This article began as a post on Facebook. It is being posted here as requested by KosherSalaam. Comments will be appreciated.
I get most of my best ideas when I am involved with water. Today, while I was watering the garden, just after putting in a load of wash, I was suddenly struck by the realization that Donald Trump IS NOT A BUSINESSMAN.
He's a deal maker. He buys and sells things. He doesn't make anything other than deals.
Every single business he has attempted in which he engaged in some kind of manufacturing or service industry product has failed. The only way he makes money is through the buying and selling of real estate, or licensing his name.
He's a salesman, not a businessman.
Okay, that's not a exactly late breaking news. However, it is something that has been overlooked by just about everyone who supports Trump.
What does the President of the United States have to sell? What product is he offering for sale?
The United States of America.
This corrupt, cynical, self-absorbed, self-centered, egomaniacal con artist is trying to sell off the United States to the highest bidders.
He wants to sell our roads - our rights of way - to private developers to have and to hold in perpetuity, collected tolls on roads that were formerly free.....forever.
He wants to sell off our National Parks to the oil companies and the private developers, breaking up our irreplaceable national treasures and putting private property signs on what are now public lands.
He wants to destroy free public education to create a generation of morons who will believe whatever they are told and do whatever they are instructed to do.
He wants to complete the process of converting America's home owners into tenants, so he and his cronies can rake in the bucks by jacking up interest rates to the point where ordinary people can no longer afford to buy homes and will have to rent places to live for the rest of their lives.
But the crown jewel in Donald Trump's ambitions is the elimination of the alternative minimum tax which costs him more each year than most Americans make in a lifetime. (The stories about Donald Trump not paying taxes were myths, and always were. His big tax write off ran out years ago.)
Lowering the maximum effective tax rate from 35% to 25%, combined with the elimination of the alternative minimum tax will drive the United States of America into bankruptcy and once we are bankrupt the fascists really take over.
While Republicans cry about the wealth transfer from rich to poor, they are in the process of executing the biggest con in the history of money, using the trickle down theory myth to justify wholesale tax cuts that will turn this country into an economic wasteland.
Why is the trickle down theory a myth?
1. Business expansion is driven by demand, not by conserved capital. Demand is driven by consumption, Consumption is generated by consumers buying products. Consumption is driven by increased discretionary income at the low end of the economic spectrum, the people we now call the 98%.
2. Tax cuts at the low end of the economic spectrum stimulate economies because they release pent up demand. Tax cuts at the high end of the economic spectrum fuel investment rather than consumption. This, as we have seen, drives the stock market into an inflationary spiral and inflation, of course, diminishes the value of the currency, making it more difficult for the 98% to drive the economy. As consumers are squeezed out of the marketplace, consumption goes down and the rationale for business expansion evaporates.
3. Tax savings received by corporations from the proposed tax cuts will not go into business expansion. The benefits derived from tax cuts result in increased profits and increased profits are distributed to shareholders (unless you own Berkshire Hathaway) in the form of increased dividends. This isn't a matter of choice. Corporations are compelled by precedent to distribute windfall profits to their shareholders, or face shareholder suits compelling them to do so.
4. Business expansion is almost always funded by debt from borrowing, except among a very small group of cash rich companies, who have so much conserved capital that it doesn't make sense for them to borrow but they didn't need tax cuts to generate that conserved capital. They did it themselves, with productivity.
If a business sees a reason to expand or develop new products, they will either go to the banks to borrow capital or they will issue new stocks and bonds to generate the necessary capital. No viable business ever refrains from business expansion or development because they are paying an effective tax rate of 35% rather than 25%. This is a complete myth.
5. Businesses always try to expand by borrowing because they can write off the interest on that debt which reduces the cost of the funds invested in new projects. When they use conserved capital, they do not get the benefit of the tax deduction.
6. The number one use for conserved capital isn't business expansion through organic growth. Most conserved capital that is not distributed in dividends is used to buy back stock, increasing management's control over the corporation, or for mergers and acquisitions, which almost invariably results in less competition, fewer jobs and eventually higher retail prices.
7. Tax cuts for high income individuals (I'm glad you asked) do not generate increased consumption of consumer goods, which is the segment of the economy that generates job growth. They already have all that stuff in multiples. Instead, those funds are invested in stocks, bonds, art work, gemstones, mansions, and yachts, high-dollar luxury items which all share one interesting characteristic: they are usually not labor intensive activities and therefore do not generate job growth. It takes maybe a hundred men to build a super-mansion or a super-yacht, highly skilled, well paid labor. It takes many times that number to build consumer residential housing or the family rowboat with the same total dollar value.
The belief that tax cuts for the wealthy generates economic growth has never been proven, either experimentally or in actual practice. It is a matter of fact, not speculation, that the economy suffers every time Republicans deal themselves a major tax cut, and revives whenever Democrats impose tax hikes. (Do the research. The information is out there.)
The Art of the Deal is not a blueprint for how to manage America. It is a model for how to sell off America to the highest bidders.