New York Times economics reporter Alan Rappeport furthered the myth that Trump’s health bill would be “cutting deeply into Medicaid” spending in Thursday’s Times, “Risky Mix: Cutting Taxes For Rich and Aid for Poor.” He was harsher on Twitter: “Cutting taxes for the rich and aid for the poor is proving to be a politically toxic combo”:
The tough lessons are piling up for Republicans as they struggle to repeal the Affordable Care Act, but one stands out as a harbinger of things to come: Tax cuts for the rich, paired with reduced services for the poor, are a politically unpalatable combination.
Unable to get the first version of their health care bill off the ground, Senate Republicans are expected to release a revised bill on Thursday that would keep two of the taxes on the wealthy that were imposed by President Barack Obama’s health law: the 3.8 percent tax on investment income and the 0.9 percent surcharge on Medicare taxes, both imposed on high-income earners.
Republicans have long said that these taxes are killing jobs and strangling economic growth, but the juxtaposition of repealing hundreds of billions of dollars in taxes for the wealthy and cutting deeply into Medicaid has become untenable.
But Nicholas Fondacaro at NewsBusters noted that the Congressional Budget Office, not a traditional friend of conservative tax and spending plans, shows that while the rate of increase in Medicaid spending will slow down, the actual amount will still increase over 10 years.
Rappeport carried on with loaded language on "hard-line conservative" groups and conventional liberal wisdom on "deep tax cuts" for the rich:
That Republicans may now preserve these taxes could bode poorly for their hopes of introducing deep tax cuts later this year that analysts say could disproportionately benefit the wealthiest Americans.
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Conservative lawmakers have instead called for spending cuts on programs that benefit the poor so that they can avoid raising taxes on anyone. Last month members of the hard-line conservative House Freedom Caucus said that food stamps and Temporary Assistance for Needy Families should be restructured as part of the tax plan.
The experience with the health bill suggests this will be a tough sell in the Senate.
Breaking that rule could be hard to avoid. A report released on Wednesday by the Tax Policy Center showed that Republicans might face a problem with overhauling taxes that is similar to the one they are facing with health care, with the policy benefiting those who are already the most prosperous. The tax research group analyzed the rough tax details that the Trump administration has released and found that 40 percent of the total $7.8 trillion tax cut would flow to the wealthiest 1 percent of all households.
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Even though some Republicans are disappointed that any taxes introduced by Mr. Obama remain, they will probably get another chance to erase them. Jonathan Traub, a tax expert at the accounting and consulting firm Deloitte and a former staff director for the House Ways and Means Committee, said Republican tax writers in Congress would be under pressure to find a way to address those taxes when they move on to tax legislation. Doing so outside the context of health care, Mr. Traub said, could be easier.
“The argument is being made that the health care law is a tax cut for the wealthy being paid for by spending cuts for the poor,” Mr. Traub said.
For the most conservative Republicans and for anti-tax crusaders like Grover Norquist, the Affordable Care Act taxes should be killed because they never should have been enacted at all.
Rappeport turned the attack on Trump in a follow-up on Friday, “Congressional Budget Office Picks Apart Trump’s Economic Proposals”:
President Trump had promised that his mix of tax cuts, deregulation and reductions in wasteful spending would spur economic growth and cure America’s ailing fiscal health. On Thursday, an independent government analysis of those proposals effectively said, “Not so much.”
The Congressional Budget Office cast Mr. Trump’s inaugural budget as overly optimistic, expressing doubt about his promises to balance the federal budget. The budget projected that by 2027, the economy would achieve a small budget surplus. But according to the budget office, the deficit would remain at $720 billion, or 2.6 percent of gross domestic product.
Rappeport was last featured here in April trying to drive a wedge in the right on the issue the paper is most liberal on, immigration, via “widely respected conservative economist” Kevin Hassett (when the Times respects a conservative, watch out).
