GOP’s inflation fix promises ring hollow

It’s hard to believe the 2022 midterm elections were less than three months ago. Back then, Republican Congressional candidates across the country were primarily talking about three things: high gas prices, runaway inflation and the border.

“We have a plan for a new direction for America,” Republican House leader Kevin McCarthy told The Associated Press in September 2022, touting the GOP’s “Commitment to America,” which promised “an economy that’s strong, a nation that’s safe, a future that’s built on freedom (and) a government that’s accountable.” 

“After more than a year of crushing inflation, Democrats still have no plan to solve it,” the Commitment to America literature told voters, adding that the GOP’s plan would “curb wasteful government spending that is raising the price of groceries, gas, cars and housing and growing our national debt.” 

It may have sounded pretty good to people who chose to ignore the fact that economists warned in 2017, that then Republican President Donald Trump’s $1.5 trillion Tax Cut and Jobs Act could cause inflation and add nearly $450 billion to the national deficit over the next decade. What’s more, the Trump tax cuts mostly benefited the wealthy while leaving middle-income and lower-income Americans behind. The tax cuts didn’t even create jobs as Trump and the GOP promised. 

As reported in 2021, corporate leaders were clear they didn’t actually need the massive tax cut Trump was pushing. In fact, as The Balance noted less than three years after the Trump tax cuts took effect: “Instead of using the money from tax cuts to increase production, create more jobs or raise wages, the CEOs of Cisco, Pfizer and Coca-Cola (said they) planned to use the additional cash to pay dividends to shareholders.” 

“Analyses have also shown that the overall effects have largely benefitted corporations and wealthy Americans more than middle-class and low-wage workers,” The Balance added. “The corporate tax cuts, in particular, failed to translate to the promised wage and economic growth.” 

Despite the failure of Trump’s — and therefore the GOP’s — massive tax cuts for the wealthy and for corporations in 2017, today’s Republican Congressional candidates continued to insist that inflation was somehow Democrats’ fault and that they alone could solve it. 

Voters, unfortunately, believed their promises. 

Though Republicans did not have the predicted (and horribly named) “Red Wave” during the midterm elections in November 2022, they did manage to win a narrow majority in the House and won the popular vote for the first time since the 2014 midterms..

In polls leading up to the midterms, the majority of American voters said inflation and high prices on staples such as food  and  gas was their top issue heading into the election. Around half of the voters surveyed by National Public Radio in early November said they believed Republican candidates would do a better job controlling inflation. 

Of course, as NPR noted in an article detailing this survey: “While Republicans have capitalized on voters’ frustrations over rising prices, they’ve offered few concrete prescriptions for bringing inflation down.” 

So, now those same Republicans control the House. Have they — as promised to voters before the midterm election — brought up a bill to curb inflation? 

Well, no. 

But they are bringing the “Fair Tax Act” up for a vote that would eliminate the Internal Revenue Service (IRS), get rid of personal and corporate income, estate and gift taxes and place a flat 30% federal sales tax in place on all new goods and services, including groceries, homes and cars. This tax would be in addition to individual states’ sales tax, by the way. th

And who would benefit from this plan? It certainly wouldn’t be average Americans in the middle, working and lower classes who voted for these Republican politicians. After all, the taxes this plan would eliminate — especially the gift and estate (or “death”) tax and certainly the corporate tax — don’t really impact too many non-wealthy folks. In 2022, the federal estate tax only applied to assets worth at least $12.06 million. And, according to IRS data, only 0.2% of Americans who have died in the past few years  actually owed an estate or “death” tax. Repealing the estate tax would, however, cost the country nearly $270 billion over the next decade, according to the Joint Committee on Taxation — more than the government spends on the Food and Drug Administration, the Centers for Disease Control and Prevention and the Environmental Protection Agency combined according to this same committee. 

As the Institute on Taxation and Economic Policy noted recently, the proposed Fair Tax Act backed by more than two dozen Republican members of Congress right now, would “shift federal taxes from the wealthy to the rest of us.” 

The Fair Tax Act will likely die in the House thanks to a Democratically controlled Senate and a Democratic president, but what will happen in a couple years if Republicans control the executive branch, the House and the Senate? It is likely that the wealthy and corporate shareholders would pay even less for public services that benefit the entire community and provide a safety net to people who have worked all their lives for just a little comfort in retirement. In fact, some Republicans are already talking about making cuts to Social Security and Medicare — two programs that are not “entitlements” but rather programs all workers pay into from their very first job — and bumping the retirement age up to 70, which is cruel to begin with but even more so when you consider that COVID-19 has helped drop life expectancy in the U.S. from 79 years in 2019 to 76 years (and lower for some groups of Americans) in 2021. Do you know what would help keep Social Security and Medicare on stable ground? Increasing the income cap so that wealthy people pay just as much of their income into these programs as the rest of us. The current cap of $162,000, means only around 85% of all earnings are subject to the Social Security payroll tax. As the National Committee to Save Social Security and Medicare pointed out in 2022, “This erosion in covered earnings largely stems from the fact that wages for the highest paid six percent of workers have been rising faster than wages for the vast majority of people who make less than the cap.”

Republican voters who pride themselves on being hardworking members of the middle class didn’t sign up for policies that will steal from working- and middle-class Americans and give more to those already at the very top of the economic food chain. We can only hope these voters wake up before these politicians decimate programs like Social Security and Medicare, which workers have paid into — and, more importantly, rely on when they retire or are disabled – in favor of some more tax cuts for the rich.