White House Budget Director Mick Mulvaney has issued a declaration of class war against the American people. His words may have sounded wonkish or technical, but underneath the coded language, Mulvaney was expressing Republicans' extreme ideas with unusual directness.
In an interview with CNBC’s John Harwood, Mulvaney was asked about Trump’s stated intention to spend $1 trillion on infrastructure spending. (Trump won’t. He will almost certainly propose far less, offer tax breaks to corporations and billionaires, sell off public resources, and then claim the total adds up to $1 trillion.)
“Will Republicans be comfortable with adding to the deficit to pay for a trillion dollars in infrastructure?” Harwood asked.
Mulvaney's response began this way: “Bad spending to me in terms of its economic benefit would be wealth transfer payments. It’s a misallocation of resources.”
The term “transfer payment” is commonly applied to health and welfare programs, and other forms of public assistance, since the people who receive the payments don’t provide any goods or services in return. Mulvaney is essentially saying that he opposes taxing the rich and using any of that money to help those who are in need.
“Infrastructure is sort of that good spending in the middle, where even if you do misallocate resources a little bit, you still have something to show for it. It’s tangible, it may help economic growth, and so forth.”
In other words, Mulvaney is saying he dislikes spending money for any government programs, but at least there’s money to be made in infrastructure. He is dramatically understating the jobs and growth that would arise from genuine, government-financed infrastructure spending.
Then came the kicker:
“At the other end of the spectrum, at the very other end, is letting people keep more of their money, which — while it can contribute to the deficit in a large fashion — is the most efficient way to actually allocate resources … I’m really not interested in how tax reform handles the deficit.”
Most headlines addressed Mulvaney’s surprisingly candid admission that he doesn’t care about deficit spending, since he was considered a leading “deficit hawk” in Congress. (While the candor was surprising, the hypocrisy itself was not. It’s been obvious for many decades that Republicans only bring up deficits when Democratic spending proposals are being discussed, only to let them skyrocket whenever they can cut taxes for the wealthy.)
The real headline is this: Donald Trump’s budget director, who was a prominent House Republican before joining the administration, wants to radically overhaul our tax system to benefit the rich.
An Ancient Battle
Mulvaney is challenging the concept of progressive taxation – that is, of calling upon people to pay a larger percentage of their income as they earn more. That’s been a cornerstone of American fiscal policy for at least a century, through both Republican and Democratic governments.
The first progressive tax in the United States, the Revenue Act of 1861, was introduced during the Civil War by Republican president Abraham Lincoln. (It only applied to people with annual earnings of $800 or above.) Since the passage of the Sixteenth Amendment in 1913, the top marginal tax rate in this country has been as high as 94 percent.
Mulvaney is staking out an extreme position in a very old debate. In a paper on the history of progressive taxation, law professor Richard Westin writes, “The concept of imposing taxes at increasing rates as income or wealth rises has a history that spans over two thousand years, and a large literature.”
Westin adds: “The principles underlying progressive taxation have been with us at least since Aristotle’s time.”
Aristotle was surprisingly prescient regarding greed and inequality, writing:
“[E]xternal goods have a limit, like any other instrument, and all things useful are of such a nature that where there is too much of them they must either do harm, or at any rate be of no use … “
That’s a phenomenon we have seen firsthand in recent years, as the billionaire class accumulates much more wealth than it can possibly spend, while the resulting runaway inequality does potentially irreparable harm to our economy, our democracy, and our society.
Wealth and Responsibility
But, says Mulvaney, the wealthy should “keep more of their money.” Is he right? Elizabeth Warren addressed this especially well in a 2011 speech:
“I hear all this, you know, 'Well, this is class warfare, this is whatever.' No. There is nobody in this country who got rich on his own — nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for.
“You didn't have to worry that marauding bands would come and seize everything at your factory … because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”
Warren’s comments are particularly compelling when you consider the fact that, as Robert Reich point out, an increasing number of rich Americans inherited their wealth. We are rapidly becoming the unjust society our founders warned us against, shackled with what Thomas Jefferson called “an artificial aristocracy founded on wealth and birth, without either virtue or talents.”
The Mulvaney interview is worth reading in full. Progressive taxation isn’t the only item on Mulvaney’s list. He’s also targeting Social Security, Medicare, and other government services that are vitally important to millions of Americans.
That’s the agenda that unites Trump with Republicans in the House and Senate: the ever-increasing enrichment of the billionaire class. with the resulting ever-increasing impoverishment of everyone else.
Elizabeth Warren’s right: Progressive taxation is not “class warfare.” Republicans use the term preemptively whenever they want to hide the fact that they’ve been conducting class warfare against middle-class and lower-income Americans for decades.
With these words, Mulvaney has brought that class war out into the open. It’s an economic war against working people, many of whom believe in a biblical adage taken from the Parable of the Faithful Servant: To whom much is given, much is expected.