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March 1, 2024 Heather Cox Richardson

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Today, President Joe Biden signed the continuing resolution that will give lawmakers another week to finalize appropriations bills. Lawmakers will continue to hash out the legislation that will fund the government. 

Republicans have been stalling the appropriations bills for months. In addition to inserting their own extremist cultural demands in the measures, they have demanded budget cuts to address the fact that the government spends far more money than it brings in. 

As soon as Mike Johnson (R-LA) became House speaker, he called for a “debt commission” to address the growing budget deficit. This struck fear into the hearts of those eager to protect Social Security and Medicare, because when Johnson chaired the far-right Republican Study Committee in 2020, it called for cutting those popular programs by raising the age of eligibility, lowering cost-of-living adjustments, and reducing benefits for retirees whose annual income is higher than $85,000. Lawmakers don’t want to take on such unpopular proposals, so setting up a commission might be a workaround.

Last month, the House Budget Committee advanced legislation that would create such a commission. The chair of the House Budget Committee, Jodey C. Arrington (R-TX), told reporters that Speaker Johnson was “100% committed to this commission” and wanted to attach it to the final appropriations legislation for fiscal year 2024, the laws currently being hammered out.

Congress has not yet agreed to this proposed commission, and a recent Data for Progress poll showed that 70% of voters reject the idea of it. 

This week, a new report from the Institute on Taxation and Economic Policy (ITEP), a nonprofit think tank that focuses on tax policy, suggested that the cost of tax cuts should be factored into any discussions about the budget deficit. 

In 2017 the Trump tax cuts slashed the top corporate tax rate from 35% to 21% and reined in taxation for foreign profits. The ITEP report looked at the first five years the law was in effect. It concluded that in that time, most profitable corporations paid “considerably less” than 21% because of loopholes and special breaks the law either left in place or introduced. 

From 2018 through 2022, 342 companies in the study paid an average effective income tax rate of just 14.1%. Nearly a quarter of those companies—87 of them—paid effective tax rates of under 10%. Fifty-five of them (16% of the 342 companies), including T-Mobile, DISH Network, Netflix, General Motors, AT&T, Bank of America, Citigroup, FedEx, Molson Coors, and Nike, paid effective tax rates of less than 5%.

Twenty-three corporations, all of them profitable, paid no federal tax over the five year period. One hundred and nine corporations paid no federal tax in at least one of the five years. 

The Guardian’s Adam Lowenstein noted yesterday that several corporations that paid the lowest taxes are steered by chief executive officers who are leading advocates of “stakeholder capitalism.” This concept revises the idea that corporations should focus on the best interests of their shareholders to argue that corporations must also take care of the workers, suppliers, consumers, and communities affected by the corporation. 

The idea that corporate leaders should take responsibility for the community rather than paying taxes to the government so the community can take care of itself is eerily reminiscent of the argument of late-nineteenth-century industrialists. 

When Republicans invented national taxation to meet the extraordinary needs of the Civil War, they immediately instituted a progressive federal income tax because, as Representative Justin Smith Morrill (R-VT) said, “The weight [of taxation] must be distributed equally, not upon each man an equal amount, but a tax proportionate to his ability to pay.” 

But the wartime income tax expired in 1872, and the rise of industry made a few men spectacularly wealthy. Quickly, those men came to believe they, rather than the government, should direct the country’s development. 

In June 1889, steel magnate Andrew Carnegie published what became known as the “Gospel of Wealth” in the popular magazine North American Review. Carnegie explained that “great inequality…[and]…the concentration of business, industrial and commercial, in the hands of a few” were “not only beneficial, but essential to…future progress.” And, Carnegie asked, “What is the proper mode of administering wealth after the laws upon which civilization is founded have thrown it into the hands of the few?”

Rather than paying higher wages or contributing to a social safety net—which would “encourage the slothful, the drunken, the unworthy,” Carnegie wrote—the man of fortune should “consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer…in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.”  

“[T]his wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if distributed in small sums to the people themselves,” Carnegie wrote. “Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among themselves in trifling amounts through the course of many years.”

Here in the present, Republicans want to extend the Trump tax cuts after their scheduled end in 2025, a plan that would cost $4 trillion over a decade even without the deeper cuts to the corporate tax rate Trump has called for if he is reelected. Biden has called for preserving the 2017 tax cuts only for those who make less than $400,000 a year and permitting the rest to expire. He has also called for higher taxes on the wealthy and corporations, which would generate more than $2 trillion. 

Losing the revenue part of the budget equation and focusing only on spending cuts seems to reflect a society like the one the late-nineteenth-century industrialists embraced, in which a few wealthy leaders get to decide how to direct the nation’s wealth.   

In other news today, Alexei Navalny’s parents held a funeral for the Russian opposition leader and buried him in Moscow. Navalny died two weeks ago at a penal colony in Siberia where Russian president Vladimir Putin had imprisoned him on trumped-up charges after failing to kill him with poison. Navalny fought against Putin’s control of Russia by emphasizing the corruption and illicit fortunes of Putin and his associates.

Russia specialist Julia Ioffe of Puck News noted that a million Russians have fled the country since the February 2022 invasion of Ukraine and that many of them were Navalny supporters. Still, many thousands turned out for the funeral and the procession, throwing flowers at the hearse as it made its way to the cemetery. 

A woman at Navalny’s funeral compared Navalny and Putin. “One sacrificed himself to save the country, the other one sacrificed the country to save himself.”

Notes:

https://www.govexec.com/management/2024/02/congress-reaches-deal-fy24-funding-bills-new-stopgaps-hopes-averting-shutdown/394554/

https://www.whitehouse.gov/briefing-room/legislation/2024/03/01/press-release-bill-signed-h-r-7463/

https://rollcall.com/2024/01/18/bill-to-create-new-debt-commission-approved-in-house-panel/

https://crr.bc.edu/congressional-republicans-want-big-cuts-to-social-security/

https://www.cnn.com/2023/11/05/politics/mike-johnson-social-security-medicare/index.html

https://www.dataforprogress.org/insights/2024/2/29/voters-want-congress-to-expand-social-security-not-cut-it-behind-closed-doors

https://itep.org/corporate-tax-avoidance-trump-tax-law/

https://www.theguardian.com/business/2024/feb/29/trump-tax-cuts-us-companies

https://www.investopedia.com/stakeholder-capitalism-4774323

Justin Smith Morrill, Congressional Globe, 37th Cong., 2nd Sess., p. 1194. 

Andrew Carnegie, The Gospel of Wealth and Other Timely Essays (New York: the Century Company, 1901) at: https://babel.hathitrust.org/cgi/pt?id=uc1.c105438535&seq=13

https://www.washingtonpost.com/business/2023/09/11/trump-tax-cuts-2024/

https://www.pbs.org/newshour/world/navalnys-funeral-set-for-friday-in-moscow-spokesperson-says

https://acf.international/

https://www.nytimes.com/2021/01/17/opinion/aleksei-navalny-russia.html

https://www.wsj.com/politics/policy/6-trillion-in-taxes-are-at-stake-in-this-years-elections-ee4353ed

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Nellie Bowles: The Triumph of the Plastic Straw Nellie Bowles

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The biggest environmentalist craze of my generation started in 2011 with Vermont 9-year-old Milo Cress cooking up an arbitrary number for how many plastic straws Americans used daily. This 9-year-old figured it was so many. He says he called up straw manufacturers and calculated 500 million a day. Boom, big number, good number. The mainstream media was off to the races. That 500 million a day number was cited in The New York Times, The Wall Street Journal, and The Washington Post. Suddenly the most important thing we could do for the environment—for our children!—was ban plastic straws.

States and cities passed laws against them. California banned them from restaurants outright in 2018. New York, in 2021, changed the law so the only straws on display were paper (you were allowed to ask for plastic). Official fact sheets from Ron DeSantis’s state of Florida instruct Floridians to “Skip the Straw,” citing the 500 million figure. Did anyone question the basis of this?


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It Pays to Be a Friend of Donald Trump Joe Nocera

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Two dodgy Democrats had a great day on Monday—thanks to our new Republican president, Donald J. Trump.

The first, former Illinois governor Rod Blagojevich, was granted a full pardon. Back in 2009, after he’d been charged with corruption, Blagojevich got himself booked on Trump’s show, Celebrity Apprentice. (You can see his appearance in these YouTube clips. He was fired, of course.) I don’t know if Blagojevich had a premonition that Trump might someday be in a position to help him, but it sure has turned out that way. Transforming himself from a high-profile Democratic governor to a big-time Trump supporter was the single best move he could have made.


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Stop Making Cents? Charles Lane

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On Sunday, President Donald Trump announced that he has ordered his administration to cease production of the penny. The argument for the move seems straightforward enough. It costs more than a penny to make a penny (3.7 cents, according to the U.S. Mint). Given inflation and the move to digital payments, ditching the coin is just common cents, right?

Not necessarily. Life’s about more than just making the numbers add up, and amid all the government waste, doesn’t the humble penny deserve a carve out for sentimental reasons?

Today, we debate the penny’s fate. Good riddance or gone too soon? Deputy Editor Charles Lane supports Trump’s move. Consulting Editor Jonathan Rosen opposes it. Have at it, gentleman.

Charles Lane: President Trump’s decision to end production of the penny has my total support. This mite of a coin betrayed me, quite directly and personally, over the course of 13 years.

“Save your pennies, Chuck,” a supervisor at work told me in 2002, responding to some angst I expressed about future college tuition costs. This was her way of not getting the hint that I needed a raise.

Attitudinally positive as always, I took her advice. I told my 5-year-old son that we would henceforth be keeping every one-cent coin we received as change, found on the street, or won playing dreidel until the moment he left for college.

What a father-son project! So rich in lessons about thrift, consistency, and long-term thinking! And so we collected and collected, filling first one large glass jug and then another, until July 2015, when it was time for the big reveal: We had accumulated 10,142 pennies, about 2.19 per day.

They were worth $101.42, not even enough to cover a month’s fraternity dues.

Wrapping the little suckers in paper rolls to enable deposit at a bank took me several days. Valued at the federal minimum wage of $7.25 per hour, the time wasted offset any wealth embodied in our hoard—with change left over.

So I did not need the DOGE to tell me the government lost over $179 million in fiscal year 2023 minting more than 4.5 billion one-cent pieces at a cost of three-plus cents each. I already knew that a penny is much more trouble than it’s worth.


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