Conspiracy versus Stupidity

Alan Zendell, December 21, 2017

It’s sometimes difficult for people who aren’t in the inner circle to tell the difference between ulterior motives and sheer incompetence. In my experience, which includes nearly fifty years working for one government or another (sometimes as a contractor) it was usually the latter. As Watergate proved beyond a shadow of a doubt, government people who attempt to conspire generally aren’t smart enough to pull it off.

Let’s have a look at the way various people have tried to sell the new tax law. Speaker of the House Paul Ryan put on a nationally televised dog-and-pony show last month, in which he didn’t exactly lie through his teeth, but he was very selective about what he included. More to the point, he was very selective about what he omitted.

Senate Majority Leader Mitch McConnell was, as usual, smart enough and slippery enough not to let himself get pinned down over details, but by sticking to generalizations, he came much closer to lying than Ryan did.  He completely misled working- and middle-class people about the real intent of the new law. Various media sources on all sides have analyzed it and concluded that 80 percent of the benefits will again accrue to the top one percent, either through corporate profits or direct tax savings.

The left claims it was all a massive conspiracy to pay back wealthy donors for their support of the Republican agenda, which is kind of circular, since the Republican agenda was crafted by those same wealthy donors. But I don’t think there was any conspiracy there. Conspiracies, by definition, are covert, and this tax bill was as blatantly biased toward the wealthiest Americans as it could be. No one ever really claimed it wasn’t, they just harped on the miniscule benefits that the rest of America would see in the initial years, also omitting that those were scheduled to expire to fund the savings for the wealthy, which are permanent.

To muddy the water further was the old saw about lower corporate taxes resulting in more jobs. The trickle-down theory has been around for a long time, and there is no evidence that it was ever borne out in reality. When Ronald Reagan proposed it, George H. W. Bush proclaimed it “voodoo economics”. And history has proved Bush’s point more than Reagan’s. Corporations do exactly what is in their self-interest, in other words, in the self-interests of their major stockholders.

We heard a lot about bringing jobs back from overseas and somehow forcing corporations that used foreign workers to hire Americans instead. But all this tax law does is let corporations choose between padding their bottom lines with tax savings and perhaps building factories here in the future instead of in China or Indonesia. Corporate profits are inherently amoral and unaligned with anything we’d call patriotic. The only way this tax law could bring jobs back from overseas would be by heavily taxing everything American companies manufacture outside the country. The only way to stop bad behavior is to penalize it, and the new tax law doesn’t.

Paul Ryan might be forgiven for being well-intentioned, because he honestly seems to believe that voodoo economics works. That doesn’t make him innocent in the massive deception, only less guilty than the president. Remember when Trump unequivocally characterized the tax law as the greatest tax cut the middle class has ever seen? Remember when he said it would cost him millions of dollars?

The fact that both statements were utter lies doesn’t really surprise anyone. That’s what Trump does. But even in his case, we can apply my original query. Were his falsehoods part of some bigger conspiracy to pay back billionaire donors or did Trump simply not understand enough about the bill to know he was lying? In the end it doesn’t matter, but we must learn from this to keep it from happening again.

The biggest lie of all was the change to the estate tax. The federal tax exemption was raised from $5.5 to $11 million. How many Americans even know what that means?

Simply put, it means that instead of the first $5,500,000 of the value of an estate being exempt from taxes when assets are passed on to heirs, now the first $11,000,000 will be. People who inherit money from Trump and 10 Cabinet members will reap at least $20.7 million in estate tax savings as a direct result of the GOP legislation, because the federal estate tax rate is 40% at those levels. It’s a simple computation: 40% x $5,500,000 = a $2,200,000 windfall for the Trump family. How does that compare with the $100 per pay period all those working moms the Republicans talk about might see in their paychecks, at least until it expires to pay for the estate tax giveaway?

Does it matter that the new tax law was driven by a small group of greedy people, and most of the Republicans who voted for it simply weren’t smart enough to see through the subterfuge? Not really.

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