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Democratic Candidates for 2020: Warren Details How She Would Finance Medicare for All

Sen. Elizabeth Warren, 2020 Democratic candidate for president detailed how she would finance her most controversial proposal, Medicare for All, without increasing taxes on middle class families. © Karen Rubin/news-photos-features.com

Senator Elizabeth Warren, Democratic candidate for President, has released details of her most controversial proposal, Medicare for All, promising that it will cover every person in America with health care, including long-term care, vision and dental, without increasing taxes on middle class families. Warren focuses on an overall restructuring taxes and spending – going after the loopholes and tax cheats and reining in military spending as well as drug costs and cutting healthcare costs by removing the for-profit insurance companies (gatekeepers) as middlemen. What her plan misses, though, is the obvious: collect the Medicare tax (1.45%, plus an extra 0.9% on income over $200,000) on all income, not just wages, and, if necessary raise the surcharge for incomes over $250,000. Interestingly, while employers would no longer pick and choose the private health insurance they subsidize, employers would still subsidize their employees’ Medicare cost. Health care is considered the leading issue for voters in 2020. Here is the detailed plan, from the Warren campaign: –Karen Rubin/news-photos-features.com.

Charlestown, MA – Today, Senator Elizabeth Warren, candidate for President, released her plan to finance Medicare for All. The coverage is identical to the coverage in the Medicare for All legislation in the Senate and it will cover every single person in America with excellent, high-quality health care, including long-term care and vision and dental. 

Elizabeth will pay for this plan without raising taxes one penny on middle class families. Instead, she will put about $11 trillion in the pockets of American families by eliminating what they would pay in premiums, deductibles, co-pays, and other out-of-pocket costs over the next ten years. 

Her numbers add up and are backed by experts including: 

Simon Johnson, the former Chief Economist at the International Monetary Fund and a professor at MIT

Dr. Donald Berwick, one of the nation’s top experts in health system management and improvement, who ran the Medicare and Medicaid programs under President Barack Obama

Mark Zandi, Chief Economist of Moody’s Analytics

Betsey Stevenson, former Chief Economist for the Obama Labor Department

Elizabeth’s plan to dramatically improve health care and cut family costs would cost the United States less than our current broken system. It would require $20.5 trillion in new revenue, nearly half of which comes simply from having employers pay Medicare instead of private insurance companies.

Elizabeth will finance the remainder of Medicare for All with targeted defense spending cuts, new taxes on financial firms, giant corporations, and the richest 1% of Americans, and by cracking down on tax evasion and fraud. The $11 trillion in household insurance and out-of-pocket expenses projected under our current system goes right back into the pockets of America’s working people — substantially larger than the largest tax cut in American history — and no middle class tax increases.

My daddy’s heart attack nearly sent our family skidding over a financial cliff. Today I think about all the kids this year who will face the double blow of nearly losing a parent and then watching their lives turn upside down as their families struggle to pay a growing stack of medical bills.  

I spent my career studying why so many hard-working middle class families were going broke. For years, my research partners and I traveled the country from bankruptcy courtroom to bankruptcy courtroom, talking directly to people who’d seen their lives turned upside down. We interviewed lawyers, judges, and families involved in bankruptcy cases. To save on printing costs, we lugged around a Xerox machine (I nicknamed him “R2-D2”) to save money on photocopying court records. 

Eventually, we built the largest and most comprehensive database of consumer bankruptcy data ever assembled. That first study surprised us: we found that 90% of families went bankrupt because of job loss, medical problems, and marital disruption. That finding was confirmed in 2007 by my later research, which found that the number one reason families were going broke was health care – and three quarters of those who declared bankruptcy after an illness were people who already had health insurance. 

It’s been nearly thirty years since we published that first groundbreaking study. And after all that time, here’s where we are: between 2013 and 2016, the number one reason families went broke was still because of health care – even though 91.2% of Americans had health insurance in 2016.

Families are getting crushed by health costs. Just look at the numbers. 

$12,378. That’s how much an average family of four with employer-sponsored insurance personally spent per year on employee premium contributions and out-of-pocket costs in 2018. And this figure has increased each year.

87 million. That’s how many American adults in 2018 were uninsured or “underinsured” – meaning either they have no insurance or their so-called health insurance is like a car with the engine missing. It looks fine sitting on the lot, but inadequate if they actually need to use it. Nearly one in every two adults not currently on Medicare has no insurance or unreliable insurance.

37 millionAmerican adults didn’t fill a prescription last year because of costs. 36 millionpeopleskipped a recommended test, treatment, or follow-up because of costs. 40 millionpeople didn’t go to a doctor to check out a health problem because of costs. 57 millionpeople had trouble covering their medical bills. 

Today, in 2019, in the United States of America, the wealthiest nation in the history of the world, inadequate health coverage is crushing the finances and ruining the lives of tens of millions of American families. 

I’m running for President based on a radical idea – calling out what’s broken and speaking plainly about how to fix it. 

All my plans start with our shared values. There are two absolute non-negotiables when it comes to health care:

One: No American should ever, ever die or go bankrupt because of health care costs. No more GoFundMe campaigns to pay for care. No more rationing insulin. No more choosing between medicine and groceries.

Two: Every American should be able to see the doctors they need and get their recommended treatments, without having to figure out who is in-network. No for-profit insurance company should be able to stop anyone from seeing the expert or getting the treatment they need.

Health care is a human right, and we need a system that reflects our values. That system is Medicare for All.

Let’s be clear: America’s medical professionals are among the best in the world. Health care in America is world-class. Medicare for All isn’t about changing any of that. 

It’s about fixing what is broken – how we pay for that care.

And when it comes to health care, what’s broken is obvious. A fractured system that allows private interests to profiteer off the health crises of the American people. A system that crushes our families with costs they can’t possibly bear, forcing tens of millions to go without coverage or to choose between basic necessities like food, rent, and health – or bankruptcy.

We must fix this system. And over the long-term, the best way to achieve that goal is to move from the system we have now to a system of Medicare for All. 

Medicare for All is about where doctors, hospitals, and care providers send the bill – to a collection of private insurance companies who make billions off denying people care or to the Medicare program for fair compensation. Under Medicare for All, everyone gets the care they need, when they need it, and nobody goes broke. 

A key step in winning the public debate over Medicare for All will be explaining what this plan costs – and how to pay for it. This task is made a hundred times harder by powerful health insurance and drug companies that make billions of dollars off the current bloated, inadequate system – and would be perfectly happy to leave things exactly the way they are. 

In 2017 alone, health industry players whose profiteering would end under Medicare for All unleashed more than 2,500 lobbyists on Washington. These industries will spend freely on shady TV ads and lobbying to convince people that a program that saves them massive sums of money will somehow cost them money. That being able to see the doctors and get the treatments they need regardless of what their employer or their insurance company thinks is somehow actually a loss of choice. That a program that covers more services, more people, and costs the American people less than what we currently spend on health care is somehow too expensive.

Meanwhile, where are the 2,500 lobbyists for the people who get sick and can’t pay their medical bills?  Where are the hundreds of millions being spent so that people who are trying to balance a budget around rising health care premiums and growing deductibles and copays can make their voices heard in Washington?  Washington hears plenty from the giant health insurance and giant drug industries, but not so much from families being squeezed to the breaking point.

So let’s focus on families’ expenses and families’ health care. 

Start with the Medicare for All Act – which I have cosponsored. The bill provides a detailed proposal for how to achieve our end goal. But as economists and advocates have noted, the legislation leaves open a number of key design decisions that will affect its overall cost, and the bill does not directly incorporate specific revenue measures. While much of this ambiguity results from the reasonable choice to delegate significant implementation discretion to the Executive Branch, it has also allowed opponents of Medicare for All to make up their own price tags and try to scare middle class families about the prospect of tax increases – despite the conclusions of expert after expert after expert that it is possible to eventually move to a Medicare for All system that gives both high quality coverage for everybody and dramatically lowers costs for middle class families.

The best way to fight misinformation is with facts. That’s why today, I’m filling in the details and releasing a plan that describes how I would implement the long-term policy prescriptions of the Medicare for All Act and how to pay for it. 

Under my plan, Medicare for All will cover the full list of benefits outlined in the Medicare for All Act, including long-term care, audio, vision, and dental benefits. My plan will cover every single person in the U.S., and includes common-sense payment reforms that make Medicare for All possible without spending any more money overall than we spend now. 

My plan reflects careful, detailed analyses from key national experts in health policy, tax policy, and economics. By filling in the details, we can strip away all the misleading political attacks and make plain the choice facing the American people: 

Option 1: Maintain our current system, which will cost the country $52 trillion over ten years. And under that current system – 

24 million people won’t have coverage, and millions can’t get long-term care.

63 million have coverage gaps or substandard coverage that could break down if they actually get sick. And millions who have health insurance will end up going broke at least in part from medical costs anyway. 

Together, the American people will pay $11 trillion of that bill themselves in the form of premiums, deductibles, copays, out-of-network, and other expensive medical equipment and care they pay for out-of-pocket – all while America’s wealthiest individuals and biggest companies pay far less in taxes than in other major countries.

Option 2: Switch to my approach to Medicare for All, which would cost the country just under $52 trillion over ten years. Under this new system –

Every person in America – all 331 million people – will have full health coverage, and coverage for long-term care.

Everybody gets the doctors and the treatments they need, when they need them. No more restrictive provider networks, no more insurance companies denying coverage for prescribed treatments, and no more going broke over medical bills.

The $11 trillion in household insurance and out-of-pocket expenses projected under our current system goes right back into the pockets of America’s working people. And we make up the difference with targeted spending cuts, new taxes on giant corporations and the richest 1% of Americans, and by cracking down on tax evasion and fraud. Not one penny in middle-class tax increases. 

That’s it. That’s the choice. A broken system that leaves millions behind while costs keep going up and insurance companies keep sucking billions of dollars in profits out of the system – or, for about the same amount of money, a new system that drives down overall health costs and, on average, relieves the typical middle class families of $12,400 in insurance premiums and other related health care costs. 

No middle class tax increases. $11 trillion in household expenses back in the pockets of American families. That’s substantially larger than the largest tax cut in American history.

Not every candidate for president supports moving to a system of Medicare for All. Some who support Medicare for All will have different ideas about how to finance and structure it. And everybody knows that there must be a real transition. But you don’t get what you don’t fight for – and my view is clear.  

Every candidate who opposes my long-term goal of Medicare for All should explain why the “choice” of private insurance plans is more important than being able to choose the doctor that’s best for you without worrying about whether they are in-network or not. Why it’s more important than being able to choose the right prescription drug for you without worrying about massive differences in copays. Why it’s more important than being able to choose to start a small business or choose the job you want without worrying about where your health care coverage will be coming from and how much it will cost.

Every candidate who opposes my long-term goal of Medicare for All should put forward their own plan to cover everyone, without costing the country anything more in health care spending, and while putting $11 trillion back in the pockets of the American people by eliminating premiums and virtually eliminating out-of-pocket costs. Or, if they are unwilling to do that, they should concede that they think it’s more important to protect the eye-popping profits of private insurers and drug companies and the immense fortunes of the top 1% and giant corporations, rather than provide transformative financial relief for hundreds of millions of American families. 

And every candidate who opposes my long-term goal of Medicare for All should put forward their own plan to make sure every single person in America can get high-quality health care and won’t go broke – and fully explain how they intend to pay for it. Or, if they are unwilling to do that, concede that their half-measures will leave millions behind.  

And make no mistake – any candidate who opposes my long-term goal of Medicare for All and refuses to answer these questions directly should concede that they have no real strategy for helping the American people address the crushing costs of health care in this country. We need plans, not slogans. 

THE COST OF MEDICARE FOR ALL

A serious conversation about how to pay for Medicare for All requires, first, determining how much such a system would cost. 

In recent years, several economists and think tanks have attempted to estimate the cost of a single-payer system in the United States. Those estimates consider how much our nation’s health care spending will change over a ten year window, and range from a $12.5 trillion decrease to a $7 trillion increase. They also consider how much additional money the federal government would need to fund this system, and those estimates range from a low of $13.5 trillion to a high of $34 trillion over ten years. 

Because nobody can actually see the future, some of this variation results from different assumptions about how parts of our health care system might work differently under Medicare for All. But most of the difference comes from policy choices. And while the Medicare for All Act is clear about some of these choices – for example, generous benefits, long-term care coverage, and virtually no out-of-pocket expenses – it is silent on a number of really important ones. How much will we pay for medical care and for prescription drugs? What do we do with the existing money that states spend on Medicaid? How aggressively will we cut administrative costs? Aggressive choices mean a lower total cost. Less aggressive choices result in a higher total cost. 

Serious candidates for president should speak plainly about these issues and set out their plans for cost control – especially those who are skeptical of Medicare for All. Because whether or not we make modest or transformative changes to our health care system, cancer, diabetes, strokes, Alzheimer’s, and Parkinson’s aren’t going to simply disappear. And without leadership from the top, neither will the mushrooming cost of care in America that’s bankrupting our families. 

I’ve asked top experts to consider the long-term cost of my plan to implement Medicare for All over ten years – Dr. Donald Berwick, one of the nation’s top experts in health system improvement and who ran the Medicare and Medicaid programs under President Obama; and Simon Johnson, the former Chief Economist at the International Monetary Fund and a professor at MIT. Their analysis begins with the assumptions of a recent study by the Urban Institute and then examines how that cost estimate would change as certain new key policy choices are applied. These experts conclude that my plan would slightly reduce the projected amount of money that the United States would otherwise spend on health care over the next 10 years, while covering everyone and giving them vastly better coverage. 

REDUCING INSURER ADMINISTRATIVE COSTS 

The business model of private insurers is straightforward: pay out less for medical care than they take in as premiums. This model is located right in the center of our health care system, wasting huge amounts of time and money documenting and arguing over who is owed what. Incredibly, insurance companies spend a whopping $350 billion on administration costs annually—and then, in turn, push huge additional administrative costs onto hospitals, doctors, and millions of other health care professionals in the from of complex billing—and then, in turn, drive up costs incurred by employers as they attempt to navigate the complexity of providing their employees with insurance.

Medicare for All will save money by bringing down the staggering administrative costs for insurers in our current system. As the experts I asked to evaluate my plan noted, private insurers had administrative costs of 12% of premiums collected in 2017, while Medicare kept its administrative costs down to 2.3%. My plan will ensure that Medicare for All functions just as efficiently as traditional Medicare by setting net administrative spending at 2.3%.

COMPREHENSIVE PAYMENT REFORM 

In 2016, the United States spent nearly twice as much on health care as ten high-income countries, and these costs have been steadily rising for decades, growing from 5.2% of U.S. GDP in 1963 to 17.9% in 2017. But instead of resulting in better health outcomes, Americans have the lowest life expectancy of residents in high-income countries, the highest infant mortality rate, and the highest obesity rates. 

Why? As a group of health economists famously wrote, “It’s the prices, stupid.” 

Studies have continued to show that it’s not how much people use the health care system, often referred to as “utilization,” but rather how much people pay that drives our high spending. Compared to other high income countries, Americans simply pay more for health care. We pay more for physicians and nurses. We pay more in administrative costs. We pay more for prescription drugs. 

A heart bypass surgery that costs nearly $16,000 in the Netherlands costs an average of $75,000 in the United States. A CT scan that costs $97 in Canada costs an average of $896 here. And in the United States, hospitals can charge new parents for holding their newborn after delivery. 

Meanwhile, private equity firms fight bipartisan legislation in Washington that might undermine the profitability of their investments or prevent their hospitals from sending patients surprise bills. And health care CEO salaries continue to soar. Between 2005 and 2015, non-profit hospital CEO salaries increased by 93% to an average of over $3 million, and last year, 62 health care CEOs raked in a combined $1.1 billion – more than the CDC spent on chronic disease prevention. 

If we expect the American people to be able to afford health care, we need to rein in these costs. Comprehensive payment reform, as part of Medicare for All, will reduce this component of health care spending. Under my approach, Medicare for All will sharply reduce administrative spending and reimburse physicians and other non-hospital providers at current Medicare rates. My plan will also rebalance rates in a budget neutral way that increases reimbursements for primary care providers and lowers reimbursements for overpaid specialties. While private insurance companies pay higher rates, this system would be expected to continue compensating providers at roughly the same overall rate that they are currently receiving. Why? This is partially because providers will now get paid Medicare rates for their Medicaid patients – a substantial raise. But it’s also because providers spend an enormous amount of time on billing and interacting with insurance companies that reduces their efficiency and takes away from time with patients. Some estimate that hospitals will spend $210 billion on average annually on these costs. 

The nonpartisan Institute of Medicine estimates that these wasted expenses account for 13% of the revenue for physician practices, 8.5% for hospitals, and 10% for other providers. Together, the improved efficiency will save doctors time and money – helping significantly offset  the revenue they will lose from getting rid of higher private insurance rates.

Under my approach, Medicare for All will sharply reduce administrative spending and reimburse hospitals at an average of 110% of current Medicare rates, with appropriate adjustments for rural hospitals, teaching hospitals, and other care providers with challenging cost structures. In 2017, hospitals that treated Medicare patients were paid about 9.9% less than what it cost to care for that patient. The increase I am proposing under Medicare for All will cover hospitals’ current costs of care – but hospital costs will also substantially decrease as a result of simpler administrative processes, lower prescription drug prices, the end of bad debt from uncompensated care, and more patients with insurance seeking care. 

Of course, as Medicare currently recognizes, not every provider situation is the same, and my Medicare for All program maintains these base rate adjustments for geography and other factors. In my plan for Rural America, for example, I have committed to creating a new designation under Medicare for rural hospitals due to the unique challenges health systems face in rural communities. That’s why my plan allows for adjustments above the 110% average rate for certain hospitals, like rural and teaching hospitals, and below this amount for hospitals that are already doing fine with current Medicare rates.Universal coverage will also have a disproportionately positive effect on rural hospitals. Because people living in rural counties are more likely to be uninsured than people living in urban counties, these hospitals currently provide a lot of uncompensated care. Medicare for All fixes that problem. And I’ve previously laid out additional investments to increase the number of Community Health Centers and grow our health care workforce in rural and Native American communities, while cracking down on anti-competitive mergers that lead to worse outcomes and higher costs for rural communities. 

We can also apply a number of common-sense, bipartisan reforms that have been proposed for Medicare. Today, for example, insurers can charge dramatically different prices for the exact same service based on where the service was performed. Under Medicare for All, providers will receive the same amount for the same procedure, saving hundreds of billions of dollars. We can also make adjustments to things that we know Medicare currently pays too much for – like post-acute care – by adjusting those payments down slightly while accounting for the patient’s health status, bringing health care costs down even more.  

We will also shift payment rates so that we are paying for better outcomes, instead of simply reimbursing for more services. We build on the success of value-based reforms enabled by the Affordable Care Act, including by instituting bundled payments for inpatient care and for 90 days of post-acute care. Instead of paying providers for each individual service, bundled payments reimburse providers for an entire “episode” of care and have been shown to both improve outcomes and control costs. These bundles help ensure that a patient’s different providers all communicate because they are all tied to the same payment.

RESTORING HEALTH CARE COMPETITION

Health care consolidation has also contributed to rising health care costs. One analysis found that over 90% of metropolitan areas had health care provider markets that were either highly concentrated or super concentrated in 2016. And despite the same kinds of empty promises we see every time there’s industry consolidation – in this case, that bigger hospitals would lead to better care – the data have not borne this out. In fact, it’s the opposite: more competition between providers creates incentives to improve care, and that incentive will only increase under a Medicare for All system where quality, not price, is the main differentiator in the system.

Under Medicare for All, hospitals won’t be able to force some patients to pay more because the hospital can’t agree with their insurance company. Instead, because everyone has good insurance, providers will have to compete on better care and reduced wait times in order to attract more patients. 

That’s why I will appoint aggressive antitrust enforcers to the Department of Justice and Federal Trade Commission and allow hospitals to voluntarily divest holdings to restore competition to hospital markets. I’ve also previously committed to strengthening FTC oversight over health care organizations, including non-profit hospitals, to crack down on anti-competitive behavior. And I will direct my FTC to block all future hospital mergers unless the merging companies can prove that the newly-merged entity will maintain or improve care. 

REINING IN OUT-OF-CONTROL PRESCRIPTION DRUG COSTS

Americans pay more for prescription drugs than anyone in the world – $333 billion in 2017 alone. Americans spent $1,220 per person on average for prescription drugs, while the next highest spending country, Switzerland, spent $963 per person. That’s not because Americans use more prescription medication – it’s because lax laws have allowed pharmaceutical companies to charge insurance companies and patients exorbitant rates. In a now-infamous example, when Turing Pharmaceuticals purchased the rights to the HIV medication Daraprim, the company raised the price of this life-saving drug from $13.50 per pill to a stunning $750 per tablet overnight. The price of insulin has skyrocketed, forcing people to risk their lives by rationing. And as prices continue to rise, more Americans are turning to Canada in search of affordable prices. 

Reining in prescription drug costs should be a top priority for any President – and there’s no better way to do it than through Medicare for All. My administration will use a suite of aggressive policy tools to set a net savings target that will bring down Medicare prices for brand name prescription drugs by 70% and prices for generics by 30%, with an initial focus on more expensive drugs. 

Under Medicare for All, the federal government would have real bargaining power to negotiate lower prices for patients. I will adopt an altered version of the mechanism outlined in the Lower Prescription Drug Costs Now Act which leverages excise taxes to bring manufacturers to the table to negotiate prices for both branded and generic drugs, with no drug exceeding 110% of the average international market price, but removes the limit of the number of drugs Medicare can negotiate for and eliminates the “target price” so Medicare could potentially negotiate prices lower than other countries. 

If negotiations fail, I will use two tools – compulsory licensing and public manufacturing – to allow my administration to ensure patient access to medicines by either overriding the patent, as modeled in the Medicare Negotiation and Competitive Licensing Act, or by providing public funds to support manufacturing of these drugs, as modeled in my Affordable Drug Manufacturing Act. Medicare for All will also incentivize pharmaceutical companies to develop the drugs we need – like antibiotics, cancer cures, and vaccines. And it’s not just about driving down drug prices. Making sure patients get important drug therapies up front that keep them healthy and cost a fraction compared to more severe treatment down the line can save money overall. Insurers, who may only cover individuals for a few years of their lives, see those investments in long-term health as a cost they’ll never recoup – so they have a financial incentive to deny patients these treatments. But Medicare for All covers each patient for their entire lifespan. There’s no perverse incentive to deny the prescriptions they need today because the long-term benefits to their health won’t benefit their current private insurance company. 

STEMMING THE GROWTH OF MEDICAL COSTS

Year after year, U.S. health spending has grown at rates above GDP growth, reaching a whopping 17.9% of GDP in 2017. Experts believe the changes to prescription drug spending and value-based payment systems that I’ve already outlined will bring growth rates in line with U.S. GDP, which CBO projects to be an average of 3.9% for the next decade. And if growth rates exceed this rate, I will use available policy tools, which include global budgets, population-based budgets, and automatic rate reductions, to bring it back into line.   

REDIRECTING TAXPAYER-FUNDED HEALTH SPENDING

Through Medicaid and public health plans for state employees, state and local governments play a significant role in financing health care coverage in America. Under my approach to Medicare for All, we will redirect $6 trillion in existing state and local government insurance spending into the Medicare for All system. This is similar to the mechanism that the George W. Bush Administration used to redirect Medicaid spending to the federal government under the Medicare prescription drug program.Under this maintenance-of-effort requirement, state and local governments will redirect $3.3 trillion of what they currently spend to support Medicaid and the Children’s Health Insurance Program and $2.7 trillion of what they currently spend on employer contributions to private insurance premiums for their employees into Medicare for All. Because we bring down the growth rate of overall health spending, states will pay less than they would have without Medicare for All. They’ll also have far more predictable budgets, resulting in improved long-term planning for state and community priorities. 

Together, these policy choices represent significant reductions in health care spending over current levels. Compared to the estimate by the Urban Institute, they will save over $7 trillion over ten years, bringing the expected share of additional federal revenue to just over $26 trillion for that period. After incorporating the $6 trillion we will redirect from states to help fund Medicare, the experts conclude that total new federal spending required to enact Medicare for All will be $20.5 trillion.

PAYING FOR MEDICARE FOR ALL

Medicare for All puts all health care spending on the government’s books. But Medicare for All is about the same price as our current path – and cheaper over time. That means the debate isn’t really about whether the United States should pay more or less. It’s about who should pay. 

Right now, America’s total bill for health care is projected to be $52 trillion for the next ten years. That money will come from four places: the federal government, state governments, employers, and individuals who need care. Under my approach to Medicare for All, most of these funding sources will remain the same, too. 

Existing federal spending on Medicare and Medicaid will help fund Medicare for All.

Existing state spending on health insurance will continue in the form of payments to Medicare – but states would be better off because they’d have more long-term predictability, and they’d pay less over time because these costs will grow more slowly than they do today.

Existing total private sector employer contributions to health insurance will continue in the form of contributions to Medicare – but employers would be better off because under the design of my plan, they’d pay less than they would have otherwise. 

Here’s the main difference: Individual health care spending. 

Over the next ten years, individuals will spend $11 trillion on health care in the form of premiums, deductibles, copays, and out-of-pocket costs. Under my Medicare for All plan, that amount will drop from $11 trillion to practically zero. 

I asked top experts – Mark Zandi, the Chief Economist of Moody’s Analytics; Betsey Stevenson, the former Chief Economist for the Obama Labor Department; and Simon Johnson – to examine options for how we can make up that $11 trillion difference. They conclude that it can be done largely with new taxes on financial firms, giant corporations, and the top 1% – and making sure the rich stop evading the taxes we already have.

That’s right: We don’t need to raise taxes on the middle class by one penny to finance Medicare for All. 

Here’s how it would work.

REPLACING EMPLOYER HEALTH SPENDING WITH A NEW EMPLOYER MEDICARE CONTRIBUTION 

Let’s start with a basic fact: American companies are already paying a lot for health care for their employees. They are projected to pay nearly $9 trillion over the next ten years, mostly on employer contributions for employee health insurance and on health-related expenses for employees under workers’ compensation and long-term disability. My idea is that instead of these companies sending those payments to private insurance companies, they would send payments to the federal government for Medicare in the form of an Employer Medicare Contribution. 

In fact, it’ll be a better deal than what they have now: companies will pay less than they otherwise would have, saving $200 billion over the next ten years. 

To calculate their new Employer Medicare Contribution, employers would determine what they spent on health care over the last few years and divide that by the number of employees of the company in those years to arrive at an average health care cost per employee at the company. (Companies would count part-time employees towards the total based on the number of hours they worked during a year.) Under the first year of Medicare for All, employers would then take that average cost, adjust it upwards to account for the overall increase in national health care spending, and multiply it by their total number of employees that year. Their Employer Medicare Contribution would be 98% of that amount – ensuring that every company paying for health care today will pay less than they would have if they were still offering their employees comparable private insurance. 

A similar calculation would apply to pass-through entities, like law firms or private equity funds, even though many of the people that work there technically aren’t employees. People who are self-employed would be exempt from making Employer Medicare Contributions unless they exceed an income threshold. 

Small businesses – companies with under 50 employees – would be exempt from this requirement too if they aren’t paying for employee health care today. When either new or existing firms exceed this employee threshold, we would phase in a requirement that companies make Employer Medicare Contributions equal to the national average cost of health care per employee for every employee at that company. Merging firms would pay the weighted average cost of health care per employee of the two firms that are merging.  

Employers currently offering health benefits under a collective bargaining agreement will be able to reduce their Employer Medicare Contribution if they pass along those savings to workers in the form of increased wages, pensions, or other collectively-bargained benefits. New companies or existing companies who enter into a collective bargaining agreement with their employees after the enactment of Medicare for All will be able to reduce their Employer Medicare Contributions in the same way. Employers can reduce their contribution requirements all the way down to the national average health care cost per employee. 

That way, my plan helps unions that have bargained for good health care already, and creates a significant new incentive for unionization generally by making collective bargaining appealing for both workers and employers as a way of potentially reducing the employer’s Employer Medicare Contributions.

Over time, an employer’s health care cost-per-employee would be gradually shifted to converge at the average health care cost-per-employee nationally. That helps make sure the system is fair but also gives employers and employees time to adapt to the new system.  

If we’re falling short of the $8.8 trillion revenue target for the next ten years, we will make up lost revenue with a Supplemental Employer Medicare Contribution requirement for big companies with extremely high executive compensation and stock buyback rates.    

There are a variety of ways to structure an employer contribution to Medicare for All. This particular approach has the benefit of helping American employers in a few ways:

Employers would collectively save $200 billion over the next ten years.

Employers receive far more certainty about how their health care costs will vary over time and affect their finances.

Small businesses – who often suffer when competing for employees because they can’t afford to offer health care coverage – would no longer be at a competitive disadvantage against bigger businesses.

Employers can reduce their Employer Medicare Contribution by supporting unionization efforts and negotiating with workers to provide better wages and benefits – reducing costs and promoting collective bargaining at the same time.

Because my plan holds health care cost growth to GDP levels, businesses will have stable balance sheets that grow with the economy instead of crowding out other priorities.

By asking employers to pay a little less than what they are already projected to pay for health care, we can get almost halfway to where we need to go to cover the cost of my Medicare for All plan. 

Automatic Increases in Take-Home Pay 

Medicare for All puts a whole lot of money back in the American people’s pockets. One way it does that is by taking the share of premiums employees are responsible for paying through employer-sponsored insurance – that line on pay stubs each week or month that says “health insurance” – and returning it to working people. Congratulations on the raise! 

And higher take-home pay for workers also means additional tax revenue just from applying our existing taxes – approximately $1.15 trillion if we apply average effective tax rates.  

Medicare for All saves people money in other ways too. With Medicare for All, nobody would need to put money in Health Savings Accounts or medical savings accounts to try and protect themselves against the unthinkable. And because individual spending on premiums, deductibles, copays, and out-of-pocket costs will basically disappear, the tax break for medical expenses in excess of 10% of Adjusted Gross Income becomes irrelevant. Together, those changes would generate another $250 billion in revenue.

All told, another $1.4 trillion in funding for Medicare for All is generated automatically through existing taxes on the enormous amount of money that will now be returned to individuals’ pockets from moving to a Medicare for All system with virtually no individual spending on health care. 

Here’s what that means: we can generate almost half of what we need to cover Medicare for All just by asking employers to pay slightly less than what they are projected to pay today, and through existing taxes.  

So where does the rest of the money come from that allows us to eliminate premiums, deductibles, copays, and most out-of-pocket spending for every American? Four sources: (1) better enforcement of our existing tax laws so we stop letting people evade their tax obligations; (2) targeted taxes on the financial sector, large corporations, and the top 1% of individuals; (3) my approach to immigration; and (4) shutting down a slush fund for defense spending. 

CRACKING DOWN ON TAX EVASION AND FRAUD

The federal government has a nearly 15% “tax gap” between what it collects in taxes what is actually owed because of systematic under-enforcement of our tax laws, tax evasion, and fraud. If that 15% gap persists for the next ten years, we will collect a whopping $7.7 trillion less in federal taxes than the law requires. By investing in stronger enforcement and adopting best practices on tax reporting, withholding, and filing, experts predict that we can close the tax gap by a third – generating about $2.3 trillion in additional federal revenue without a single new tax. 

A big part of our current tax gap problem is that we’re letting wealthier taxpayers get away with paying less than what they owe. Studies show that the wealthiest 5% of taxpayers misrepresent their income more frequently than the bottom 90%. 

The wealthy and their allies in Washington have worked to slash the IRS budget, leaving it without the resources it needs. The agency today has about the same number of revenue agents as it did when the economy was one-seventh its current size in the 1950s. And the IRS insists on targeting low-income taxpayers rather than wealthy ones, even though the amount of revenue we can recover from wealthy taxpayers is far more. 

We know how to fix this problem. We can draw lessons from what works in other countries with much lower tax gaps and rely on the recommendations of tax experts. Here’s a game plan:

Substantially increase funding for the IRS, including the Criminal Investigation Division. The Treasury Department estimated in its Fiscal Year 2017 budget request that every $1 invested in IRS enforcement brings in nearly $6 in additional revenue – not even including an indirect deterrence effect three times that amount.

Expand third-party reporting and withholding requirements. Research shows that third-party reporting and withholding cuts down on the tax misreporting rate substantially.

Strengthen enforcement of the Foreign Account Tax Compliance Act (FATCA). FATCA requires foreign financial institutions to report the holdings and income of U.S. taxpayers, but the IRS is generally not systematically matching these reports to individual tax returns. We also don’t hold foreign financial firms truly accountable for ignoring their reporting obligations. Automatically matching FATCA reports to tax returns and instituting sanctions for non-compliant foreign financial institutions would help narrow the tax gap.

Simplify tax filing obligations in line with other comparable countries with lower tax gaps, including by adopting my Tax Filing Simplification Act and using “smart returns” to improve honest reporting.

Redirect enforcement resources away from low-income taxpayers towards high-income taxpayers. 

Increase the nonfiler compliance program, strengthen reporting requirements for international income, use existing currency transaction reports to enforce cash income compliance, and increase reporting requirements for virtual- or crypto-currencies, as suggested by the Treasury Department’s Inspector General.

Allow employees who disclose tax evasion and abuse to use the protections of the False Claims Act and other whistleblower protections. 

The experts who reviewed these ideas estimated that if we implemented them, we could close the tax gap by one-third from 15% to 10%, bringing us closer to the tax gap in countries like the United Kingdom (5.6%). That will produce another $2.3 trillion in net federal revenue – without imposing a single new tax. 

TARGETED TAXES ON THE FINANCIAL SECTOR, LARGE CORPORATIONS, AND THE TOP 1% 

We can generate a whole lot of the remaining revenue we need for Medicare for All just by eliminating bad incentives in our current tax system and asking those who have done really well in the last few decades to pay their fair share.

Let’s start with the financial sector. It’s been more than ten years since the 2008 financial crisis, and while a lot of families are still dealing with the aftereffects, the financial sector is making record, eye-popping profits. Meanwhile, the risk of another financial crisis remains unacceptably high. By imposing targeted taxes and fees on financial firms, we can generate needed revenue and also make our financial system safer and more secure.

For example, a small tax on financial transactions – one-tenth of one percent on the sale of bonds, stocks, or derivatives – would generate about $800 billion in revenue over the next ten years. The tax would be assessed on and collected from financial firms, and would likely have little to no effect on most investors. Instead, according to experts, the tax could help decrease what Americans pay in fees for their investments and reduce the size of relatively unproductive parts of the financial sector. 

We can also impose a fee on big banks that encourages them to take on fewer liabilities and reduce the risk they pose to the financial system. A small fee that applies only to the forty or so largest banks in the country would generate an additional $100 billion over the next ten years – while making our financial system more safe and resilient. 

Next, we can make some basic changes to ensure that large corporations pay their fair share and to fix some fundamental problems with our current approach that actually encourage companies to shift jobs and investment overseas. These changes will generate an estimated $2.9 trillion over the next ten years. 

For instance, our current tax system lets companies deduct the cost of certain investments they make in assets faster than those assets actually lose value. That means that if a company buys a machine for a million dollars, it gets to deduct a million dollars from its taxes that same year – even if the machine only loses $100,000 in value a year. Letting the company write off the extra $900,000 all at once is like giving them an interest-free loan from the government. 

That might be worth it if the company responded to this tax break by investing more and building out their businesses. But the data suggest this isn’t happening because companies don’t actually value these tax deferrals as much as policymakers assume. Companies are mostly making the same investments they would’ve made anyways – sometimes with small changes in timing – and getting a write-off in exchange. Some experts even suggest that accelerated expensing could induce less domestic investment, not more. 

That’s why I’m proposing to get rid of this loophole. Under my plan, businesses will still write off the depreciation of their assets – they’ll just do it in a way that more accurately reflects the actual loss in value. This would generate $1.25 trillion over ten years.

We can also stop giant multinational corporations from calling themselves American companies while sheltering their profits in foreign tax havens to avoid paying their share for American investments. 

Currently, a U.S. multinational corporation can make billions in profits and attribute it to a company it set up in a tax haven like the Cayman Islands, which has no corporate taxes. The Trump tax bill claimed to address that problem by creating a global minimum tax rate for corporations, but that minimum tax – the result of heavy lobbying by multinationals – is too low and easily gamed. While Trump and congressional Republicans claimed their minimum tax would keep companies from shifting profits to tax havens and limit offshoring, the opposite is happening. The current approach both encourages companies to shift their profits to tax havens and actually incentivizes American companies to outsource their operations overseas. 

That’s why I’m proposing to institute a country-by-country minimum tax on foreign earnings of 35% – equal to a restored top corporate tax rate for U.S. firms – without permitting corporations to defer those payments. Under my plan, corporations would have to pay the difference between the minimum tax and the rate in the countries where they book their profits. For example, an American corporation booking a billion dollars in profits in the Cayman Islands, taxed at 0% there, would need to pay the federal government a 35% tax rate – the difference between the new minimum rate (35%) and the foreign rate (0%) – on the billion dollars in profits. 

My plan would also collect America’s fair share of profits that foreign companies make by selling their products to Americans. Today, we have a “global tax deficit”: companies that sell their goods abroad don’t have to pay the extra taxes that they would have to pay if they were subject to a minimum effective tax rate in each country they operated in. Making U.S. firms pay a country-by-country minimum tax effectively collects their whole global tax deficit – but foreign companies should have to pay their fair share, too. That’s why I’m proposing that the U.S. collect the fraction of this global tax deficit that corresponds to the percentage of that company’s sales in the U.S. In other words, if a foreign company should owe an additional $1 billion in taxes if it were subject to a country-by-country minimum tax, the U.S. would collect a fraction of that $1 billion based on the amount of sales that company made in the United States. 

Together, the country-by-country minimum tax and the taxation of foreign firms based on their domestic sales would result in an additional $1.65 trillion in revenue. 

Finally, we can raise another $3 trillion over ten years by asking the top 1% of households in America to pay a little more. 

The tax burden on ultra-millionaires and billionaires is less than half that of working families in the United States. In 2019, the bottom 99% of families will pay 7.2% of their wealth in taxes, while the top 0.1% of households will pay just 3.2%. My Ultra-Millionaire Tax, a 2-cent tax on the wealth of fortunes above $50 million, tackles this head on. Under this tax, the top 0.1% – the wealthiest 75,000 Americans – would have to pitch in two cents for every dollar of net worth above $50 million and three cents for every dollar on net worth over $1 billion. With this version of the Ultra-Millionaire Tax in place, the tax burden on the wealthiest households would increase from 3.2% to 4.3% of total wealth – better, but still below the 7.2% that the bottom 99% are projected to pay.

Today, I’m going one step further. By asking billionaires to pitch in six cents on each dollar of net worth above $1 billion, we can raise an additional $1 trillion in revenue and further close the gap between what middle-class families pay as a percentage of their wealth and what the top one-tenth of one percent pay. 

Yes, billionaires will have to pay a little more, but they will still likely pay less than what they would earn just from putting their assets into an index fund and doing nothing. The average annual rate of return of the S&P 500 has regularly topped 10%. And billionaires have access to the kinds of fancy investment opportunities that can generate even higher returns on average. Put it this way – should we ask billionaires to pitch in an extra three cents on every dollar above $1 billion, or force middle-class families to bear another $1 trillion in health care costs?

We can also change the way the government taxes investment income for the top 1%. Today, taxes are only assessed on capital gains when securities are sold. That means wealthy investors can put their money in the stock market, see it grow, and not pay a dime in taxes on those earnings unless or until it is taken out of the market. Under the current system, they can then pass along those shares to their heirs when they die and their heirs will be able to pay even less when they choose to sell.

I’ve already proposed closing that loophole for how capital gains are treated when shares are passed on to heirs. But we can go a step further. Under “mark-to-market” system for the wealthiest 1% of households, we will tax capital gains income (excluding retirement accounts) annually, rather than at the time of sale, and raise the rates on capital gains to match the tax rates for labor income. Individuals would still only pay taxes on gains and could use current losses to offset future taxes.

Under this system, investment income will no longer be treated differently than labor income for the top 1% of households. Ultra-millionaires and billionaires won’t be able to earn income on giant fortunes year after year without paying a penny in taxes. And we can raise another $2 trillion over ten years to pay for my Medicare for All plan.

IMMIGRATION REFORM 

I support immigration reform that’s consistent with our values, including a pathway to citizenship for undocumented immigrants and expanded legal immigration consistent with my principles. That’s not only the right thing to do – it also increases federal revenue we can dedicate to Medicare for All as new people come into the system and pay taxes. Based on CBO’s analysis of the 2013 comprehensive immigration reform bill, experts project that immigration reform would generate an additional $400 billion in direct federal revenue. 

REINING IN DEFENSE SPENDING 

Since the attacks of 9/11, the United States has appropriated $2 trillion to fund combat and counterterrorism operations around the world via the Overseas Contingency Operations fund, or OCO. On average this spending has amounted to $116 billion per year – and in total, an amount equivalent to nearly 10 percent of all federal discretionary spending over that same time period. 

Republicans – including the President’s current Chief of Staff – and Democrats alike agree that OCO is a budget gimmick that masks the true impact of war spending. The emergency supplemental funding mechanism was never intended to fund the costs of long-scale, long-term operations outside of the normal appropriations process. And in recent years, OCO has also been used to fund so-called “base” requirements unrelated to the wars, outside of the Budget Control Act caps – in effect acting as a slush fund for increased Pentagon spending. And as everything from more F-35s to massive bombs never used in combat have migrated into the OCO account, the Department of Defense has been spared from having to prioritize or live within its means. It’s not just bad budgetary practice – it’s wasteful spending. 

I’ve called out this slush fund for what it is. I’ve also called for an end to endless combat engagements in places like Afghanistan, Iraq, and Syria, and to responsibly bring our combat troops home from these nations. These open-ended commitments are not necessary to advance American foreign policy or counterterrorism interests, their human cost has been staggering, and their financial cost has created a drag on our economy by diverting money better invested in critical domestic priorities. 

I’ve also called to reduce defense spending overall. The Pentagon budget will cost more this year than everything else in the discretionary budget put together. That’s wrong, and it’s unsustainable. We need to identify which programs actually benefit American security in the 21st century, and which programs merely line the pockets of defense contractors – then pull out a sharp knife and make some cuts. 

We can start by shutting down this slush fund and balancing with our overall defense priorities in the context of the actual defense budget. And as we end these wars, eliminating the Overseas Contingency Operations fund and forcing the Pentagon to fund any such priorities through its regular budgetary process will provide $798 billion over the ten-year period relative to current spending levels. 

As I have said repeatedly, under my Medicare for All plan, costs will go up for the very wealthy and big corporations, and costs will go down for middle-class families. I will not sign a bill that violates these commitments. And as my plan to pay for Medicare for All makes clear, we can meet these commitments without a tax increase on the middle class – and, in fact, without any increase in income taxes at all. 

America’s middle class is facing a crisis. For a generation, wages have remained largely flat while family costs have exploded. I’ve spent decades sounding the alarm about it. I’m running for President to fix it. That means doing whatever we can to reduce the overall strain on family budgets. 

Medicare for All can be a huge part of the solution. When fully implemented, my approach to Medicare for All would mark one of the greatest federal expansions of middle class wealth in our history. And if Medicare for All can be financed without any new taxes on the middle class, and instead by asking giant corporations, the wealthy, and the well-connected to pay their fair share, that’s exactly what we should do.

ACHIEVING MEDICARE FOR ALL

Of course, moving to this kind of system will not be easy and will not happen overnight. This is why every serious proposal for Medicare for All contemplates a significant transition period. 

In the weeks ahead, I will propose a transition plan that will specifically address how I would use this time to begin providing immediate financial relief to struggling families, rein in out-of-control health care costs, increase coverage, and save lives. My transition plan will take seriously and address substantively the concerns of unions, individuals with private insurance, hospitals, people who work for private health insurers, and medical professionals who worry about what a new system will mean for them. It will also grapple directly with the entrenched political and economic interests that would spend freely, as they have throughout modern American history, to influence politicians and try to frighten the American people into rejecting a plan that would save them thousands of dollars a year on premiums and deductibles while making sure they can always see the health care providers they need with false claims and scare tactics.  

But there’s a reason former President Barack Obama has called Medicare for All a good idea. There’s a reason the American people support it. It’s because when it comes to the cost of health care, we are in the middle of a full-blown crisis. 

We are paying twice as much as any other major nation for care – even as tens of millions lack coverage, and even as family after family sees its finances destroyed by a health issue. And the American people know that in the long-term, a simple system that covers everybody, provides the care they need when they need it, puts $11 trillion back in their pockets and uses all of the public’s leverage to keep costs as low as possible is the best option for their family budgets and for the health of their loved ones.

As President, I’ll fight to get it done.

Read the plan here
Read expert letter on cost estimate of Medicare for All here 
Read expert letter on financing Medicare for All here
Calculator here

New York Leads Coalition of States Suing Federal Government Over Tax Law’s Lost SALT Deductions

Governor Andrew Cuomo announced a lawsuit by NYS, Connecticut, Maryland and New Jersey against the United States, the IRS and Treasury Secretary Steven T. Mnuchin over the constitutionality of limiting deductability of state and local taxes (SALT) which they charge is politically motivated © Karen Rubin/news-photos-features.com

By Karen Rubin, News & Photo Features

Governor Andrew M. Cuomo and Attorney General Barbara D. Underwood today filed a lawsuit to protect New York and its taxpayers from Washington’s drastic curtailment of the State and Local Tax (SALT) deduction. The lawsuit, which was joined by Connecticut, Maryland, and New Jersey, argues that the new SALT cap was enacted to target New York and similarly situated states, that it interferes with states’ rights to make their own fiscal decisions, and that it will disproportionately harm taxpayers in these states.

Accusing the federal government of engaging in a host of un-American actions – ranging from Zero Tolerance for immigrants seeking asylum, to pushing oil and gas drilling off coasts, to the failure of the Trump Administration to sufficiently protect elections and critical infrastructure against cyberattacks by Russia and other foreign adversaries- he cited the tax reform act’s SALT provision as “un-American.”

“Put aside the philosophy and the top 1 percent getting 80 percent of the benefits, the so-called SALT provision was un-American. What you did was you divided the states, you penalized the democratic states.”

In a phone conference call with the press, Cuomo said that the lawsuit is being filed in the district court of the Southern District of New York, and seeks declaratory judgment that it is unconstitutional and injunctive relief.

“There are three causes of action that the lawsuit will lay out. The first one is that it’s a violation of the Tenth Amendment which was ratified in 1791. The Tenth Amendment prohibits the federal government from invading the sovereign tax authority of the states. Remember, the founding fathers who they loved to quote, these are co-equal sovereign the federal government and the states. That was the basis of the Constitution.

“And the Tenth Amendment prohibited the federal government from invading a state’s tax authority. And that’s what they did by their own admission. Secretary Mnuchin said, the purpose of the law was ‘to send a message to the state governments that they have to get their budgets in line.’ Ted Cruz said, ‘we want to get states to lower their taxes.

Paul Ryan said the same thing. This was their attempt to manipulate state governments.

The second cause of action is that it’s a violation of the 16th Amendment that was ratified in 1913, which states the federal government may not exercise its power to tax individual incomes without providing for deduction of state and local taxes. Alexander Hamilton was cited: “the individual states would under the proposed Constitution retain an independent and uncontrollable authority to raise revenue to any extend of which they may stand in need. By every kind of taxation except duties on imports and exports.” James Madison said, “the state’s status as co-equal sovereigns provided security against interference from the federal government.”

The third cause of action is a violation of Article 1 Section 8 of the Constitution that says, ‘the Congress has the power to lay and collect taxes, duties, impose excises to pay debts, and provide for the common defense and general welfare, but it may not use its tax and spending authorities to exert a power akin to undue influence over the states or coerce the states into adopting policies preferred by the federal government.’ That goes back to case law to 1937.

Cuomo cited Abraham Lincoln when he passed the first federal income tax—the Revenue Act of 1862— “state and local taxes shall first be deducted to determine a taxpayer’s liability for the federal income taxes.” Justin Morrill in 1862, stated”‘as a matter of simple logic, the deduction is necessary to avoid both double taxation and the principle of federalism.” It also goes to the principle of federalism.

“This is their political attempt to hurt Democratic states,” Cuomo stated. “It is totally repugnant and hypocritical of the fundamental conservative ideology which they preach—the limited federal government, respect state rights. This tramples on their own theory. And it is politically motivated. And it was politically targeted. Steven Moore, the conservative economist who advised the Trump campaign, said the Republican tax bill represents death to the Democrats.

“This is not what our Founding Fathers intended. They did not intend for the federal government to manipulate or politically retaliate against states. It’s violative of the fundamental relationship between the federal government and the states. It is un-American, like what the president did with Putin yesterday, like what they did in Puerto Rico, like what they’ve done on immigration, like what they’ve done on trampling women’s rights. It is un-American. Not just repugnant to this state. Repugnant to the Constitution and the values of the American people.”

The 2017 federal tax law, “which resulted from a hyper-partisan and rushed process,” drastically reduced the deduction by capping it at $10,000. An analysis by the New York State Department of Taxation and Finance shows that the cap will increase New Yorkers’ federal taxes by $14.3 billion in 2018 alone, and an additional $121 billion between 2019 and 2025. As set forth in the complaint, the law flies in the face of centuries of precedent, which establishes constitutional limits on the federal government’s ability to use its tax power to interfere with the sovereign authority of the states.

For the entire history of the United States, every federal income tax law protected the sovereign interests of the states by providing a deduction for all or a significant portion of state and local taxes. This uninterrupted history demonstrates that the unprecedented cap on the SALT deduction is unconstitutional, as the lawsuit notes. This new, drastic curtailment of the SALT deduction has both the purpose and effect of harming New York, other similarly situated states, and their residents. Among other things, the new cap will depress home prices, spending, and business sales, and result in slower growth for the New York economy and fewer jobs.

Countering the impression that New York is the highest taxed state in the country, Cuomo said, “The large tax in New York is not state income tax, it’s local taxes – that’s what they are targeting. We have people who pay more in property ax than income tax – if those jump 30% after we capped them with first proper tax cap in history, you will see home values go down, real estate values come down, because it will make this jurisdiction must more expensive, and there may be people right on margin. This is not a theoretical political argument, this is real life.

“Ask your neighbor if property taxes go up 30 percent, what will you do? That’s why we did the property tax cap in first place – 2% year over year – this would be 30 percent bump in property taxes, and if you see real estate values come down, we will have a problem with banks, funding for school districts, and have potential devastating consequences. That’s why wanted to move on expeditious basis.

“This state has been fiscally responsible. That’s undeniable. Our credit rating up, spending increases are at record lows, efficiency up. This is a different point: it’s not for fed government to determine local taxation. That is fundamental Constitutional point.

“We think they are doing it out of political intent. If they want to talk about reduce taxes, give us back the $48 billion they take from us – we are the highest Donor State in the nation. We have been since Moynihan railed against it. We give them $48 billion more than we get back. If you really want us to reduce taxes, give it back and I will reduce taxes.

“They set up two sets of rules,” Governor Cuomo asserted, “One for Republican states, one for Democratic states. If we can’t deduct, state and local taxes [effectively] go up 30 percent. We depend heavily on property taxes to fund local governments.”

The lawsuit, filed today in the U.S. District Court for the Southern District of New York, was led by Attorney General Underwood and joined by the Attorneys General of Connecticut, Maryland, and New Jersey, is against the United States, the IRS and Treasury Secretary Steven T. Mnuchin as defendants.

Cuomo held out the possibility of other states, such as California, joining the suit. “We are forming a coalition, but time is of the essence.”

“New York will not be bullied. This cap is unconstitutional – going well beyond settled limits on federal power to impose an income tax, while deliberately targeting New York and similar states in an attempt to coerce us into changing our fiscal policies and the vital programs they support,” said Attorney General Underwood. “We will not allow partisans in Washington to hurt our people or interfere with our policies. We’ve filed suit against this unconstitutional attack on New York and our state’s fundamental rights — because we won’t stand by and let Washington pick the pockets of New Yorkers.”

“It was a number and a tax selected to effect what they wanted,” Cuomo charged. “You think it was a coincidence that it impacted 12 states, all Democratic, all states Trump lost, all that don’t have Republican representative in Congress? .. That puts democratic states on different footing. That’s why I’ve said this is economic civil war – red versus blue, Democratic versus Republican, and penalizing those states. But these are co-equal sovereigns. The federal government can’t do whatever want. It has a right to tax, and we have right to tax, I can’t interfere with the federal right to tax, and the federal government can’t interfere with our right to tax, and where they drew this line, arbitrary, because it had the desired effect.”

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© 2018 News & Photo Features Syndicate, a division of Workstyles, Inc. All rights reserved. For editorial feature and photo information, go to www.news-photos-features.com, email editor@news-photos-features.com. Blogging at www.dailykos.com/blogs/NewsPhotosFeatures.  ‘Like’ us on facebook.com/NewsPhotoFeatures, Tweet @KarenBRubin

White House Messagers Sugar Coat Trump/Republican Tax Plan, Invoking ‘American Dream’

The US Treasury building is literally next door to the White House. Treasury Secretary Steve Mnuchin claimed that over 100 people in Treasury are “working around the clock on running scenarios for us,” to prove that the Republican tax cuts would pay for themselves and benefit middle class families, but never produced the analysis, beyond a single-page of hopeful assumptions. © 2017 Karen Rubin/news-photos-features.com

by Karen Rubin, News & Photo Features

During a press call previewing Donald Trump’s “closing message to the American people” about the glories of the Republican tax plan supported by less than 25% of Americans, Trump’s leading “messagers” – the people charged with making the deal palatable – had to “research” the American Dream, as if they had never heard of the concept before:

“At the president’s direction, we did research into the concept of American Dream,” said Treasury Assistant Secretary for Public Affairs Tony Sayegh. “It is interesting what we found, where the concept came from and what it meant. And part was that in the United States, you were not destined to die in the same income class you were born into, children were not destined to have same quality of life that you had, people had the ability to rise. This was unique thing in world history. Most of the world, most of history, born in a certain class and died in that class, children were born and died in same economic class. America [brought the] idea of economic opportunity for all.”

But now, he said with dubious accuracy because this same criticism has arisen since the Reagan “Revolution”, if he in fact bothered to research, “for first time in American history, parents no longer think their children will be better off. …We will bring back the American spirit, that’s what president likes to talk about it. Consumer confidence is at all time high. That kind of optimism is at the core of the message.”

He asserted, “We’re nearing a historic moment in which we will decide the economic future of the nation. We have the power to reject [the notion]  that 2% growth is the new normal and the majority of Americans for first time in history will lose faith that next generation will do better…[We want an] economy that works for all Americans, not just the wealthy and well connected….Ultimately message will be that middle class will no longer just be getting by, finally have the opportunity to get ahead, and that’s what will Make America Great Again.”

When asked about the scores of economists and experts who have challenged the theory that the tax cuts to the wealthiest and corporations will trickle down to working people, that the cumulative impact of the tax plan will hurt working class and middle class Americans, upset the very mechanisms that promote the American Dream (education, health care, home ownership), that it will result in $1.5 trillion added to the national debt which will result in cuts to Medicare, Social Security and Medicaid, and that large majority of Americans oppose the tax plan, White House message strategy director Cliff Sims went on the attack:

”I encourage you to spend a little less time reading [Senate Minority Leader] Chuck Schumer’s talking points, and more time reading the plan [which has yet to be finalized or scored]. This plan offers a lot for the middle class…. [The plan] substantially increased child tax credit, $1000 now to $1600 or $2000; nearly doubles standard deduction so a married couple can take $24,000 tax free and more if they itemize; it lowers the tax rate so more income is taxed at lower rates… Quite frankly anyone who says otherwise is purposefully disingenuous or taking a partisan line that doesn’t meet the reality.”

Sayegh  added, “Analysis and studies. The Council of Economic Advisors reported a month ago clearly demonstrates what we are doing on corporate side helps workers, because workers absorb the greatest burden when corporate taxes are high… We know that through analysis, the average worker gets anywhere $4000-$9000.. after policies implemented – because there is a more productive and investment-friendly environment when corporations can compete with significantly lower rate. It is a benefit to hardworking Americans, the American worker.”

Asked where was the analysis that Treasury Secretary Steve Mnuchin said  “over 100 people in Treasury are “working around the clock on running scenarios for us,,” Sims said that Treasury “in very rare instances will ever release analysis of a bill that has not already been voted on and passed because as anyone who has followed process understands, there are two bills – House, Senate –there are  differences between them and a final bill will be voted on.”

Sayegh also pushed back against polling which shows the vast majority of Americans believe the tax plan substantially favors the wealthy over working people, pointing to rolling back the estate tax and eliminating the AMT (Alternative Minimum Tax), by which Trump in 2005, in the only 2 pages of his tax returns revealed to the public, shows that he would have saved $30 million in tax payments but for the AMT.

“We’ve poured through this from a lot of angles, political strategy and public opinion. It is abundantly clear that almost every poll nationally cited – CBS, Quinnipiac, Marist – is deliberately trying to shake and manipulate public opinion and not accurately reflect it. Quinnipiac uses a methodology where only 20% of respondents are Republican, 33% are Democrats, 38% are independents –a  preposterous formula. Negative of 12% between Democrats and Republicans is not close to reality – so does not reflect public opinion.”

Sims added “The more people learn about specifics, the more they love it. 61% to 21% supported it after learning we are doubling the standard deduction from $12 to $24K, 54% support only 14% oppose the child tax credit, 54% support only 18% oppose after being informed of basic provisions. Does anyone on the planet not believe Americans don’t want lower taxes, a fairer corporate tax rate that will create more jobs and higher wages? When polls get into specifics…support goes through the roof. When you have polls that try to manipulate, push questions, you get numbers you can put in Chiron or story to manipulate public opinion, but not reflect what Americans feel.”

Except that polling only specific, popular provisions (who doesn’t want higher standard deduction), does not put the whole picture into view: the higher premiums likely to come when the individual mandate for the Affordable Care Act is eliminated; the personhood provision; drilling in the Arctic National Refuge; taxing graduate school fellowships as income; eliminating the deductibility of state and local taxes and significantly limiting the mortgage interest deduction, and adding more than $1 trillion to the national debt, which will trigger cuts to Medicare, Medicaid and Social Security, curtail investment and infrastructure spending.

And no one has asked where the $300 billion to pay for disaster relief just from the 2017 climate catastrophes will come from, or why the Republicans have refused to reauthorize CHIP, which provides access to health care for 9 million children and pregnant mothers.

Meanwhile, Paul Ryan and others have said that the tax plan – precisely because it adds more than $1 trillion to the national debt – will be followed next year by cuts to “entitlements.”

And Trump, in his tax speech in St. Louis said:

“Then we will have done tax cuts, the biggest in history; healthcare, phenomenal healthcare. I know you don’t want this — welfare reform. Does anybody want welfare reform? (Applause.) And infrastructure. But welfare reform — I see it and I’ve talked to people. I know people, they work three jobs and they live next to somebody who doesn’t work at all. And the person who’s not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off. And it’s not going to happen. Not going to happen. (Applause.) So we’re going to go into welfare reform…”

See also:

Dickens’ ‘Christmas Carol’ Is Vision of New Reality in Trump’s America Where Money is Entitlement

Republican Tax Scam: They Don’t Care 85% Oppose. Here’s Why

Republican Tax Plan is Attack on Blue States; Fight Back by Holding Money ‘in Escrow’

Ready the Revolution: GOP Tax Plan Decimates Middle-Class, Gives Rise to New American Aristocracy

Trump Selling Tax Plan in Missouri, the Show Me State: This is going to cost me a fortune, this thing — believe me.

Democrats Should Shut Down Government over Republican Tax Scam

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© 2017 News & Photo Features Syndicate, a division of Workstyles, Inc. All rights reserved. For editorial feature and photo information, go to www.news-photos-features.com, email editor@news-photos-features.com. Blogging at www.dailykos.com/blogs/NewsPhotosFeatures.  ‘Like’ us on facebook.com/NewsPhotoFeatures, Tweet @KarenBRubin

NY, CA, NJ Governors Assail Republican Tax Plan as ‘Evil in the Extreme,’ a Wrench to Nation’s Economic Engine

Blue State governors including New York’s Andrew Cuomo hope their Republican Congressmembers will do the right thing for their constituents; otherwise, they raise the specter of court challenges to Republican Tax Plan © 2017 Karen Rubin/news-photos-features.com

by Karen Rubin, News & Photo Features

Governors of New York and California and the Governor-Elect of New Jersey and California joined forces to condemn the Republican tax plan as a “stake in the heart” of the nation’s economic engine, a cynical ploy to punish Democratic-majority states, and only the first-step toward generating such an increase in the national debt to justify cuts in Medicare, Social Security, Medicaid, CHIP and other social programs, and threatened to challenge the legality of elements of the tax plan should it become law.

In a joint press call, New York Governor Andrew Cuomo, California Governor Jerry Brown and New Jersey Governor-Elect Phil Murphy and using phrases such as “evil,”  “nefarious” and “cynical,” raised issues of the legality of elements of the Republican tax plan, which shifts $1.5 trillion in wealth from middle class and working families to the wealthy  – indeed, 50% of the tax cuts go directly into the pocket of the top 1% – through lowered tax rates, elimination of the AMT (Alternative Minimum Tax), reductions if not elimination in the Estate Tax (which only impacts 2 out of 1000 families now), and new rules enabling the wealthiest to shelter tax through pass-throughs.

But the Republicans pay for the cuts by largely eliminating or significantly reducing the deductibility of state and local taxes, including property taxes, effectively double-taxing, something that has not existed since income taxes were first implemented in 1913, which disproportionately targets 12 states that happen to vote Democratic and also happen to be the donor states that account for 40% of the nation’s gross domestic product (GDP). A similar effort during the 1986 Reagan tax reform effort was defeated by both Republicans and Democrats. The governors say this may be challenged as unconstitutional double-taxation.

Other provisions, such as establishing a legal framework for “personhood” may also be challenged as unconstitutional.

The way the Republican tax plan is structured, it shifts wealth from the 12 “donor” (Democratic-majority) states, to the rest of the country, by eliminating or dramatically reducing the tax deductibility of state and local taxes, including property taxes. In effect, it makes those states structurally uncompetitive by effectively increasing taxes by 20-25 percent for homeowners, may reduce home values by that amount, as well as make it difficult for schools (which account for 60-65% of New Yorkers’ property taxes and 40% of California’s) to raise the revenue they need to property function. But while individuals lose the deductibility of SALT, corporations do not.

In a further blow to public education and stripping away of the separation of Church & State, the Republicans would allow the tax-exempt 529 funds, created to fund college, to be used for K-12 education for parochial and private schools, even homeschooling. (This is on top of repealing the Johnson Amendment, opening floodgates of “charitable” contributions to religious institutions to become political PACs; a particularly insidious breach of the Constitution’s Establishment clause because the religious leader preaching from the pulpit has a special ability to coerce.

The governors held at the hope that the wildly unpopular Congress (only 13% approval) and the most unpopular president in history (33% approval), will recognize the tax plan is similarly wildly unpopular, with barely 20% support, and that Republican Congressmen who have to stand for election in 2018, will do what is best for their constituents.

The Senate version, which eliminates the individual mandate from the Affordable Care Act (Obamacare), would result in 13 million more people without health insurance by 2025, and 10 percent annual increases in premiums on everyone else.

The bill also “pays” for the tax cuts to the richest Americans and corporations by eliminating the deductibility of student loan interest, tax credits for renewable energy, and opens the way for drilling in the Arctic National Refuge, and other provisions which help the upward mobility of working families and middle class striving to achieve the American Dream.

The governors held out a glimmer of hope that enough of the Republicans (the only ones who voted in favor of the tax plan) would vote for their constituents’ interests.

“The tax plan that passed Senate, the House, and is headed to reconciliation, is a long way from done. It is a fraud on the American people. They talk about tax cuts for middle class and working people, but what it is, is tax cut for the rich – 50% of the tax cuts go to the top 1%. That’s an inarguable fact. Their theory isn’t new or novel. It’s ‘trickle down’ on steroids.” He argued that instead of corporations taking their tax cuts to raise wages for workers or create more jobs  through investment, corporations in the past have pocketed the extra cash or used it to buy back stock (raising the share prices) or paying dividends.

“To add insult to injury,” Cuomo said. “the tax cut is then targeted at 12 states that happen to be Blue States where they target eliminating state and local deductions. People don’t understand what that will do, but it will be devastating for states. In essence, it is an increase in property taxes and state income tax only on those 12 states. It puts us at a structurally competitive disadvantage because structurally our taxes will be higher.” That gives residents additional complaint about their government (Republicans even now charge that New York’s taxes are high because of mismanagement, or lavish spending on services). Cuomo countered the claim by Republicans that the poorer states somehow subsidize the public services of the richer states.  New York, California and New Jersey are donor states, which means we put more into the [federal] till than we take out. This aggravates and enhances the injustice where we are subsidizing the other states, and now you’re using New York and New Jersey as a piggybank to finance tax cuts in other states.

“That amounts to political retaliation through the tax code. That’s why they passed it with only their own votes,” Cuomo charged.

California Governor Jerry Brown assailed the Republican tax plan saying, “the most immediate evil of this cynical maneuver called the tax bill is to further divide America when we are at one of our most divisive periods in history. The idea that a president and representatives only in the majority would use that power to penalize 12 states – most of which voted strongly against this president– is not going to bring country together. We are divided while some of our most important competitors are getting more unified, authoritarian. We need to come together. This will further divide blue states from red, Democrats from Republicans. It is evil in the extreme. It exacerbates inequality….It’s not right. It won’t stand.”

New Jersey Governor-Elect Philip Murphy further expounded on the devastating impact in terms of widening inequality and continuing down the awful path of us vs Washington leadership.

“It is based on the trickle down theory, which we have seen time and again doesn’t work. Executives get paid better, the gap between the top of corporate food chain and bottom widens; shareholders benefit from buybacks while working people are neglected. It is a scam at the ultimate extreme. On more than one occasion we all heard, when asked for the rationale, the awful answer [from Republicans] was ‘it is our donors, our donor base will dry up if we don’t.’ We saw the chaos Friday night, literally lobbyists hand-writing in pen, amending the bill. This is as bad as it gets.

“But in a ‘glass half full’ sense, as Governor Cuomo stated,  It’s not over yet. This is the ninth inning. Each of our states have Republican House members. This is beyond Republican, Democrat; it is a clear question of whether you are representing the constituents who elected you. Black & white.”

“The changes in the SALT deduction, are particularly problematic, Murphy said. “That’s been part of the tax code since income tax became legal in 1913. For over 100 years, Congress realized taxing people twice is unfair. We are the biggest odnor states in terms of the federal money we give. This will only make it worse.

“The stronger we are together, the more numbers, the more locked arms, we fight together as a team. There is a lot to be said for that. I am honored to be with you.”

Asked what actions, beyond political pressure on Republican members of Congress, the governors might take, they said that just as the Republicans, the day after Obamacare was signed into law, pledged to repeal and replace, they would also take whatever means – even court challenges– to repeal and replace this tax law.

“We’re looking at the legality now. [SALT deductions] has been in the tax code since it started over 100 years ago. This is double taxation – they are taxing taxes, this from the party that’s against taxation, redistribution [or what Republicans used to condemn as “class warfare”]. This is redistribution in an exponential form –taking from richer states and subsidizing a tax cut in less wealthy states. Hypocritical. Everything they said were against: double-taxation, taxing tax for first time, redistribution state to state, so may well be illegal, unconstitutional. We’re looking at it.”

“There may be some legal action but this is a quintessentially political challenge,” Governor Brown stated. “Our job is to communicate the fraudulent and nefarious character of this tax bill – the way it proceeded, which John McCain said follows no normal pathway. We want to make sure our members of Congress know they are hurting New York, California, New Jersey but also hurting America. We are the key elements of America’s engine of prosperity, and when Trump and his allies attack New York, New Jersey, California, they are attacking the vital seams of the American economy. That’s stupid. They will regret it, and we will do everything we can to convince our Republican representatives that the right thing to do is defeat.

Murphy said they are working with state Attorneys General “to tear up all the floor boards, to the fullest extent of law, and challenge this. There are 500 pages of amendments, a lot handwritten. I am betting there are flaws, holes. If we don’t succeed in the next few days, we will have to take this to the limit.

“This is double taxation and I’m not sure it’s legal,” said Cuomo. “We will find out if it is. But Governor Brown’s point is that it is counterproductive. These 12 states are 40% of GDP. If you say this will help the American economy, how do you do that by assaulting 12 states that are 40% of GDP: this will be negative for our states and regional economies. No doubt about that.”

“Attacking the innovation of NY, CA, NJ and others is just a dumb move, only explained by the desperate situation the Republican leadership find themselves,” Governor Brown added. “This president is the most unpopular is history. They are riding a dead horse in this tax bill, acting irrationally, not in interest of country, throwing a wrench into engine of economy.”

“The more people understand, the more people understand how unfair, divisive and harmful it is to them individually,” Cuomo commented. “The problem is, there is so much news, so much happening. This is so complicated – elimination of state and local taxes but the more people understand it, the more they are against it. Congresspeople and Senators ultimately have to go home, and if they vote for this, they are voting against the interests of their constituents, and they have election next year. Ultimately democracy works. A congressperson who votes for this, there’s no going home again.

“I’m an optimist for the simple reason that we all believe in a different America than this bill articulates,” Murphy said. “The more people understand what’s in this thing, the more actively they push back. What it will do for higher education by repealing tax deduction for student loans, stripping credits for renewable energy, opening Arctic to drilling, on and on –repealing the individual mandate in ACA – the more people realize what’s at stake, the more collectively they say this can’t go forward.

Largely eliminating the SALT deductions, Cuomo said, contradicts the Republican claim their tax plan is supposed to spur the economy. “But targeting 40% of GDP, then saying that’s how you are going to spur economy, by putting arrow into economic heart of these 12 states? There are predictions it will drop the value of homes in our states because property taxes in effect will go up 20-25% over night. If you drop the value of homes, disrupt the whole financial system. Mortgage foreclosures. I don’t think they understand what they are doing.

“We talk about [eliminating SALT deductions] as if it were a new concept,” Governor Cuomo said. “It’s not new. They proposed eliminating SALT during Reagan’s time. At that time, Democrats and Republicans both said it was wrong and defeated it. The difference now is the political extremism and their willingness to divide, and the political extremes they will go to.

“This is only step one of their plan – we know what their plan is, because not new, we’ve seen the playbook. Step one is tax cuts for the rich. Step 2, is to drive up the debt, the deficit, and then come back and say we have $1.5 trillion debt that we created (by cutting taxes for rich), and now we have this debt, we have to address it by cutting government spending. Where will they go? The right to Medicaid, healthcare for poor people. The right to CHIP for poor children, Right to housing programs, food stamps, etc. That’s inevitable. They are creating the debt that will then justify their philosophical step to cut government spending to hurt the poorest Americans.”

“Look at this in its entirety, beyond SALT,” Murphy added. “This is their way to cut Medicaid, Medicare, Social Security. It is the height of hypocrisy from the so-called deficit hawks. Look at higher education and student loans, Obamacare individual mandate, Seen result of trickle down. Pass through. Taken in its entirety, the Republican tax plan is exceedingly damaging not just to our states, but entire country.”

“Republicans saw Obamacare passed and the next day they started Repeal & Replace,” Cuomo said. “If they do this, the next day, we will start the repeal and replace of the divisive Tax Act.”

None of them mentioned, but should have, the increasing pressures on the federal government for disaster relief from climate catastrophes (hundreds of billions of dollars in 2017 alone), the need to address the opioid crisis, and to rebuild and mitigate infrastructure.

See also:

Republican Tax Scam: They Don’t Care 85% Oppose. Here’s Why

Republican Tax Plan is Attack on Blue States; Fight Back by Holding Money ‘in Escrow’

Ready the Revolution: GOP Tax Plan Decimates Middle-Class, Gives Rise to New American Aristocracy

Trump Selling Tax Plan in Missouri, the Show Me State: This is going to cost me a fortune, this thing — believe me.

Democrats Should Shut Down Government over Republican Tax Scam

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© 2017 News & Photo Features Syndicate, a division of Workstyles, Inc. All rights reserved. For editorial feature and photo information, go to www.news-photos-features.com, email editor@news-photos-features.com. Blogging at www.dailykos.com/blogs/NewsPhotosFeatures.  ‘Like’ us on facebook.com/NewsPhotoFeatures, Tweet @KarenBRubin

Democrats Should Shut Down Government over Republican Tax Scam

Congressman Tom Suozzi (D-NY) at a Town Hall attended by 150 people in Great Neck, Long Island, says the Republican tax plan would be “devastating for Long Island, New York State and the nation © 2017 Karen Rubin/news-photos-features.com

By Karen Rubin, News & Photo Features

The Republican tax plan (scam) – whether the House or the Senate version or whatever will come out of conference – would be devastating to New Yorkers in particular, but the nation as a whole. More than 50 percent of American households will wind up paying more in taxes, with the various cuts in deductions for all the things that enable upward mobility – home mortgage, local property taxes, education loans, medical costs.

Instead of simplifying the tax code and eliminating loopholes, the Republicans have only cut taxes for the wealthiest and corporations without eliminating the loopholes that enable profitable multi-nationals like Apple shelter profits from US tax. There is no incentive for corporations or wealthy individuals to invest in the US, or to create jobs, or even to raise wages. Instead, the Republicans would cause the biggest transfer of wealth from the poorest and middle class to the wealthiest, at the same time, creating a new American aristocracy of wealth and political power. It would intensify the already growing gap between rich and poor – the greatest gap since the Gilded Age and the Robber Barons –  hollow out the middle class. Meanwhile, the poor and middle class would be living with heightened insecurity because of loss of access to affordable health care.

The nonpartisan Congressional Budget Office released its report which clearly shows that the federal government would be raising taxes on those making less and generously benefiting those making more. For instance, Americans making less than $30,000 in 2019 will pay $2,580,000,000 more in taxes – while those making over $200,000 will pay $118,550,000,000 less in taxes in 2019.

“The Republican tax plan [which eliminates the deductions for state and local taxes] would be devastating for Long Island,” Congressman Tom Suozzi, Democrat of Long Island told a Town Hall attended by 150 people in Great Neck. “The current tax bill passed by the House and proposed by the Senate would be bad for the country but especially bad for New York State and Long Island. Devastating…. It will cause people to move out – make people move away – not just the billionaires and millionaires making oodles of money, but people who are just making it.”

Housing values will likely fall because the tax deduction of the mortgages – $1.5 million is average home cost for New York City – will be eliminated. Houses will be even less affordable.

The Republican tax plan is “structured in a way to take money out of the middle class to pay for tax cuts for the very wealthy and corporations. They had to find revenue to pay for tax cuts – they couldn’t go over $1.5 trillion deficit over 10 years in order to pass the bill with only 51 votes in the Senate.” They came up with the biggest reduction in deductions –  eliminating the deductions for  SALT (state and local taxes), which if they put back in, can’t give the tax cuts to corporations.” It is even questionable if it is constitutional, since it would essentially double-tax that income – first at the state and local level and then again at the federal level.

“It’s a conscious decision that affects states like New York, New Jersey, California, and a few others” – states with high state and local taxes which also are “donor states” sending far more to the federal government than comes back in federal aid., which also happen to be “blue” states. It’s also part of the strategy to “shrink the federal government” and attack the social safety net put into place since FDR’s New Deal that came out of the Great Depression and continued by LBJ’s Great Society: Medicare, Social Security and Medicaid because budget deficits will trigger mandatory reductions in spending – $25 billion worth in 2018 alone.

“This is the issue we have to shut down the government on,” said a town hall participant, Howard Weitzman who was a village mayor and member of the Nassau County Board of Assessors. “They cannot destroy the economic engine of this country – all this tax money going to government. They are willing to destroy this area to give tax cuts to people who don’t need them. [Budget Director Mike Mulvaney charged, “Why do people in Alabama have to support New York” but the opposite is true: he knows very well that New York sends $48 billion more to the federal government, which go to states like Alabama. “Shut down the government.”

Democrats would be right to shut down the government. And the Donor States like New York, California, New Jersey (not coincidentally which are Democratic), should withhold the excess revenue to the federal government, much like a tenant-landlord dispute, putting the money into escrow for use to accomplish the infrastructure projects and transition to clean-energy economy that would have been federally funded. (See: Republican Tax Plan is Attack on Blue States; Fight Back by Holding Money ‘in Escrow’)

Trump and the Republicans intend to bankrupt the nation, to justify $25 billion in cuts to Medicare, Social Security and Medicaid next year, and billions more thereafter. Their tax policy would saddle the nation with $1.5 trillion more in debt while doing nothing to pay down the $20 trillion in debt we already incur – that interest payment alone, unless Trump defaults as he has on his own debt, will amount to 5% of the annual budget, more than $200 billion worth each year.

The Republican tax plan would raise taxes on the 59 million households that make $50,000 or less; and by 2027 the 86 million households who make less than $75,000. Trump appealed to the suffering masses whose salaries haven’t kept up in the 40 years since the Reagan “revolution” – but as Suozzi said, “the world is dramatically changed because of globalization and technology. We need to figure out how to get more companies to locate in US and create jobs where people make a decent living –enough to buy a house, educate their children, have health insurance and retire without being scared.” But the Republican plan will “starve the beast” and break the “engine” of economic growth by cutting off revenue that would pay for education, infrastructure and health care, while increasing the national debt which will raise interest rates. It is a cycle of destruction.

NYS Governor Andrew Cuomo Reacts

Here’s New York State Governor Andrew Cuomo’s response to Senate Budget Committee’s 12-11 vote strictly along partisan lines:

“The President and Republican members of Congress appear determined to pass a tax plan before the end of the year because after an otherwise entirely fruitless legislative year, they are in desperate need of an accomplishment. They must believe in the old adage that “doing something is better than doing nothing.”  In this case, that could not be less applicable.

“The GOP tax plan is not just a marketing fraud. It is a schizophrenic hybrid of extreme conservative political ideology and crass electoral politics.  The House and Senate have different plans, but both have the same DNA.  Both plans pretend to offer tax relief to the middle class, but in reality the policy they advance is just old, discredited trickle-down economics on steroids:  disproportionate and large cuts for the rich and the big corporations that are then supposed to result in economic growth that is magically passed on to the workers as wage increases.  This is a purely ideological concept that lacks data to support either the idea that the economy will be stimulated or that higher wages will result.

“Both the Senate and House plans are financed in large part by the particularly obnoxious, and possibly illegal, elimination of deductions of state and local taxes (referred to as the SALT deduction). The GOP plan eliminates the deductibility of state and local taxes which is a direct attack on the states with higher state and local taxes.  New York and California top the list of the twelve states that will most directly face hardship if SALT deductions are removed.  Curiously, all twelve are “blue” states and if this change to accepted tax law passes, these states will be at a competitive disadvantage to other states with lower local taxes.

“The deductibility of state and local taxes has been a sacrosanct principle of tax law for the past one hundred years.  It is the underpinning of the economic system for state and local governments.  Republican ideology that has always espoused “state’s rights” now tramples on that theory with the elimination of this provision.  And anti-tax conservatives are now proposing the first ever double taxation – to tax the taxes an individual pays locally.  There is a serious legal question as to whether this double tax is constitutional.

“The elimination of the SALT deduction is the ultimate redistribution of wealth making conservatives who vehemently oppose this philosophical concept all the more hypocritical and disingenuous as they now support it. Eliminating the SALT deduction will redistribute wealth from richer states to poorer states.  New York and California will effectively serve as piggy banks to finance tax cuts for other states.  Our loss is their gain.

“In New York, six of nine Republican Congress members opposed this plan.  The three who stood in support, voted in opposition to the interests of their constituents out of sheer party loyalty.  Their justification for supporting this plan is flawed factually and ideologically.  If New York raises taxes on the rich and corporations, people and business will leave the state for lower tax states and the remaining tax burden will fall to those left behind.  The deduction of state and local taxes is not a federal subsidy for New York.

“New York State is the number one donor state in the nation, sending $48 billion dollars more to Washington than we get back.  Eliminating SALT will compound the Federal taking adding approximately $18 billion to the $48 billion now taken. If the Republican Congress returns the $48 billion that New York sends to Washington, then I would be open to discussing eliminating the SALT deduction.

“And to make matters worse, the Senate GOP version proposes to repeal the Affordable Care Act, another legislative promise that the GOP controlled Congress has failed to achieve. It is just healthcare policy masquerading as tax reform. The reality is that lower income Americans won’t have access to health insurance and the individual tax cuts that are set to expire in 2027 will result in half of American households paying higher taxes than they would have if the Senate bill had never passed.

“The Republican Congress is correct that the American people expect action from their government.  But in their attempt to save legislative face, they should heed the old adage: “do no harm.”  It’s true in medicine and politics.  This tax reform plan hurts the country’s poor, working and middle-class families and will have a devastatingly negative economic impact on the twelve states targeted by Washington.

“To be this reckless and dismissive of the economic interests of so many Americans, the Republican’s political assumption must be that they have lost the “blue” states anyway. That is no way to govern or – dare I say – to prepare for mid-term elections.”

See also: Republican Tax Plan is Attack on Blue States; Fight Back by Holding Money ‘in Escrow’

________________________

© 2017 News & Photo Features Syndicate, a division of Workstyles, Inc. All rights reserved. For editorial feature and photo information, go to www.news-photos-features.com, email editor@news-photos-features.com. Blogging at www.dailykos.com/blogs/NewsPhotosFeatures.  ‘Like’ us on facebook.com/NewsPhotoFeatures, Tweet @KarenBRubin

Cuomo to Trump: ‘Do Not Use [Blue] New York as Piggybank for Other [Red] States’

Governor Andrew M. Cuomo today issued a letter to President Donald J. Trump condemning the federal tax plan to eliminate or roll back state and local tax deductibility and calling on the President not to use New York as a piggybank for other states. © 2017 Karen Rubin/news-photos-features.com

Governor Andrew M. Cuomo today issued a letter to President Donald J. Trump condemning the federal tax plan to eliminate or roll back state and local tax deductibility and calling on the President not to use New York as a piggybank for other states.

Here is text of the letter:

Dear President Trump, 

I write to you on an issue that impacts every single American: pending federal tax legislation. I am not writing as a Democratic Governor to a Republican President, but rather as one New Yorker who cares about New York and the country to another. I often say to the New York State legislature, “we are Democrats and we are Republicans, but we are New Yorkers first.” 

As you well know, the House is expected to release additional details of a “tax cut” plan this week that in reality amounts to a “tax increase” plan for states like New York. The current proposal primarily uses New York and California as the piggybank to make it possible to cut taxes for other states. By eliminating or rolling back state and local tax deductibility, Washington is sending a death blow to New York’s middle class families and our economy. 

I understand the politics at play here. California and New York are “blue states.” I also understand that the political map dictates that most Republican members of Congress come from outside the Northeast and West Coast and their primary motivation is to help their states at any cost, even when it comes at the cost of middle class New Yorkers. But when the economies of New York and California suffer, and they will, the nation follows.  

It’s clear this is a hostile political act aimed at the economic heart of New York with no basis on the merits. First, it is an illegal and unconstitutional double taxation that forces our middle class families to subsidize a tax cut for the rest of the nation, and it is contrary to every principle the Republican Party has always espoused. Second, it reverses all the bipartisan progress New York State has made in lowering taxes over these past few years. While we have lowered state income taxes, capped property taxes and are forcing local governments to consider shared services, this federal act would erase all those gains and in fact increase taxes. Eliminating state and local deductibility will result in a tax increase of $5,660 on average for one in three taxpayers in New York, or 3.3 million New Yorkers.

This backward tax plan has encountered much deserved resistance, including from Republicans in the Senate. Senate Finance Chairman Orrin Hatch said “I don’t think that’s going to go anywhere,” adding that state and local tax deductibility is “a system that’s worked very well.” In the face of this pushback, Republican leadership is now trying to salvage their tax plan with a so-called “compromise.” Their scheme is to allow a property tax deduction, but do away with the deduction for state income taxes. For middle class New York families, the average tax increase attributable to losing that deduction would be $1,715.  And considering the original federal proposal would cost New York State taxpayers $18.6 billion, this “compromise” does little to help our state since it would still cost New York State taxpayers nearly $15 billion.

Another “compromise” that is being suggested, where only higher income individuals would lose the state and local deductibility, is a 3-card Monte game that could be played on 42nd Street in Manhattan. New Yorkers are not stupid. We know that if deductibility is eliminated on higher incomes it will have a ripple effect, forcing these New Yorkers to move out of the state, taking their tax revenue with them, thus increasing taxes on everyone else. New York will not be in a position to cut state taxes because both the original proposal, as well as the proposed compromise, will force the highest taxpayers from the state and deplete our revenue stream. As you know, five percent of New York State taxpayers account for nearly two thirds of our annual income tax revenue. 

I understand why Paul Ryan would seek to hurt New York, but to ask New York Republican members of Congress to vote to raise taxes on their constituents is a betrayal against their state and their constituents. In fact, seven of nine Republicans from New York are against it. The two representatives who support it—Congressmen Collins and Reed—are the Benedict Arnolds of their time because they are putting their own political benefit above the best interests of their constituents.

Speaker Ryan’s only justification is that other states subsidize New York. He is just wrong. They don’t. The opposite is true. New York subsidizes every other state in the nation. We are the highest donor state which means we send $48 billion more in tax dollars to the federal government than we receive back in federal spending. 

To be fair, this is not a new idea to pillage New York and California and send their wealth to other states. Congress tried it under President Reagan, but the gross injustice of it caused all but the most partisan and callous officials to drop support. Today’s proposals are no different. Our Congressional representatives should be saying it’s time New Yorkers get their money back. Instead, the current proposal would be taking even more revenue from the number one donor state. How unfair. 

There is no middle ground here. Any of the proposed “compromises” will still destroy New York’s economy and harm the middle class. There can be no elimination, no “compromise,” and no cap on state and local tax deductibility.

New York needs your help.  You can stop this. And you should not just as an American, but as a New Yorker.

Sincerely,

Governor Andrew M. Cuomo

Cc:

Senate Majority Leader Mitch McConnell

Speaker of the House Paul Ryan

Climate Disasters Should Force Re-think of Trump (‘Cheater-in-Chief’) Tax Plan

How will the nation fund the recovery from the increasingly devastating climate disasters? The lates record-breaking climate catastrophes, Harvey and Irma, should cause re-thinking of the investment in climate action and Trump’s plan to cut taxes for the wealthiest © Karen Rubin/news-photos-features.com

By Karen Rubin, News & Photo Features

Hurricane Harvey had just devastated Texas, the worst natural disaster up until two weeks later when the entire state of Florida was about to be destroyed by Hurricane Irma, as whole Caribbean island nations as well as the US territory of Puerto Rico had their infrastructure utterly decimated. And Hurricane Jose was on Irma’s tail. Meanwhile, Los Angeles and Oregon were being consumed by record wildfires. Congress had authorized $15 billion toward Hurricane Harvey relief and to replenish the nearly depleted funds of FEMA.

Indeed, in North Dakota on September 6, as Hurricane Irma was barreling toward Florida, Trump, the Tax-Cheat-in-Chief, gave an incoherent speech touting his tax plan that began with his incredulity in discovering that North Dakota was undergoing a massive drought.

“I just said to the governor, I didn’t know you had droughts this far north.  Guess what?  You have them.  But we’re working hard on it and it’ll disappear.  It will all go away,” Trump said.

Accuweather is projecting the cost of Harvey and Irma alone at $290 billion, or 1.5% of total GDP, which would erase the growth of the economy through year-end, according to Dr. Joel N. Myers, president and chairman.

That’s also more than one-fourth of the $1 trillion that Trump proposed for a 10-year infrastructure plan. Where will the money come from? And if all infrastructure spending has to be directed to Texas and Florida, where does that leave the rest of the country? Not to mention the $1 billion Trump is demanding as down payment on a $70 billion border wall.

Does this get you thinking that Trump and his administration, especially EPA Administrator and shill for the oil industry Scott Pruitt, should rethink their self-serving notion of climate change denial (self-serving because it is used to fuel their argument that they can overturn environmental regulations on the massively profitable fossil fuel industry)? Of course not.

But it should also cause them to rethink their totally corrupt plan for tax reform which is intended to starve the federal government of funds, balloon the budget deficit and national debt, all to shift more of wealth to the already fabulously wealthy. Especially when so many people have lost their businesses and jobs, which will certainly impact tax revenues.

Let’s just consider for a moment what taxes are supposed to be for. And yes, a considerable amount goes to pay for interest on bonds, but bonds are what are used to pay for infrastructure – they represent an investment in the future. And as we are considering how to replace the destroyed and decimated infrastructure, why not build back with sustainability in mind.

Just as in his speech declaring his decision to withdraw the US from the Paris Climate Agreement (forged with US leadership and signed by 195 countries), Trump, who took a $900 million tax deduction on his failed Atlantic City casino and probably has never paid 40% tax in his life,lies to rationalize his tax plan, beginning with the lie that the US is the highest taxed nation in the world (not true) and that workers wages will increase if only shareholders and CEOs and the wealthiest 1% could keep an even greater percentage of their money (history shows the opposite).  (See New York Times, The False Promises in President Trump’s Tax Plan)

Remember: the wealthiest people used to be taxed at 90% – that was after World War II when the nation had to rebuild its treasury. We were able to afford the GI Bill which probably did more to create a middle class than anything since the New Deal. Now the wealthiest pay something between 35 to 40% – except that they don’t.

Trump (and Ryan) want to give a $170,000 annual windfall to the wealthiest Americans, while crumbs ($700) to the middle class who will lose the only tax deductions they can use.  $170,000 times four years worth mean in terms of free money (from tax-paying schnooks) is a lot of dough to invest in politicians and policy with a spectacular return: policies like enabling Big Pharma Sharks to hike up life-saving drugs by 5000%; Oil Barons to make sure incentives for wind and solar energy don’t help these industries develop into competitors; real estate developers who can delight in the tax advantages that let them take a $900 million deduction and build without interfering regulations on lands that are needed to soak up flood waters and health insurance companies to raise premiums to pad profits.

Now this nation is looking at more than $290 billion just to recover from the climate disasters which are becoming more and more frequent, hitting the high density developed urban centers.

If taxes for those who have the means to pay don’t cover the cost, who does? Ryan and the Republicans love to talk about “sacrifice” but the only ones they demand sacrifices from are not the wealthiest or the corporations, but Social Security and Medicare recipients, struggling middle class kids who need to take out loans to pay for college. Their concept is to take money out of the consumer economy, which starts a downward unvirtuous cycle of economic contraction. How do we know?” Because we have seen this movie before: the Bush tax cuts. Meanwhile, median income has risen to its highest levels in 1999 (under Bill Clinton) and 2016 (under Barack Obama) and their tax-and-spending plans.

The Trump/Ryan tax “plan” requires a federal budget that slashes spending for infrastructure, for research and development, for education, for environmental protection (and of course, eradicating any mention of climate change), even slashing spending for diplomacy and foreign aid. It depends on slashing Medicaid and subsidies to keep health insurance affordable (that’s why they are so desperate to repeal Obamacare).

It slashes the tax rate for corporations which already do not pay the nominal 35% rate. Many highly profitable corporations – including General Electric, Pepco Holdings, PG&E Corp., Priceline and Duke Energy – paid nothing into federal coffers from 2008-2015 yet benefit from all the services the government provides including roads, public safety, an educated workforce, mass transit, a military to defend their shipping.

To get to a tax cut without obscenely increasing the national debt, the Republicans say they will get rid of “loopholes” like the mortgage credit and property taxes – that would only complete the decimation of the Middle Class and destroy any semblance of an American Dream. What would make more sense, if they really cared to “reform” the tax code and stop the income distribution from middle class to the already fabulous rich, is to take away the mortgage tax credits on 2nd, 3rd homes and such, and take away the many special deductions that real estate developers like Trump has benefited from, as well as the loopholes that let hedge fund managers shield all but a fraction of their income from taxes that wage-earners pay.

Indeed, the policies that Trump are proposing – specifically, eliminating the tax deduction for state and local property taxes – would hurt blue-states that tend to have higher state and local taxes because they tend to have higher property taxes but provide more services and get less in federal payments than they send to the government, while red-states that have low state and local taxes (and crappy schools and health care) get more from the federal government (paid for by blue states) than they send.

And what about Puerto Rico. which already was in economic disaster – having defaulted on $70 billion in debt – and basically written off by the US government. It’s infrastructure is now totally destroyed. How will it be rebuilt? Here’s what I imagine:  Trump is so transactional, I can see a foreign country (China?) with big bucks and an interest in having a foothold in the Western Hemisphere buying Puerto Rico from the US. After all, what is $100 billion or $200 billion to put the island right?

Of course Trump’s tax “reform” plan – sketched out as if on the back of an envelope without any analysis – is really all about tax cuts to the wealthiest and to corporations. As Hillary Clinton said during a debate (which she won): “trickle down economics on steroids” from the guy who took a $900 million deduction for a failed real estate deal, which taxpayers – normal working stiffs – wind up paying for.

Those who have actually analyzed the plan have said that the wealthiest people – who have done astronomically well for decades, while middle class Americans have scarcely had a salary increase in 40 years, so that the gap between rich and poor has reached Grand Canyon proportions – would get a tax windfall of $170,000 a year, while middle class families would get something like $700. Where do the 1 percenters put that extra money which they scarcely need? Well, they invest in buying politicians and influencing policy, of course.

Tax “reform” figures into the Trump obsession with repealing Obamacare and leaving 32 million people without health insurance. It figures into the administration’s dismissal of the Gateway Tunnel project so important to the New York region’s infrastructure and economy.

But now, Trump’s Republican states are being whacked with climate catastrophes, and the money has to come from somewhere.

And let’s also be reminded that the growth in the economy – first, saving the nation from plunging into another Great Depression, and now rebounding to the highest median income, lowest unemployment rate ever and highest rate of health insurance coverage while reducing the poverty rate – happened because of Obama Administration policies and would have been even more effective in terms of raising wages and living standards if the Trump Administration did not steamroll back policies, like overtime pay, parental leave, and federal minimum wage and obstruct infrastructure development and the transition to clean, renewable energy.

People remark that the devastation in their neighborhoods from these massive climate disasters is like a bomb went off. Well, in wartime, taxes are raised – that’s how the rate on the wealthiest hit 90%, to pay off the World War II debt. This is wartime. This nation has to rebuild, and sustainably, responsibly. We need to invest in 21st and 22nd century technologies, to keep the United States a global leader. Otherwise, we will cede our leverage to China which has basically embraced the American model of spreading its political ideology (nominally, “Democracy”) through capitalism (nominally “free market” as opposed to centralized control) and is literally buying up influence over Africa and Asia.

Of course, Trump’s tax plan is Paul Ryan’s tax plan (Trump never actually had a plan), and the Republicans are content to let Trump destroy the nation and end the social safety net including Medicare, Social Security and Medicaid, and possibly embroil us in World War III, until they can get jam through the tax plan they have coveted since Reagan.

________

© 2017 News & Photo Features Syndicate, a division of Workstyles, Inc. All rights reserved. For editorial feature and photo information, go to www.news-photos-features.com, email editor@news-photos-features.com. Blogging at www.dailykos.com/blogs/NewsPhotosFeatures.  ‘Like’ us on facebook.com/NewsPhotoFeatures, Tweet @KarenBRubin

Trump Races to Chalk Up 100-Day ‘Successes’ by Weakening Antiquities Act, Overturning Education Reform, and Unveiling Tax Plan to Benefit Wealthy, Corporations

After his visit to Yosemite in 1903, President Theodore Roosevelt pushed through the Antiquities Act of 1906 to prevent the destruction of historic or prehistoric ruins on government land © 2017 Karen Rubin/news-photos-features.com

Donald Trump is racing to the 100-day mark to do as much as he can to undo progress won over the past century, particularly eradicating every part of Barack Obama’s legacy.

On Wednesday, he signed Executive Orders weakening the Antiquities Act that has been used since Theodore Roosevelt to protect federal land for the American people.

He signed another Executive Order aimed at rolling back national education standards put into place, originally, by George W. Bush under the No Child Left Behind Act, amended with Barack Obama’s Race to the Top (which used federal financial incentives instead of threats of losing federal aid), and reformed under ESSA (Every Student Succeeds Act).

Also, his Treasury Secretary introduced the outline for tax “reform” which cuts taxes for the wealthiest and corporations and promises to blow a hold trillions of dollars wide in the national debt, just as previous “voodoo” “trickle-down” tax “reform” by Ronald Reagan and George W. Bush have done.

According to the pool report by Dave Boyer, White House correspondent for The Washington Times:

The president signed an executive order at the Interior Dept. with Vice President Pence, Interior Secretary Ryan Zinke and several lawmakers and governors. The order directs Interior to review larger national monuments created since 1996.

Trump said the Antiquities Act “does not give the federal government unlimited power to lock up” millions of acres of land and water. He especially criticized the Obama administration for an “egregious use of power” and an “abuse of the monuments designation,” and said that it’s time “to end another egregious abuse of federal power.”

“It’s gotten worse and worse and worse. This should never have happened,” he said. “Now we’re going to free it up.”

“We’re returning power back to the people,” Mr. Trump said. “Today we’re putting the states back in charge.”

Pence called the use of the monuments designation “one of the great federal overreaches in recent decades.”

Mr. Zinke said “somewhere along the line, the act has become a tool of political advocacy.” He said the order “does not remove any monuments” or weaken any environmental protections.

[However, it is clear that the powers that Trump is taking upon himself is aimed at reversing Obama’s designation of Bears Ears in Utah.)

Here’s more of what Trump said:

“In the first 100 days, we have taken historic action to eliminate wasteful regulations.  They’re being eliminated like nobody has ever seen before.  There has never been anything like it.  Sometimes I look at some of the things I’m signing I say maybe people won’t like it, but I’m doing the right thing.  And no regular politician is going do it.  (Laughter.)  I don’t know if you folks would do — I will tell you literally some politicians have said, you’re doing the right thing.  I don’t know if I would have had the courage to do some of these things.  But we’re doing them because it’s the right thing to do.  And it’s for the good of the nation.

“We’re returning power back to the people.  We’ve eliminated job-destroying regulations on farmers, ranchers, and coal miners, on autoworkers, and so many other American workers and businesses.

“Today, I am signing a new executive order to end another egregious abuse of federal power, and to give that power back to the states and to the people, where it belongs.

“The previous administration used a 100-year-old law known as the Antiquities Act to unilaterally put millions of acres of land and water under strict federal control — have you heard about that? — eliminating the ability of the people who actually live in those states to decide how best to use that land.

“Today, we are putting the states back in charge.  It’s a big thing.

“I am pleased to be joined by so many members of Congress and governors who have been waiting for this moment, including Governor Herbert of Utah.  Thank you, thank you, Governor.  Governor LePage of Maine, who, by the way, has lost a lot of weight.  (Laughter.)  I knew him when he was heavy, and now I know him when he’s thin, and I like him both ways, okay?  (Laughter.)  Done a great job.  Governor Calvo of Guam.  Thank you.  Governor Torres from the Northern Mariana Islands.  Thank you, thank you, Governor.

“I also want to recognize Senator Orrin Hatch, who — believe me, he’s tough.  He would call me and call me and say, you got to do this.  Is that right, Orrin?”

SENATOR HATCH:  That’s right.

THE PRESIDENT:  You didn’t stop.  He doesn’t give up.  And he’s shocked that I’m doing it, but I’m doing it because it’s the right thing to do.  But I really have to point you out, you didn’t stop.

“And, Mike, the same thing.  So many people feel — Mike Lee — so many people feel so strongly about this, and so I appreciate your support and your prodding, and your never-ending prodding, I should say, because we’re now getting something done that many people thought would never ever get done, and I’m very proud to be doing it in honor of you guys, okay?  Thank you.  (Applause.)

“Altogether, the previous administration bypassed the states to place over 265 million acres — that’s a lot of land, million acres.  Think of it — 265 million acres of land and water under federal control through the abuse of the monuments designation.  That’s larger than the entire state of Texas.

“In December of last year alone, the federal government asserted this power over 1.35 million acres of land in Utah, known as Bears Ears — I’ve heard a lot about Bears Ears, and I hear it’s beautiful — over the profound objections of the citizens of Utah.  The Antiquities Act does not give the federal government unlimited power to lock up millions of acres of land and water, and it’s time we ended this abusive practice.

“I’ve spoken with many state and local leaders — a number of them here today — who care very much about preserving our land, and who are gravely concerned about this massive federal land grab.  And it’s gotten worse and worse and worse, and now we’re going to free it up, which is what should have happened in the first place.  This should never have happened.

“That’s why today I am signing this order and directing Secretary Zinke to end these abuses and return control to the people — the people of Utah, the people of all of the states, the people of the United States.

“Every day, we are going to continue pushing ahead with our reform agenda to put the American people back in charge of their government and their lives.

“And again, I want to congratulate the Secretary.  I want to congratulate Orrin and Mike and all of the people that worked so hard on bringing it to this point.  And tremendously positive things are going to happen on that incredible land, the likes of which there is nothing more beautiful anywhere in the world.  But now tremendously positive things will happen.”

The signing took place in a room at Interior with a framed portrait of Teddy Roosevelt, a bust of TR and mounted heads of a buffalo and deer on the wall. Among those in attendance were Sens. Mike Lee and Orrin Hatch of Utah and Lisa Murkowski of Alaska. Also Govs. Herbert of Utah and LePage of Maine.

Reversing Education Reform

Trump walked into the Roosevelt Room at 2:44 p.m., having been introduced by Vice President Pence. He was greeted by a group of about 25 people, including teachers, lawmakers and governors, and Education Secretary Betsy DeVos, according to Boyer’s pool report:

A bit of banter:

Mr. Trump joked with Nevada Gov. Brian Sandoval, incoming head of the National Governors Association, about the length of Sandoval’s prepared remarks, with Trump saying he decided to stay in the room after his own comments because “I know it’s going to be a short speech” from Sandoval.

Mr. Sandoval laughed and told the president, “It just got shorter.”

A few moments later during his remarks, Mr. Sandoval said, “I’m going to skip a page.”

The president, standing to the rear of the group, called out, “Education for North Korea.”

During the event, Mr. Trump also said he was heading afterward for a “very important” briefing for senators on North Korea.

During the president’s formal remarks, he said the education executive order will help to restore local control of education. It calls for a 300-day review of Obama-era regulations and guidance for school districts and directs DeVos to modify or repeal measures deemed an overreach by Washington.

“We know that local communities do it best and know it best,” the president said. He called it “another critical step to restoring local control, which is so important.”

“Previous administrations have wrongly forced states and schools to comply with federal whims and dictates for what our kids are taught,” he said. “The time has come to empower teachers and parents to make the decisions that help their students achieve success.”

Among those in attendance were Sen. Lamar Alexander, Rep. Virginia Foxx and Alabama Gov. Kay Ivey, Gov. Herbert of Utah and LePage of Maine, and Iowa Gov. Terry Branstad, nominee for ambassador to China.

Mr. Trump told Mr. Branstad, “They’re looking forward to seeing you” in China.

From there, Trump honored the Teacher of the Year, who, surprise surprise, is the first to be from a charter school in the 65 years of the award.

Boyer reports no questions taken at this event.

Pool was ushered into the Oval Office around 4:45 p.m. to find the President seated at the Resolute desk, surrounded by 55 teachers from around the nation, plus First Lady Melania Trump (who is celebrating her birthday), Vice President Pence, Second Lady Karen Pence and Education Secretary Betsy DeVos.

The President congratulated Sydney Chaffee, winner of the 2017 National Teacher of the Year, from Codman Academy Charter Public School in Dorchester, Mass. The ninth-grade teacher is the first charter school teacher to win the award in its 65-year history, and also the first from Massachusetts.

“That is really something special,” Mr. Trump said.

The president also thanked the group for having sung “Happy Birthday” to the First Lady before your poolers arrived.

The president greeted your poolers with, “Busy day, hasn’t it been?”

He praised the teachers as “the greatest there are. You’re all great, great teachers.”

Near the conclusion of the president’s comments, as he was saying he hopes the teachers’ trip to the White House was special, one unidentified teacher began to cry, apparently tears of happiness.

“Sorry, I’m always crying,” she told the president.

The President told her, “I’ve had some of the biggest executives in the world, who have been here many times, and I say have you been to the Oval Office? No. They walk into the Oval Office and they start crying. I say ‘I promise I won’t say to your various stockholders [that they cried].”

The president did not answer a question shouted near the end about North Korea.

Meanwhile, the outline of his tax plan was unveiled which would:

  1. Slash the corporate tax rate by 60%, from 35% to 15%. This will lose $2.4 trillion over 10 years—enough to fund Medicaid and CHIP (the Children’s Health Insurance Program) serving nearly 75 million Americans for five years.
  2. Cut the tax rate paid by Wall Street money managers and real estate tycoons like Trump down to just 15%―far less than many middle-class families pay.
  3. Continue tax breaks that encourage corporations to send jobs and profits offshore. Corporations currently have $2.6 trillion in profits stashed offshore, on which they owe $750 billion in taxes.

The theory – by Republicans since Ronald Reagan – is that the deficit in tax revenues would be made up by economic growth, except that has never been the case.

In reaction, Senator Bernie Sanders (I-Vt) stated:

“At a time when we have a rigged economy designed to benefit the wealthiest Americans and largest corporations, President Trump’s new tax plan would only make that system worse. He would slash taxes for himself and his billionaire friends and significantly increase the deficit, while doing little to help rebuild the collapsing middle class. Rather than making large profitable corporations – many of which pay nothing in federal income tax – finally contribute their fair share, Trump wants to give them a huge tax break.

“At a time when Trump wants to make major cuts in education, health care, senior programs, nutrition and affordable housing, it is especially outrageous that he would propose the elimination of the Estate Tax and provide a $353 billion dollar tax giveaway to the wealthiest 0.2 percent – including a tax break of up to $4 billion to the Trump family.”

VP Pence Tells Club for Growth: ‘This is Our Moment’

Vice President Mike Pence at the opulent Breakers Hotel, Palm Beach, tells the Club for Growth: “This is our moment.” © 2017 Karen Rubin/news-photos-features.com

Except for the cuts to the State Department which has some Republicans howling, the rest of Trump’s “America First” anti-American budget are the things the Conservatives have been fantasizing about but never had the guts to do because of the ramifications. Now they have someone who is putting himself out there who doesn’t bother considering the impacts on ordinary people. 

This is as much Ryan’s budget  as Trump’s, which likely will also enact massive tax cuts, paid for by slashing benefits to Medicare, Medicaid and Social Security, further  exacerbating the inequality in wealth, political power and justice  in this country that strains the limits to what this Democracy can sustain. 

“This is our moment,” Vice President Mike Pence gleefully told the Club for Growth at the posh Breakers Hotel, Palm Beach. 

Here are highlights from his speech–Karen Rubin, News & Photo Features

For the first time in a decade, thanks to your hard work, we have a pro-growth House, we have a pro-growth Senate, and we have a pro-growth President of the United States of America.  (Applause.)  And President Donald Trump I believe has laid out an agenda that is renewing the American spirit in ways that we haven’t seen since the days of Ronald Reagan.

This is our moment.  This is the time. And my friends, this is our chance to prove that our answers are still the right answers for America.  (Applause.)

More freedom.  Lower taxes.  Less regulation and smaller government.  History will attest that when America builds on this foundation, we reach heights that once seemed unreachable.

And that is the foundation of this administration.  President Trump’s vision is to unleash growth in America like never before, and the good news is:  It’s already happening.

On Day One, President Trump went straight to work rolling back the reams of red tape.  He instructed every bureaucracy in Washington, D.C. to find two regulations to get rid of before imposing any new red tape on the American people and on American free enterprise.  (Applause.)

He’s already taken action to put the Keystone and Dakota pipelines on the path to approval, creating tens of thousands of American jobs and protecting our American energy future.  (Applause.)

And just this past Monday, President Trump set into motion a plan to reorganize the executive branch — and that includes identifying and eliminating federal agencies that, frankly, we just plain don’t need anymore.

It’s leadership like that — you can applaud that if you like.  (Applause.)   It’s leadership like this that’s getting government out of the way of the American people and of American job creators. 

Businesses are already reacting to President Trump’s vision and his renewed optimism and investment.  And they’re investing in America in ways that are lifting and creating jobs.

Last month alone the economy added 235,000 jobs.  Construction and manufacturing are booming once again.  Business leaders and American consumers haven’t been this confident in years — and by some measures, in more than a decade.

Folks, the era of slow growth is over; a new era of American growth has begun.  (Applause.)

You know and I know that economic growth begins with fiscal responsibility.  I see my friend Senator Pat Toomey over there.  We fought together in the House, shoulder to shoulder for fiscal restraint.  And I know how enthusiastic he and the other great conservatives like Senator Mike Lee and others in the room are that just two days ago, President Donald Trump released the most conservative budget since Ronald Reagan sat in the Oval Office.  (Applause.)

Our vision is simple.  We want a government that will keep Americans safe and that leaves us free to do what the American people do best.  That’s why our budget first and foremost gives our soldiers, sailors, airmen, Marines, and Coast Guard the resources they need to complete their mission, protect our families, and come home safe to theirs.  We’re rebuilding the American military under this Trump budget.  (Applause.)

But also at the President’s direction, our budget offsets $54 billion in military spending with government spending cuts –a 31 percent cut at the E.P.A.  (Applause.)  Double-digit reductions in no fewer than 10 federal departments.  (Applause.)

And, folks, The Washington Post actually ran a headline this week saying, they quote, “historic contraction of the federal workforce.”  (Laughter.)  They meant it as a warning, we took it as a compliment.  (Applause.)

We’re going to end the waste, the fraud, the abuse in D.C and make sure that the American taxpayer gets the best bang for their buck.  I got to tell you this businessman who has become President of the United States believes in sharpened pencils.  And he’s been sharpening his pencils ever since the morning after Election Day.

But beyond the budget, we’re going to keep slashing all the job-killing regulations and rein in unelected bureaucrats in Washington, D.C.  I want to commend the members of Congress for sending those congressional review act bills.  We’re going to keep rolling back regulation every chance we get so that this economy can’t be crippled by bureaucrats in Washington, D.C. sitting behind the comfort of their metal desks.  (Applause.)

We’ve heard from businesses large and small, all across America that red tape is strangling their ability to create jobs, and to grow and thrive.  That’s why we’re working to get government off their back.

We’re going to keep working with the Congress to repeal the last-minute mandates rushed through by the last administration.  And, frankly, we’re taking a hard look at every regulation on the books — including, as President Trump said on Wednesday, the CAFE rule that is holding back the American automotive industry will now no longer stand in the way of economic prosperity and growth.  (Applause.)

We’re making sure federal agencies fast-track projects and permits and don’t slow-walk them.  And we’re going to roll back Dodd-Frank so that American businesses have access to the best financial system in the world.  (Applause.)

And with this Cabinet — and how about this Cabinet? (Applause.)   With this Cabinet, President Trump has picked men and women who know that bureaucrats don’t create jobs, businesses do.

The bottom line is that our agenda of more freedom and less regulation is going to usher in growth and opportunity and prosperity in this country like never before.  And it’s the vision that the Club for Growth has been about advancing since the very beginning of this organization.

If you still have any doubt, there’s also something else I want you to know.  We’re going to have the biggest tax reform and reduction in a generation in America before this year is out.  (Applause.)

Under President Trump’s leadership, we’re going to cut taxes across the board for working families, small businesses, and family farms.  It’s going to be pro-growth, pro-savings, and pro-hardworking Americans keeping more of their hard-earned dollar.

We’re going to simplify the tax code working with members of the House and Senate who are gathered here, and we’re going to have lower rates across the board.

We’re going to make American businesses competitive again by slashing one of the highest corporate rates in the developed world and letting American companies bring the money back from overseas so they can invest in American and create American jobs with a lower business rate.  (Applause.)

And not only that, and I promise to you working with members of Congress, we’re going to repeal hundreds of billions of dollars in taxes when we repeal and replace Obamacare.  (Applause.)

My friends, the Obamacare nightmare is about to end.  Now, I don’t have to remind people here at the Club for Growth why this failed law has to go.  You all have seen the headlines, and you know the facts.  You’ve lived them in many places all over the country — skyrocketing premiums, unaffordable deductibles, mandates, higher taxes.  The truth is the American people can’t afford Obamacare, and it’s time we no longer ask them to put up with it.  (Applause.)

In his joint address to Congress two weeks ago, the President outlined his plan to repeal and replace Obamacare once and for all.  And we’re working with members of Congress to advance that plan.

Make no mistake about it:  Our plan is pro-growth and pro-freedom.  It ends Obamacare’s individual and employer mandates by eliminating their penalties by the time the whole plan is unfurled.  It repeals the taxes I just mentioned right out of the gate.  It expands health savings accounts.  It enacts the biggest reform in Medicaid since the creation of that program in 1965.

These are the kind of solutions that conservatives like us have been talking about for years. And they’re now within our reach.  And let me be blunt:  We need your help to get this plan passed.  The House is set to vote next week on the beginning of this process.  It’s called the American Health Care Act, and it is a crucial step towards fulfilling our promise to repeal and replace Obamacare with something that actually works.

Now I know that there have been concerns expressed with the bill as it currently stands.  And just know that the President and I are and our entire administration are listening.   We’re working with members of Congress to improve the bill and to make this bill even better than it already is..

 

And we’re working with every single [Republican] member of Congress — the Republican Study Committee, the Freedom Caucus, the Senate Steering Committee, and all the lawmakers here tonight, just to name a few.   Thanks to their input, we’ve actually added a number of great amendments just in the last 24 hours.

Beginning with, we’re going to stop more states from expanding Medicaid by ceasing the expansion for states that did not expand Medicaid under Obamacare immediately.  (Applause.)

Because of the voices of conservatives in Congress, we’re going to be amending the Ho bill to give states the option for a Medicaid in a block grant in its entirety so states can reform Medicaid in the way that they see fit.  (Applause.)

And thanks to the leadership and the collaboration of many of the great conservatives in this room, we’re going to have an amendment to allow states to include a work requirement for able-bodied adults on Medicaid so we can ensure the program is there for people who actually need it. [So if you’ve lost your job, were laid off, your company goes bankrupt, you are doomed.] (Applause.)

Folks, I meant it when I said we’re listening.  And the President is going to continue to engage members of Congress in ways that we can improve this legislation.  We had a meeting just yesterday in the Oval Office, and I was pleased that the leadership of the Republican Study Committee endorsed the bill that’s moving through the House, and we’re grateful for their support.

And while we’re having a vigorous debate, the good news is that Republicans are in complete agreement, and we have complete consensus that Obamacare must go.  (Applause.)

Donald Trump and Mike Pence are only courting right-wing conservatives on policies that impact all Americans’ lives © 2017 Karen Rubin/news-photos-features.com

We’ll continue to advance the President’s agenda, and how we work that out is going to be the result of the legislative process and administrative action.  But President Trump’s vision is very simple:  a national health-care marketplace and state-based Medicaid reform; allowing the American people to purchase health insurance across state lines the way you buy life insurance, the way you buy car insurance, and allowing states the freedom and flexibility to redesign Medicaid around the unique needs of their own people is a pathway toward a more prosperous future and better healthcare for the American people.  (Applause.)

And it’s important to remember that our healthcare plan doesn’t begin and end with the bill that’s moving through the Congress today.  I wanted to make it clear to all of you this is only one part of the President’s three-part strategy.  The other two tracks are just as important in restoring free-market principles to American health care.

At this very moment, our administration is evaluating every possible administrative action to get government out of the way and allow for state-based innovation and reform.

The name of the game is to seize the opportunity to change the regulations, and we’ve got a great team with Dr. Tom Price and Seema Verma heading up HHS and the Center for Medicaid & Medicare Services to do it.

Just this past week, they both sent a letter to every single one of America’s governors saying, “a new era for federal and state Medicaid partnership” has begun — and so it has.  (Applause.) 

Under Dr. Tom Price’s leadership with Seema Verma at his side running Medicaid, we’re going to give our states the freedom and flexibility they need with Medicaid to implement the kind of reforms that will do the most good for the most vulnerable — state-based solutions, not one-size-fits-all federal solutions.  And remember that truthfully it is about improving Medicaide[sic]….

 

And we’re going to continue to partner with the Congress to pass other important healthcare reforms, including we’re going to pass medical malpractice reform at last.  (Applause.)  We’re going to allow businesses around America to participate in association health plans, and as I mentioned before, we’re going to give Americans the freedom to buy health insurance across state lines — an idea whose time has come.

Not before too long I expect we’re going to see that little lizard and Flo on television selling health insurance just the way they sell car insurance and sell life insurance.  (Laughter and applause.) 

Our three-part strategy, once enacted, we truly believe will create a dynamic national health-insurance marketplace, which is the key to making affordable, high-quality coverage accessible for every American.

Now we can’t lose sight of what’s at stake in the coming weeks. This is a momentous time.  We literally have an opportunity to begin to accomplish what everyone in this room has fought so hard to achieve for so long.  And President Trump and I look forward to continuing to work with all of you — the men and women in public life who are here, and those of you who are patrons and supporters that are present.

And know this:  When we repeal and replace Obamacare, we will also make room for even more tax relief for working families, small businesses, and family farms when we take up tax reform this spring.  (Applause.)

But health care isn’t the only place where we need your partnership.  The same goes for the rest of our pro-growth, pro-freedom agenda. 

Quite frankly, we’re counting on you.  And we know you’ll be there.  You’ve already demonstrated — many of you for many years here at Club for Growth — your dedication to the principles that we all share.  

I look around this room and I see true patriots — men and women who love this country and have been willing to devote your time and your talent and your treasure to the country’s future without any regard to whether you’d ever be acknowledged or ever get credit for it.  Those great candidates that you’ve supported over the years, and that now people the hallways of the House and the Senate serving the American people.  The debt this country owes to the men and women in this organization and throughout the conservative movement can only be repaid by keeping faith with the ideals and the principles that you have sought to advance….

 

The reason that we’re here with a pro-growth President and a pro-growth Congress on the cusp of repealing the failed policies of Obamacare is because, on the cusp of transformational tax reform, on the cusp of a whole range of reforms that will enliven this country’s economy and open doors of opportunities for millions of Americans is that year after year, all of you in this room and conservatives around America never gave up.  And I’m just here to say thanks, and to tell you to press on.

My friends, this is our moment.  Now is the time.  This is our rendezvous with destiny.  And I know we’ll meet the challenge.  It will come together.  We’ll give all of our energy, our enthusiasm, our courage, and our conviction, our passion, and our prayers.  And in that, I’m confident — I’m confident we’ll make the most of the opportunity before us.  And under President Trump’s leadership, I know we’ll get this economy moving again.  Under his leadership, I know we’ll restore opportunity and prosperity for all our people.  We’ll make the best healthcare system in the world even better with free-market principles, more jobs, higher incomes, better healthcare in a safer and more prosperous America.

In a word, my friends, with your help, and with God’s help, we’ll make America great again.  

Thank you very much.  Thanks for having me back and God bless you and God bless the United State of America.   (Applause.)