If your net worth is $43 million, like Nancy Pelosi’s, $1,000 isn’t a lot. Might even seem like crumbs.
But if you have a salary in the five figures or low six figures, $1,000 (even minus federal taxes, state taxes, Social Security tax, Medicare tax …) means a lot. It might be the cost of fixing your brakes and replacing your non-all-wheel-drive tires at the same time. It could be what you’d spend on a modest vacation for your family. It might be what you can manage to put into a Roth IRA this year. Or maybe it’s just the amount you need to start your own business.
The continued derision by House Minority Leader Nancy Pelosi of the widespread $1,000 salary bonuses sparked by the tax cut President Donald Trump signed into law December 22 is unseemly. But it also shows a profound disconnection between the political class and the rest of America.
Pelosi doubled down on her infamous “crumbs” comment when she visited Cambridge Public Library on Thursday. She claimed the bonuses, which are fueled in part by the cut in the federal corporate tax rate from 35 percent to 21 percent, are an “enticement” for workers – most of whom are also getting personal income tax cuts, by the way.
The tax cuts, she claimed, “mortgage our children’s future.”
Only if you spend us into oblivion, Madam Former Speaker.
Speaking of which, Pelosi also embraced the “tax-and-spend” label Republicans successfully foisted on Democrats back in the 1980s.
“Now people say that Democrats are about tax-and-spend, but that’s exactly what government does,” Pelosi said. “It acquires revenue.”
Yeah, but how much? And when do constant increases in scope and spending end?
To Democrats like Pelosi, never.
And it hurts the vast majority of Americans, through sluggish growth and encumbered freedom.
This profound misunderstanding of the way economics works extends to a supposed economics expert, Seth Hanlon, who served former President Barack Obama in that capacity and now works for a left-wing think tank.
Speaking during Pelosi’s appearance in Cambridge, Hanlon tried to debunk the link between corporate bonuses, which he derided as one-time payments, and the corporate tax cut – even though the link appears obvious.
But it can’t be so, Hanlon explained, because while corporate profits have been going up recently, wages have remained stagnant:
“So it’s simply not the case that when a company gets extra money via a tax cut, they just pass it on to workers out of the goodness of their heart.”
Exactly. Most companies give wage increases and bonuses when they feel comfortable they can afford it and if they think they need to do it in order to retain valued workers.
The combination of a growing economy, promising profits, and a corporate tax cut they can calculate and count on has led many companies to offer these bonuses (and, in some cases, wage increases).
That so many companies feel flush enough and motivated enough to offer bonuses and wage increases is an excellent sign for the American economy in 2018, the likes of which we haven’t seen in many years.
It is not necessary to rely on the kindness of corporations or the people who run them. What’s needed are freedom and growth.
The Republican tax cut gives us more of both.
As tree-cutting business owner Joe DiStasio of Braintree put it: “… I’ll take a whole plateful of crumbs.”
