The Media & The Republicans Keep Screaming “Tax Increase” As Biden Attempts to Upgrade the U.S.: That’s Propaganda & Misinformation

Reducing Tax Expenditures is a Not Tax Hike

When the Clinton Administration made major reductions in welfare benefits, Republicans and the media didn’t call that particular policy change a “tax cut.” It was a reduction in benefits for the ostensible purpose of imposing “discipline” on poor people – which was a scurrilous, racist, stereotype. Wealthy Americans and corporations receive far more in government benefits than all programs for the poor combined. Those benefits are dished out through the tax codes.

When individuals and corporations are provided benefits such as mortgage interest deductions on expensive real estate such as a second home in Vail, Colorado, or accelerated depreciation allowances, those are government benefits – they are technically known as a “tax expenditures.” The Budget Control and Reconciliation Act of 1974 requires that tax expenditures be included in the federal budget on the expense side of the balance sheet. The amount of those expenditures in 2019 totaled $1.5 trillion. When we have a handle on the COVID relief for corporations and individuals in 2020, that will most certainly rise to at $2 trillion or higher. Much of that was unnecessarily dished out to corporations that didn’t deserve it, while many small businesses languished without customers, revenue, and a line of credit.

The Debt & Deficit Fetish Is Harmful to U.S. Progress

The “higher taxes” narrative is repeated incessantly by journalists who fail to understand the U.S. tax and budgetary system. Federal programs are not legislated into existence accompanied by a specific tax to pay for them. Rather, debt/bonds are issued, i.e., the government creates money to pay for programs. The amount of debt issued will exceed revenue from income taxes; hence, debt will increase due to a deficit in revenue versus expenditures.

Debt is not a problem unless the amount of money created begins to cause inflation. If that happens, the amount of money in the economic system can be reduced through adjustments to the tax codes. At this time, federal debt is is equal to approximately 100% of GDP or $20 trillion. The official inflation rate has been running at or below 2% for the past ten years (

Republican leaders know that a large amount of debt is incurred through tax expenditures. They also know that those expenditures are tilted toward the upper income brackets and therefore increasing maldistribution of wealth. They will claim that these benefits for corporations and wealthy individuals incentivize capital expenditures and investment in job creating businesses. That could be partially the case, but for the most part these give aways are unnecessary and don’t do much for economic growth and job creation.

Mitch McConnell and other Republicans scream about deficits and debt when they want to obstruct a Democratic Administration from succeeding at passing programs beneficial to the country and beneficial to the Democratic Party at the same time. Unfortunately, too many Democrats have acquiesced in and even supported the reactionary debt/deficit fetish. Until liberals/progressives learn to frame the argument in accordance with reality and sound economic theory, misinformation and propaganda will undermine the U.S. as a nation and a society.