GOP Plans to Cut Social Security & Medicare & Give Tax Breaks to Corporations Won't Reduce Inflation
Republicans across the nation are hammering Democratic candidates on the current rate of inflation, using the tagline "reckless spending" and insinuating that the bipartisan infrastructure bill and President Joe Biden's Inflation Reduction legislation somehow caused the problem by increasing the budget deficit. It's true that the Inflation Reduction Act won't reduce inflation much in the short term but it will save money for Americans struggling with higher prices by lessening the cost of prescription drugs, extending health insurance subsidies, and reducing energy prices. Moreover, the new minimum 15% tax on corporations will cut the federal budget deficit, which will lower inflation a bit in the longer run.
AP: ... "the White House has trumpeted a letter signed by more than 120 economists, including several Novel Prize winners and former Treasury secretaries, that asserts that the law’s reduction in the government’s budget deficit — by an estimated $300 billion over the next decade, according to the CBO — would put “downward pressure on inflation.”
As we have documented before [see here and here], inflation is a global phenomenon caused by classic supply and demand pressures incident to the worldwide business shutdowns during the pandemic and exacerbated by Russia's invasion of Ukraine, worker shortages, and the ongoing coronavirus-related closures in China. And, it's easy to prove; just take a look at the rate of inflation across the European Union or pretty much anywhere else in the world. At least ours is trending down while it's still increasing in many other nations.
As the midterm elections get closer, Republicans have been questioned about their plans to battle inflation if given the keys to Congress and their answers reflect their love of trickle-down economics and loathing of social welfare programs. They plan to force Biden to accept cuts to Social Security, Medicare, and Medicaid in exchange for raising the debt ceiling.
Washington Post: "House Minority Leader Kevin McCarthy (R-Calif.) said that if Republicans win control of the House the GOP will use raising the debt limit as leverage to force spending cuts — which could include cuts to Medicare and Social Security — and limit additional funding to Ukraine." ...
"McCarthy is not the first Republican to say he is open to changes in the entitlement programs. Sen. Ron Johnson (R-Wis.) has suggested that Social Security and Medicare be eliminated as federal entitlement programs, and that they should instead become programs approved by Congress on an annual basis as discretionary spending."
At the same time, they intend to reduce corporate taxes and make it more difficult to collect taxes from corporations and the wealthy.
New York Times: ... "they have vowed to repeal the corporate tax increases that Mr. Biden signed into law in August while gutting funding for the Internal Revenue Service, which was given more money to help the United States go after high-earning and corporate tax cheats."
For anyone who has been following politics since the Reagan years, none of this is a surprise. The GOP's answer to almost any issue is tax cuts and more tax cuts. They argue that eventually these tax cuts will trickle down to the masses despite a mountain of research that has determined that they simply increase income inequality and swell the federal budget deficit. Moreover, there isn't any evidence that lowering corporate taxes will reduce inflation; quite the opposite.
New York Times: "But while Republicans insist they will be better stewards of the economy, few economists on either end of the ideological spectrum expect the party’s proposals to meaningfully reduce inflation in the short term. Instead, many say some of what Republicans are proposing — including tax cuts for high earners and businesses — could actually make price pressures worse by pumping more money into the economy."
“It is unlikely that any of the policies proposed by Republicans would meaningfully reduce inflation in 2023, when rapidly rising prices will still be a major problem for the economy and for consumers,” said Michael R. Strain, an economist at the conservative American Enterprise Institute."
So, the bottom line is that Republicans don't actually have an inflation-reduction program. Like President Biden, they hope that Federal Reserve rate increases will eventually blunt consumer demand, allowing the supply chain to catch up. The GOP's proposed solutions simply reflect their desire to please their wealthy donor base with more tax cuts while undermining the nation's social safety net. That's been their goal for the last 40 years.
By: Don Lam & Curated Content