Why people have such a low opinion of politicians

A recent Gallup poll (Nov. 2-8, 2017) put Congress’s approval rating at 13%, disapproval at 81%, and 6% with no opinion. The short answer why so many disapprove is that we believe the vast majority are unprincipled.

Principled politicians carry the same core beliefs whether they are in power or out of power.

House Republicans yesterday again demonstrated their that belief in state’s rights applies only when they’re not the ones telling the states how to act. If enacted, the law they passed and sent to the Senate would allow anyone with a legal concealed-carry right in their own state to take that right with them when they travel to states with more restrictive policies. For example. Arizonians, who do not need any permit for their concealed-carry, would be able to conceal their guns while traveling in Maryland, which has a very strict concealed-carry policy.

One might cynically think this vote is a payback to the National Rifle Association, which has been pushing this, for their contributions. That may be, but it also shows the Republican Congress believes it knows better than Maryland what their citizens really need. Funny, how when the Federal Government under Democratic control proclaimed transgender people should be able to use the bathroom of their choice—well, that was gross overreach and an issue that should be left to the states.

President Trump’s shrinking of two Utah national monuments illustrates a lack of principles by both parties. Many Republicans have maintained that states should have free rein to manage national lands “because they know best.” One can and should discuss whether lands acquired by treaty belong to the whole nation or should be deeded to the state in which they belong. Regardless of one’s personal position, Trump has consistently said national lands should be run by and for the states. By that measure, his trimming of the monuments is principled.

However, candidate Trump and Republicans in general decried President Obama’s executive orders and proclamations as unlawful, unconstitutional overreaches of presidential power. Yet once he became President Trump, and with Congressional Republicans cheering along, he has used these same strategies to pursue Republican objectives.

Democrats do not show principles, either. Many Democrats are now decrying President Trump’s “overreach.” Such decisions should be left to Congress they now say, ignoring their eight years of approving President Obama’s use of executive power to achieve his agenda.

Elections should, of course, have ramifications. Those who support the policies put in place during the Obama administration will not look favorably on Republican changes. They should have done a better job of electing their candidates. To decry the mechanism of power now that they don’t control the levers is not defensible.

However, Republicans have learned nothing from the mistakes Democrats made in unilaterally passing legislation with sweeping national consequences. Democrats pushed through Obamacare without soliciting expert opinion on all the consequences. The public did not like it then, in large part because Democrats never brought them into the process; Democrats overstated some and never clearly explained other benefits (remember “nobody will lose their insurance”?), and they never admitted to the costs.

The Republican tax bill process has done them one better on all these counts. Only 32% of people approve the plan, while 48% oppose it, and 20% don’t know enough to do either.

Republicans universally decried Democrats for pushing through “Obamacare” without bipartisan input—and have sunk even lower with their tax bill by rushing through a 500-page bill with repercussions that affect every individual in the US.

The process is deeply flawed. It has been said that people would be sickened to see how either sausage or legislation is made. Making last-minute changes and pulling all-nighters didn’t work well when we were in high school and college, so why does Congress think their constituents would applaud this approach to running the country? Politics, as Bismarck said, is the art of the possible and requires compromise.

Last January, Senators Grassley and Lee introduced an amendment to the constitution to require the Federal government to have a balanced budget. Without the new tax legislation, we are running budget deficits of a half-trillion dollars a year. Both senators voted for a tax cut that will increase Federal debt by over a trillion dollars. In the House, multiple balanced budget amendment bills have been introduced and co-sponsored by Republicans who voted for the tax cut.

Kudos to Senator Corker who did take a principled stand against increasing the deficit and voted against the bill.

No principles. No respect. No solving the enormous financial problems facing our country.

To quote Trump: “So sad.”

Republicans Lie to Themselves to Justify Tax Cuts

The only selling point Republicans have left to justify their tax law is their oft-stated belief that it will spur growth and EVERYONE will benefit. Unfortunately, the nonpartisan Congressional Budget Office (CBO) and the overwhelming majority of macro economists do not agree with their hype.

Republicans promised historic tax reform. Actual reform to simplify the tax code and eliminate loopholes would take time and considered compromises. The Republicans decided they didn’t have time and proved they didn’t care about real simplification. With a 500-page tax bill, I’ll bet the Internal Revenue Code and its regulations will be expanding, not contracting.

Despite the Republican Party platform calling for a balanced budget amendment, they have given up on trimming the annual budget deficit—unless one believes their assurances that the tax cuts will pay for themselves with increased growth. The CBO estimates the Senate version of the bill will increase the deficit by a trillion dollars over ten years. (That’s $1,000,000,000,000.)

Most economists agree the changes will result in some growth because the increased budget deficit provides a stimulus to our economy (which is already generating record corporate profits and nearly full employment). However, virtually all economists maintain the growth will be insufficient to pay the costs of the tax-cut stimulus. 

Three charts to illustrate why the Republicans are mistaken in believing their myths.

To predict the future, we should examine the past. We have reduced both the maximum individual tax rate and nominal corporate tax rates in the past. Did we experience increased growth in real gross domestic product (an inflation adjusted measure of the economy) after those changes? You be the judge. This is what has happened in my lifetime:

In 1950 the top income tax rate was 90% (gray line). The top corporate rate was 42%, which was increased to 52% by 1952 (orange line). The blue line shows annual changes in real GDP (multiplied by ten to show on the same scale). It varies a lot year by year, but during the 1950s averaged 4.06%.

Corporate rates in the 1960s stayed about the same. The maximum personal income tax rate declined from 91% to 70%. Average real GDP averaged 4.43%. Aha! Maximum income tax rates go down and average real GDP increases.

Except with that 70% rate maximum in place throughout the 1970s and a slight decline in the corporate rate, real GDP annual increase averaged only 3.55% that decade. Hmm.

In 1987, maximum tax rates for both individuals and corporations were significantly reduced. The average annual real GDP increase fell to 3.15% for the 1980s.

In 1993, the corporate tax rate reached its current 35% (a slight increase from 34%) and the individual rate maximum increased from 31% to 39.6%. And the average annual real GDP for the 1990s increased ever so slightly to 3.23%

The maximum individual rate dropped for many years to 35%, but the average annual growth in real GDP during the first decade of the 2000s declined to 1.83%, and for the last six years has only increased to 2.09%. This year real GDP looks to grow something over 3%.

If maximum corporate and personal income tax rates were the only or even main driver of real GDP growth, we should go back to the high tax rates of the 1950s!

They’re not of course, but here’s one major problem with trickle-down economics. Give a billionaire an extra $100 and nothing changes for him. Give someone earning $20,000 a year that same $100 and chances are good they will spend every single one of those greenbacks. That spending is what increases GDP.

Lower tax rates are one of the reasons for the increased portion of wealth owned by the richest among us. (A second reason is the increased percentage of every dollar earned going to those who are already wealthy.)

Consider these two graphs showing the portion of income going to the top 1% and the portion of wealth owned by the top 1%.

  

During the 1950s, 1960s, and 1970s when we had significantly higher corporate and personal income tax rates, and the percentage of before-tax income going to the top 1% declined, real GDP growth averaged 4.01%.

In the 1980s, 1990s, 2000s, and the 2010s, while the income to and wealth accumulated by the top 1% has increased substantially, the average real GDP growth has been only 2.61%.

The Republican tax proposals will increase, not decrease income and wealth disparity. If one’s primary objective were to increase real GDP growth, one would skew the benefits of tax law change away from the top income-earners and toward lower income-earners.

If one’s objective is to benefit high income and wealthy individuals, the Republican plan should work quite well.