Treasury Secretary Andrew Mellon championed tax cuts for the wealthy — and sharp budget cuts — in the years before the Great Depression. (Treasury Department photo)
Published December 2, 2017
Turns out we’ve been worried about the wrong, Andrew. The Republican tax plan, President Donald J. Trump’s signature legislation, would make Andrew Mellon proud.
Andrew Mellon was a wealthy industrialist who served in government as the Secretary of Treasury. Here’s what Trump’s own Treasury Department says about Mellon: “As the Nation embarked on the most materialistic period in its history, Mellon’s philosophy was one of debt reduction, tax reduction, and a balanced budget. His tax reform scheme, known as the Mellon Plan, reduced taxes for business. His theory was that big business would prosper in proportion to the lightening of its tax load and its profit would be transferred to the rest of the Nation. During much of his tenure, general prosperity and times of peace enabled Mellon to implement his measures. The Great Depression, however, beginning in 1929, undercut Mellon’s prestige and brought him under increasing criticism. Despite the downturn in the economy, Mellon continued his policy of balancing the budget by cutting spending and increasing taxes, which worsened the effect of the Depression on the ordinary citizen.”
History is prologue. Damn. You hardly have to change a word to know that this sentence is about now. Swap today’s Treasury Secretary Steven Terner Mnuchin for Mellon and the story still answers, what’s next?
Both the House and the Senate have now passed the legislation to cut taxes so that business will prosper by the lightening of its tax load and its profit would be transferred to the rest of the nation. The funny thing is that people really believe this load of crap. Then self-delusion was a common thread in the Senate debate. Maine Sen. Susan Collins voted yes because Mitch McConnell promised her budget cuts (including cuts to Medicare) would not follow. She even tweeted proof, a McConnell letter saying Congress has the power to waive such acts. But, does he have the will or the votes to do so?
The conservative wing is, at least, honest about this. When the tax cuts result in a massive expansion of debt they want sharp budget cuts. This is a core belief. And has been since Mellon’s time. Or as the Treasury Department puts it: “Despite the downturn in the economy, Mellon continued his policy of balancing the budget by cutting spending and increasing taxes, which worsened the effect of the Depression on the ordinary citizen.”
Or there was Arizona’s John McCain, the so-called champion of regular order, voting for a 479-page bill with handwritten amendments. A bill that will add (by Congress’ own estimate) about a trillion in debt was passed in a few weeks without the usual hearings or independent scoring. The maverick did not care about process. Get it done.
How bad is this bill? It’s right up there as one of the most unpopular bills ever. An average of polling shows its popular support at about one-third. And, get this, FiveThirtyEight reports that this bill is even more unpopular than tax hikes.
A couple of things about Indian Country: So many of our tribal citizens are the low end when it comes to earning. This bill does nothing to lighten that tax load. Indeed a late night effort to increase tax credits for children, making them refundable. (Remember nearly half of all Americans don’t pay income tax, it’s the payroll tax that is the burden. This would have helped.)
And instead of turning the dial back on fossil fuels this bill aligns the tax code for more development. Alaska Sen. Lisa Murkowski has made this part of the legislation her signature, not health care, and certainly not climate change (as she so eloquently talked about during the Alaska Federation of Natives convention in October.) She owns this.
The Atlantic magazine says this bill “could forever alter Alaska’s Indigenous communities” by development. “The issue still divides Native villages, counties, and Native nations in Alaska. It also sets tribes with differing claims to Alaska’s North Slope against each other.”
This bill also strips the mandate to buy insurance. A win for freedom, right? Perhaps. But it also means that healthy people will not buy as much insurance leaving sicker, older people to pay the bills. It will weaken the insurance framework. At least 13 million fewer people will carry health insurance as a result.
However there are winners: Big corporations, rich would-be heirs (like the Trump children) and religious schools (an amendment by Ted Cruz expands tax-free savings for this purpose).
The process ahead: This bill will still have to be reconciled with the House. There are differences, such as taxing graduate students and deducting medical expenses.
But cutting taxes (and then the budget) is something Republicans have championed long before Andrew Mellon. So this bill is likely to become law soon. President Trump can make both Andrews proud.
Mark Trahant is the Charles R. Johnson Endowed Professor of Journalism at the University of North Dakota. He is an independent journalist and a member of The Shoshone-Bannock Tribes. On Twitter @TrahantReports