Neil Buchanan: Trump’s Heartless, Vicious, Rich Man’s Budget

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Office of Management and Budget Director Mick Mulvaney in the Brady Press Briefing Room at the White House on March 16. Neil Buchanan writes that Trump wants to drain money from social programs for the elderly, children, people addicted to drugs and on and on. At the same time, he plans to transfer much larger sums of money to wealthy people and their lucky heirs. Somehow, that is supposed to look like compassion. Chip Somodevilla/Getty

This article first appeared on the Verdict site. 

Before this year, the few of us who had heard of Mick Mulvaney knew only that he was one of the Republican Party’s most extreme anti-government ideologues, a leading Tea Partier who helped to force out John Boehner as Speaker of the House and who was willing to hold the debt ceiling hostage as a means to advance his reactionary agenda.

Now, Mulvaney has been installed as Donald Trump’s budget director and his job is to try to explain to the American people why Trump’s proposed deep cuts in small-but-crucial social programs are the path to economic nirvana and social justice. It is not going well.

This should not be surprising, because the proposed cuts are indefensible, both as a question of economic policy and as a matter of simple morality. What is especially interesting about Mulvaney’s approach so far, however, is that he has decided to try to convince people that he is being “compassionate” even as he proposes to stop feeding hungry people and take away programs on which the most vulnerable Americans rely.

In fact, Mulvaney has turned out to be what we might think of as an even less impressive version of House Speaker Paul Ryan, who has been trying for years to dress up harsh cuts to the least fortunate among us as freedom-enhancing, empowering opportunities that will allow people to throw off the shackles of dependency.

Ryan at least has the ability to feign concern while talking about his victims, but Mulvaney has not yet figured out how to furrow his brow and look sincere.

Perhaps more interestingly, Mulvaney’s new definition of compassion exposes a telling gap in the new conservative vision of social justice.

Related: Neil Buchanan: What happens if Trump privatizes Social Security?

They would have us believe that everyone suffers the same pain when they lose a dollar, such that a dollar lost by a millionaire is just as bad as (or even worse than) a dollar lost by a starving child. Mulvaney then tries to cover up this politically toxic claim by pretending that his real concern is vulnerable people themselves, even as he savages their lifelines.

We All Are Prohibited From Sleeping Under Bridges

In a recent press conference, Mulvaney tried to defend his proposed budget cuts for such essential programs as Meals on Wheels (a nutritional program for elderly citizens who cannot leave their homes) and subsidized school lunches for poor children. Under questioning about how he could be so lacking in compassion, Mulvaney was unmoved.

“I think it’s probably one of the most compassionate things we can do,” Mulvaney argued. Why? Because people who complain about the budget cuts are “only focusing on half of the equation.” Huh? “You’re focusing on recipients of the money. We’re trying to focus on both the recipients of the money and the folks who give us the money in the first place.”

This is a level of illogic rarely seen from anyone who has at least a high school diploma. Mulvaney takes the completely obvious point that these spending programs take (a very small amount of) tax revenue, and he then claims that “compassion” requires that we stop the spending because some people pay taxes but do not receive anything from the programs.

But this is not even a cost-benefit analysis. It says merely that spending for compassionate reasons is not free. Even if the programs generate benefits far beyond the costs to wealthier taxpayers—that is, to taxpayers who are certainly enjoying the benefits of other government activities, such as defining and enforcing the laws that allow capitalism to thrive—Mulvaney’s logic would say that as soon as anyone faces a cost due to any program, the compassionate thing to do would be to cancel the program.

But to be exceedingly generous to Mulvaney, maybe we can reinterpret his statement as simply a reminder that there are people who must pay taxes in order to support various programs. And so we need to remember that a dollar of spending has to come from somewhere.

(I cannot help repeating myself here: These are tiny amounts of money that Mulvaney is going after, essentially the remnants of the safety net that still remain after decades of Republican-led cuts to social spending.)

Even this more generous interpretation of Mulvaney’s argument, however, runs into the basic problem that it treats dollars as the ultimate measure of everything. If we take a dollar from one person and give it to another, Mulvaney is apparently saying, our compassion to the recipient should be offset by compassion to the payer. This nets to zero, which somehow means that the program should be canceled.

But economists (and I do not mean just liberal economists, but all economists) dropped the idea of measuring social well-being in dollars sometime in the late 19th century. We have long understood that what truly matters is how those dollars affect their recipients, which varies significantly depending on each person’s overall financial situation.

No one knows how to measure “utility,” which is the concept that economists have developed as a way to determine social wellbeing. We do, however, have some sense of how to compare different people’s utilities. And the one thing that is probably most widely agreed upon is that better-off people gain less utility from each dollar than worse-off people receive from the same amount.

What this means in this context is that transfers from the rich to the poor will presumptively increase net social well-being. For example, a starving person could be prevented from dying by diverting some money that would otherwise have been parked in a trust fund or been used to buy an extra dessert at a five-star restaurant.

This does not ignore that the rich person might not be happy about losing the money, but it recognizes that any decent human being would weigh that loss less heavily than the gain to the recipient.

Who, after all, could claim that the loss to the wealthy person offsets the gain to the poor person, such that we should not do such things in order to be compassionate?

Before now, I would have said that no one would make such a monstrous claim. Mulvaney proves once again that there is always someone who is willing to say anything to advance the interests of the greedy people who put people like him in office.

Who Pays? Mulvaney’s Misdirection Play and the Working Poor

An important fact to bear in mind here is that what we are calling “Trump’s budget” is not really a budget at all. It is a partial list of spending policies that Trump and Mulvaney are test marketing, trying to soften people up for the carnage to come. It shows a shockingly blatant disregard for human decency, to be sure, but it actually hides the true injustices that Trump would like to inflict on the country.

This is because the other side of Trump’s budget, revenues, is going to include huge cuts to the taxes paid by the wealthy. Trump wants to cut income tax rates for the rich and corporations and to eliminate the Alternative Minimum Tax (which, albeit imperfectly, guarantees that people like Trump actually pay some taxes), and he is eager to join Republicans in achieving their long-held dream of repealing the estate tax.

This means that we are talking about one of the most blatant cases of “reverse Robin Hood” social policy that this country has ever seen. Trump would drain money from social programs for the elderly, children, people addicted to drugs and on and on. At the same time, he plans to transfer much larger sums of money to wealthy people and their lucky heirs. Somehow, that is supposed to look like compassion.

Perhaps realizing how bad this looks, Mulvaney added a rather revealing misdirection play in his press conference: “I think it’s fairly compassionate to go to them and say, ‘Look, we’re not gonna ask you for your hard-earned money anymore. [For example, a] single mom of two in Detroit, OK?”

Suddenly, we are not talking about giving trust fund babies even more millions of dollars while slashing nutritional programs for other, unlucky babies. Mulvaney wants us to imagine that the victim is a “single mom of two in Detroit,” where the strategic use of Detroit is clearly meant to convey “poor and black.” Why, Mulvaney wants us to ask, should her hard-earned tax dollars pay for Meals on Wheels when she is struggling to get by on her own?

And this is where the truly disturbing nature of the Republicans’ views on taxes begins to emerge. The fact is that a single mother of two (in Detroit or elsewhere) who is lucky enough to find a $9-per-hour full-time job (and who manages to keep that job for a full year, even after inevitably missing shifts to deal with sick children and other matters) will not pay federal income tax.

How is that possible? The combination of the standard deduction and personal exemptions allows some of our poorest workers to reduce their federal income tax liability to zero. They do pay Social Security and Medicare taxes, but the Earned-Income Tax Credit is available to the working poor to fully or partially offset that. (Unsurprisingly, the Republicans are also trying to eliminate that program.) 

As a matter of social policy, this combination of tax provisions is compassionate in the true sense of that word. The American people recognize that the nation’s tax burden should be shared progressively, not proportionately, because some people are struggling and should not be forced even closer to starvation by paying federal taxes.

Unfortunately, this entirely sensible approach to taxation is partly undermined by states, especially by states dominated by Republicans, and even more especially by states in the South.

All states, it turns out, have regressive tax systems, but red states (including Mulvaney’s home state of South Carolina) are especially lacking in compassion for their least fortunate citizens. This offsets some of the federal tax system’s progressivity, but that simply makes it all the more important to protect what little sensible policy remains at the federal level.

Some readers might have been paying attention to Republican politics over the past few years, and thus will be able to anticipate the Republican response to the fact that the working mother in Detroit is spared from paying federal income taxes. Yes, this is where Mitt Romney’s infamous “47 percent” gaffe comes into play.

Romney, of course, severely damaged his chances in the 2012 presidential election by being caught telling an audience of rich donors that some 47 percent of Americans would never vote for him because they preferred taking from the government rather than paying taxes.

Although he paid an electoral price for his ill-considered remarks, Romney was not inventing his claim from whole cloth. He was simply channeling the people in his party who had claimed for several years that people who do not pay taxes had no “skin in the game” and thus were becoming leeches on the people who pay the bills.

That 47 percent figure was, in fact, badly distorted. It included only federal income taxes (thus ignoring the regressivity of almost all of our other forms of taxation), and it was computed in a year in which large numbers of people (and companies) uncharacteristically paid no taxes because of the Great Recession. But in the hands of conservatives, the complaint became that roughly half of America was on a free ride.

In fact, we do not—and should not—expect everyone to pay taxes. Even in non-recession years, our policies should allow people like Mulvaney’s imaginary single mother in Detroit to get by at least on the little pay that they can earn—plus programs like subsidized school lunches for their kids.

The big picture, then, shows that conservatives like Trump and Mulvaney (and Ryan and almost all of the rest of the Republican Party) want to attack the working poor for earning income but not paying federal income taxes, but then they trot out those same working poor for sympathy because they should not be expected to pay for social programs for other people.

The fact is that those social programs can be—and, at least for now, are—paid for by wealthier people who can afford to pay those taxes with much less pain (if any) than the pain that such programs alleviate. But as soon as anyone says that the working poor do not pay taxes, conservatives change the subject and start complaining about dependency.

And all of this is done in the service of reducing the supposedly horrible tax burden faced by the most comfortable people in the world. We must feel compassion for them, too, says Mulvaney.

The Military Spending Angle

Finally, it is worth noting one additional aspect of the cynical game that Republicans are playing. Even within the spending-only logic of Trump’s incomplete budget proposal, we know that the domestic spending cuts are being used to offset a big buildup in military spending, on the order of $54 billion per year.

Setting aside the regressive tax cuts discussed above, therefore, it is important to ask what it means when we reduce spending on programs like school lunches in order to increase the size of the U.S. military.

It is easy to become confused and justify the military spending increase by saying that military spending in general provides social benefits. Even a savvy commentator like John Oliver made this mistake in the March 19 episode of his Last Week Tonight show, saying, “Yes, the military keeps single mothers safe.”

The problem with that statement is that we are not asking whether the military keeps single mothers safe as a categorical matter. Instead, we are asking whether the extra $54 billion that Trump and Mulvaney want to spend on the military will make people safer than they are today.

Given the jaw-dropping size of the current military budget, it is rather difficult to imagine that Donald Trump has figured out a way to spend an additional $54 billion (almost a 10 percent increase from the current high level) that will make people safer.

Even that, however, is not the ultimate issue. Instead, we need to ask whether any marginal increases in safety that $54 billion could buy (if there are any at all) should be paid for by slashing programs for children, seniors, people who lose their jobs and need retraining, and on and on.

Maybe that is where progressive taxation should come back in the picture. Just saying.

The bottom line is that Trump’s budget mouthpiece has already managed to stand out among a rogues’ gallery of astoundingly uninformed appointees who are unburdened by conscience or expertise. He would have us believe that it is compassionate to take away the pittances that we currently give to truly needy people in order to be compassionate toward rich people and to inflate the already bursting military budget.

If anyone had written this as a work of fiction, it would have been dismissed as laughably unrealistic. Yet that is the world in which we now find ourselves.

Neil H. Buchanan is an economist and legal scholar, a professor of law at George Washington University and a senior fellow at the Taxation Law and Policy Research Institute at Monash University in Melbourne, Australia. He teaches tax law, tax policy, contracts, and law and economics. His research addresses the long-term tax and spending patterns of the federal government, focusing on budget deficits, the national debt, health care costs and Social Security.