Tax cuts: Thinking about social problems

Some information to inform, questions to ask

  • What are the benefits of a tax cut?
    • Reducing bloat in government (from the president
    • Waste, fraud and abuse–as a problem, and a political talking point
    • Paying less taxes! But … how much? Well the first tax cut was financed largely through borrowing from the federal government, increasing the overall national debt by some $1 – $2 trillion, according to the Tax Policy Center
  • How would benefits be distributed?
    • Evidence from the 2017 tax cut for individuals (from Forbes) and corporations (Peter G. Peterson):

Q: How is the need for DOGE framed? ‘Waste, fraud and abuse.’ Where is the evidence of waste, fraud and abuse? (DOGE Tracker)

The premise of tax cuts: The taxes ‘saved’ will stimulate investment in the economy. 

Q: Does it matter whether money circulating in the economy is used according to government functioning? That is, members of Congress are elected officials, presumably public servants elected to appropriate money provided by US taxpayers, and accountable (via elections) to the public. Whereas private investors could spend the money in ways that benefit their own interests (even financing politicians’ campaigns). 

Q: Does it make a difference whether tax cuts are financed by the federal government borrowing the money (by selling US treasury bonds) or by reducing the size of government (by essentially cutting the federal workforce)?

Q: What happens to those services no longer provided by the government? In other words, what might be the consequences, and to whom, if those services are ‘privatized’ and provided through the market:

  • Will the people who need them be able to afford them? 
  • Would a private provider (of, say roads, or food or housing assistance, or even something like prisons) have the same obligations to the public if the money doesn’t come from taxpayers
    • think about profitability,
    • accountability to the public,
    • potential for corruption, conflict of interest,

      who is harmed, how workers are treated and compensated.

  • What groups might be most vulnerable to a loss of publicly provided services?
  • How is the reduction in the size of government framed (how many different perspectives can you come up with)?
  • Where is DOGE in the federal government? AP, DOGE website
  • What happens to fired federal workers?

If DOGE is the means to reduce the size of government, make it more efficient, and finance the tax cuts, the question still remains . . .

  • Does it create other problems?
  • If so, what are they, and who will pay the costs?

A few things to consider here:

  • If the size of government is a major social problem, then a tax cut would address that–but in a democracy, how it is addressed is usually the subject of study and deliberation–ideally involving non-partisan professionals–among those who stand to benefit, and those who stand to pay a price. There is transparency, and accountability when results of studies are published.
  • The cuts being made–which already involve firing potentially hundreds of thousands of federal workers–do not come anywhere near the trillions needed to extend the 2017 tax cuts. UNLESS (look up at the total federal spending chart above, and how much money there is in Medicare and Social Security) . . . 
  • The tables above show that most taxpayers would receive a cut in their taxes, but for instance, a 3% reduction with an income of $100,000 is $3,000. A 3% reduction with an income of $1 billion is $30 million–the equivalent of the tax cuts of 10,000 taxpayers earning $100K per year.
  • Those standing to benefit from a $4.5 trillion tax cut are mostly very wealthy income earners, perhaps 1% of the population; those who stand to lose the most from cutting government services might lose their health insurance, food aid, financial aide (for college, for instance), rural healthcare, K-12 supports for children with special needs (especially likely in poorly-funded or rural schools), etc.
  • The reason for this is that government often provides services that either private companies would not provide without charging more (as they rightfully would expect a profit from their investments), or services or goods that are simply too large in scale–like an interstate highway system, or a public health infrastructure (imagine a pandemic without this), or an educational system that provides some semblance of equal opportunity.
  • There has been little if any fraud uncovered–that is, illegal expenditures–and ‘abuse’ has never really been defined. ‘Waste’ is defined either as simply ‘waste’ in the opinion of DOGE, or concepts to which the administration is opposed, such as any program that even mentions ‘DEI’ (diversity, equity, and inclusion). 
  • Elon Musk has a variety of conflicts of interest in heading DOGE–he has existing contracts with the federal government (where one assumes no waste, fraud or abuse will be found), he has gained access to sensitive data sets that have allowed him to see what contracts his competitors might have, he even uses the DOGE site to promote one of his businesses, the social media platform ‘X.’

Finally, how is the problem–presumably government waste:

  1. framed,
  2. how does that framing lead to the cutting of hundreds of billions of dollars from the federal government, and
  3. does the framing leave out other points of view?