One of America’s most prominent political figures is telling Congress to just vote no on President Trump’s tax legislation.
America’s eighth richest citizen, former New York City Mayor Michael R. Bloomberg, has personally penned an op-ed for his Bloomberg News calling President Trump’s tax proposal “a Trillion-Dollar Blunder.”
Bloomberg, who has a record as progressive on social issues but conservative on fiscal issues and a deficit hawk, writes in a rare personal opinion article that “Congress and President Trump put politics ahead of smart reform.”
Bloomberg is critical of Congress and the president for the way the tax bill has been created mostly in secret, with no public hearings, and little input from outsiders, and then rushed to a vote for all the wrong reasons.
“The tax bill is an economically indefensible blunder that will harm our future,” warns Bloomberg. “The Republicans in Congress who must surely know it – and who have bucked party leaders before – should vote no.”
Bloomberg, who started building his estimated $56 billion net worth working on Wall Street, and has become famous by re-inventing communications for business and finance, has long had his finger on the pulse of the top business leaders.
He begins his op-ed with an anecdote about a meeting called together by the Wall Street Journal that Trump’s economic advisor Gary Cohn had with a roomful of CEO’s of the biggest companies.
The CEO’s were asked them to raise a hand if the huge corporate tax cut being proposed in the Trump tax bill would lead them to invest more, which in turn would create jobs, as the president has claimed?
“Very few hands went up,” recalls Bloomberg, who then answered Cohn’s question about why there was so little enthusiasm for what was the centerpiece of Trump’s plan.
“We don’t need the money,” answered Bloomberg, adding: “Corporations are sitting on a record amount of cash reserves: nearly $2.3 trillion.”
The reason CEOs aren’t investing more of their liquid assets, explains Bloomberg, “has little to do with the tax rate.
“CEOs aren’t waiting on a tax cut to ‘jump-start the economy’ – a favorite phrase of politicians who have never run a company – or to hand out raises.”
“It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth,” adds Bloomberg, “as Republicans have promised.”
Bloomberg criticizes Trump and Congress for not really listening to CEO’s, economists and others who could have told them that well tax reform is needed to solve major problems, the approach they are taking is completely the wrong way to go.
Bloomberg mocks the justification for the tax bill recently put out by Treasure Secretary Steven Mnuchin’s department after months of promising an in-depth explanation.
“The flimsy one-page analysis Treasury released – which accepts the White House’s reality-defying economic projections in order to claim that the tax cuts will pay for themselves and then some – is a politically driven document that amounts to economic malpractice. So does the bill itself.”
In fact, charges Bloomberg, the tax bill not only doesn’t solve the nation’s most pressing problems but actually makes many of them worse.
“The largest economic challenges we face include a skills crisis that our public schools are not addressing,” explains Bloomberg, “crumbling infrastructure that imperils our global competitiveness, wage stagnation couple with growing wealth inequality, and rising deficits that will worsen as more baby boomers retire.”
“The tax bill does nothing to address these challenges,” warns Bloomberg. “In fact, it makes each of them worse.”
Bloomberg explains that “by limiting the deduction for state and local taxes” it will make it much more difficult to sell bonds and raise money for education – especially in the lower economic areas of big cities that need it the most – and will make it harder for local municipalities and states to raise money for badly needed infrastructure improvements.
If the goal is to reward those who work and raise wages, the right thing to do is to expand the earned income tax credit.
Instead,” writes Bloomberg, “it seems to believe that lower corporate tax rates will magically lead to higher wages, which fundamentally misunderstand how labor markets work.”
By eliminating the requirement for everyone to have health insurance, warns Bloomberg, it will raise the cost of health insurance for everyone.
“This is nothing more than a backdoor tax increase on health care for millions of middle-class families,” Bloomberg warns, “that will leave them with less disposable income for savings, investment, and spending.”
Bloomberg, who has spent his career trying to keep government deficit spending down, is clearly most irked by the more than $1 trillion the Trump tax plan will increase the national debt, and make it more difficult for Medicare and Social Security to handle the huge influx of Baby Boomers just now hitting retirement.
“Republicans didn’t grapple with those costs,” writes Bloomberg. “Instead, they kicked the can down the road.”
“Ignoring the bill’s price tag, or pretending we needn’t worry about deficits,” says Bloomberg with anger wrapped in cynicism, “is like ignoring climate change or pretending we needn’t worry about its effects.”
Bloomberg says he is in favor of tax reform that is revenue-neutral that is fair and efficient. But that is not what this bill does.
Bloomberg warns that while the majority in Congress may think passing legislation – any legislation- will help them prove they are not the do-nothing, inept bunch that they are, the American public is not so stupid that they won’t remember who made this mess.
“Republicans in Congress will have to take responsibility for the bill’s harmful effects,” Bloomberg reminds the misguided politicians behind the tax legislation, “but blame also falls on its cheerleader-in-chief, President Trump.”
Bloomberg once again shows an unusual level of common sense for a rich New Yorker who cut his teeth on Wall Street and has become an icon of American business and philanthropy.
His words are likely to fall on deaf ears as the misguided, cynical, greedy, self-indulgent Republicans rush to follow their delusional leader down the path of making their biggest donors even richer, but in the future, his words are likely to prove prophetic.