Economic Policy Institute says GOP downplayed tax cut during midterms because it didn’t help people


PAI Staff Writer

Washington (PAI) — There was one big reason Republican candidates shut up about their massive tax cut on the campaign trail, Economic Policy Institute analyst Hunter Blair says: It didn’t help you and me.

In a posting the day before the Nov. 6 balloting, Blair reported the law “is increasingly unpopular,” even according to internal GOP polls.

Respondents, he added, view the GOP’s Tax Cuts and Jobs Act as favoring “a tax cut for the rich and corporations” over “middle-class families.”

That’s just what unions, their allies and congressional Democrats all said of the measure even before the GOP-run Congress approved the $1.2 trillion 10-year slash on party-line votes last year.

And the facts of the law back that view up, Blair adds.


“Republicans shouldn’t find this” negative view of their tax cut “so surprising, since the law they wrote was a massive giveaway to the rich and big corporations. And voters do not appear fooled by a PR campaign earlier this year where corporate allies tried to trick workers into believing that any bonus they received in 2017 was due to the TCJA,” he added.

“The claims of immediate benefits to workers by those corporate allies should never have been taken so seriously by the media,” Blair said. “The theory justifying claims that corporate rate cuts should trickle down to typical workers always required that a long chain of economic events to occur first.

“We’ve long pointed out nearly every single link in this chain is likely to break down,” he said.


“The first link in this chain concerns firms’ investment,” Blair said. “Anyone trying to discern if the corporate rate cuts are having their promised effects for workers should be watching investment like a hawk.”

Annual growth in investment, the first link in the trickle-down chain, slowed down by 0.7 percent over the last 12 months, he noted, compared to the prior 12 months, when the TCJA wasn’t in effect. Company purchases of capital goods showed the same pattern.

“To be blunt, this shouldn’t surprise anyone. The best guess at how the TCJA’s corporate rate cuts will affect the economy is still based on past experience. As we pointed out before, there was no reason to believe corporate rate cuts would trickle down to workers.”

Evidence from both the U.S. and overseas “shows low corporate taxes aren’t strongly associated with stronger investment, and state-level data shows no link between corporate cuts and wage increases. And the increased deficits caused by the TCJA meant the law as passed was inconsistent with the theory it’s purported to be based on,” Blair notes.


“It’s worth noting just how wildly inefficient and cynically timed this stimulus is. For political gain, congressional Republicans imposed austerity that intentionally throttled recovery from the Great Recession, causing unnecessary harm to millions of American families. Now that economic growth helps their chances at re-election, they released the choke-hold.”

Blair also predicted, quoting GOP leaders – notably Senate Majority Leader Mitch McConnell (R-KY) – that Republicans would try to pay for the big hole their TCJA blew in the federal budget deficit by “demanding cuts to the safety net.”

“The House GOP budget included deep cuts to education, public investment, Medicare, Medicaid, and the Affordable Care Act,” Blair said. “And Republican leaders continue to claim that rising deficits mean ‘entitlement reform’ — code for ‘cuts to Social Security, Medicare, and Medicaid’ – “must be on the table.”

“Data continues to show that the TCJA has failed to kick start investment, which is the necessary but not sufficient condition for it to increase the pay of typical workers,” Blair said. “It should be repealed, rather than the deficits it caused being used as a pretense for deep cuts to programs that working families rely on,” Blair concluded.   


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