s, the share of national income going to the top 1% had risen to about 20% from 10% a half century earlier. The top 20% of earners now take in 52% of national income, up from 44% in 1980.
Wealth is even more skewed than income. The top 10% of families now hold 69% of the nation’s wealth while half the nation’s families (the bottom 50%) hold just 6% of total wealth. It would only measure 3% if Social Security benefits were excluded.
Things will only get worse — much worse — if the One Big Ugly Bill passes. How could it not given its skewed priorities. The bill reduces taxes mostly for the well-off by $4.4 trillion over next ten years while cutting about $1.5 trillion from safety net programs. Two-thirds of that will come from health care — mostly Medicaid, which provides insurance coverage for the poorest among us.
Let’s speak plainly. Combining another tranche of tax cuts for the rich with cuts in spending on the poor and middle class will devastate areas of the country that depend on those programs. The areas hardest hit will be those that voted overwhelmingly for Donald Trump. This unprecedented combination of massive tax cuts with massive spending cuts will push our country into a level of wealth and income inequality that far exceeds what existed during the Gilded Age of the late 19th and early 20th centuries.
Robin Hood in reverse
As I reported on June 12 when the Congressional Budget Office released its official analysis of the House-backed bill (the Senate bill is more punitive), everyone in the bottom third of the income distribution will be worse off under the GOP bills, losing on average over $1,200 a year. Virtually all of the gains will go to the top 10% of income earners. The Center on Budget and Policy Priorities estimates that next year alone, the top 1% will gain $25,500 on average; the top 20% (including that 1%) will gain $500 (which means even most upper middle class people will gain next to nothing).
And what happens to everyone else next year? They lose, with the bottom 20% losing the most of all — an average of $2,270.
The Senate is about to vote on its version of the bill. It’s not to late to let your Senator know that you oppose legislation that will not make America great, will not make America healthy, but will make Americans poorer, sicker and less equal.
You can do that by going to this website, where you can use the drop down menus to get the office numbers from Senators from your state.
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This dirty and criminal bill is even worse in its surreptitious takeover. Nothing takes effect until next year. It might be even after the midterms that most people notice they've been screwed.
Love to Karen.