The issues of tax legislation and general economic ideology have dominated the political sphere of the United States throughout the nation’s history, and being central matters of debate and partisan disagreement they have carved out two primary sides of the argument over time. Today, President Donald Trump’s rhetoric regarding a tax revolution and the ensuing Legislative proposals offered by the Republican Party are characteristic of supply-side, or trickle-down, economic theory, in which business investment is stimulated by making funds more available to corporations and the wealthy, and as a result economic improvement occurs from the top-down. This policy was also a core component to the presidencies of both Ronald Reagan and George H.W. Bush. Others, however, have pushed for the style of Keynesian economics, or the theory that government spending is the key to economic stimulation, as seen by President Barack Obama’s economic policies. Both theories face the issue of finding sources of funding to supplement losses of government revenue that result either due to spending more or receiving less.
Gary Varvel, an opinion cartoonist for the Indianapolis Star Newspaper, published the cartoon, “Economic Growth Seeds,” on April 28, 2017 (Varvel). The cartoon refers to President Donald Trump’s adamant announcement of his plans for the “largest tax cut in our country’s history” (Walsh). Moreover, Varvel reveals a particular case of the ongoing argument of economic policy and the question of how the government is to maintain its revenue while implementing its policy. The cartoon shows the perspective of both sides of the Trump tax cut debate and its consistency with politics throughout history, and raises the issue that there lacks a decent means in which to respond to the funding question; usually the federal budget deficit takes the hit.
Varvel’s illustration consists of two characters: President Trump on the right and a personified donkey on the left, which symbolizes the Democratic Party (Makemson 256). Varvel doesn’t portray President Trump sporting his normal presidential suit and working the Oval Office, however. The cartoon instead depicts Trump as John Chapman — more widely known as the folk hero, “Johnny Appleseed” — tossing seeds into hills of plowed fields from a large bag labeled, “Tax Cut Seeds.” Chapman, born in Massachusetts in 1774, traveled throughout Pennsylvania and Ohio to harvest apple nurseries and sharing his knowledge with settlers on the American Frontier. In the cartoon, President Trump, or Mr. Appleseed, appears to be walking with a haughty and confident posture while carelessly throwing the seeds all around. In contrast to Varvel’s depiction, Chapman planted his apple seeds for strategic economic reasons (“Johnny Appleseed”).
Such an alteration of the Appleseed story conveys a dynamic of order in chaos present in the Trump tax plan, in which his idea is that his concept would distribute growth itself. This element of simplicity may be Varvel’s reason for referring to Johnny Appleseed, who left the growth of his apple trees to nature and the people along his path whom he taught how to tend to the trees. Similarly, Trump and the Republican tax cutters are relying on and trusting the natural process of economics for their “seeds” to grow and prosper.
The other character, the Donkey/Democratic Party, is standing behind Trump’s path of travel, leaning over with his hands extended outward toward the seeds on the ground in a gestural expression of disbelief as he questions with a dropped jaw, “How are you going to pay for this?” The face of Trump appears to be whistling and completely ignorant of the donkey’s concerns. This interaction reveals a common issue in politics, in which one side questions the other’s proposal with the age-old dilemma of how to and who will pay for it; usually the party with their hands on the Congressional reigns simply ignores the opposition. Despite the cartoon’s original caption, which states, “Impatient Democrats seem not to understand the principle of sowing and reaping,” the Democrats do have a right to pose this question, especially because the idea behind Trump’s tax cuts has been seen in our country before (Varvel).
Specifically, this idea was featured in 1980’s America as supply-side economics rose to prominence. When Ronald Reagan became the 40th president of the United States in 1981, he faced a flurry of major economic issues. The country was still recovering from the Vietnam War, prices were increasing rapidly as a result of a Middle Eastern oil embargo, and a recession was well under way after a long period of stagflation in the 1970s. Thus was introduced “Reaganomics,” which consisted of supply-side economic policy — removing impediments to the supply of factors of production by implementing spending cuts to reduce the size of government and a monetary policy that controls inflation, eliminating federal regulation on businesses, simplifying the system of tax brackets and a broader base, and cutting income taxes across the board to encourage investment and allow for money to trickle down to the private sector (“Reaganomics”). The Economic Recovery Tax Act of 1981 introduced a tax rate decrease from 70% to 50% for the top tax bracket and a drop from 14% to 11% for the lowest bracket (Schein 650). Soon after, the Tax Reform Act of 1986 implemented major changes to tax policy, including the simplification of income taxation to three brackets with the rates of 15%, 28% and 33%. The Reagan Tax Cuts aimed to stimulate the economy by allowing for more investment, and in broad respect succeeded in improving the economy (“Tax Reform Act of 1986”).
The Trump-backed 2017 Republican tax plan functions in a similar way, and would be the first massive tax overhaul since 1986 (Financial Advisor). It follows the supply side concept that has become a central component of the Republican Party since the Reagan Administration. Although still incomplete, Trump’s prospective bill sets out to simplify the income tax brackets for individuals and families from seven to three, solidifying rates at 12%, 25% and 35% (Bryan). However, due to criticism there will most likely be an added fourth bracket at the top (“Trump Discusses”). As a result of the proposal, more of the middle class in Trump’s plan will be paying what is currently the rate for only the lowest middle class bracket. Additionally, the plan introduces the “Zero Tax Bracket,” in which the standard deduction is expanded to nearly double what it is now, requiring that the first $12,000 of income for individuals and $24,000 for married couples be exempt from taxation. The plan also aims to lower the highest tax bracket from 39.5% to 35%. The greatest change, however, involves business tax rates. With the principle of supply-side economics at the heart of Trump’s political stance, his proposed tax reform will lower the corporate tax rate from 35% to 20% (Bryan). It would also lower the pass-through business tax rate — the rate of taxation of small business profits that go directly to individuals — from the top bracket level of 39.6% to the new middle level of 25% (Morgan).
The problem with Trump’s tax plan, and what ended up being the weakness with similar plans put in place previously, is the national budget deficit. The Reagan Tax Cuts — though not completely alone, as they were accompanied by Congress’s failure to cut domestic spending and the defense expense at the end of the Cold War — contributed widely to the $1 trillion federal deficit in the 1980s (“Reaganomics”). The Bush Tax Cuts in the early 2000s followed the same trend. H.W. Bush put in place measures to incentivize production, but while economic growth did occur, increased government spending in a time of the September 11th terrorist attacks in New York City and the wars in Iraq and Afghanistan caused further depletion of the national revenue (Evans 17-19). In Trump’s and the Republican’s case, the new tax codes would cost the national revenue $4 to $6 trillion in the next 10 years, according to the Tax Foundation, and no substantial proposals have been put forth to offset this loss of revenue (Stewart). Some Republicans claim that new revenues will be gained from eliminating tax loopholes and — as per the Johnny Appleseed concept — the economy will take care of itself if investment is allowed to increase (Morgan). The tax plan will also eliminate most itemized deductions and the state and local tax deduction, which are both potential sources of revenue (Bryan).
Ultimately, the main claim of both Varvel, Trump and many Republicans is that the tax cuts alone are the seeds of economic growth; although there may be a slight deficit as the seeds solidify their presence in the ground and establish their roots, in time they will sprout and the economy will grow on its own. However, in an interview with House Speaker Paul Ryan in September of 2017, he did not promise the tax overhaul would not increase the federal deficit, and said the primary goal was to “bolster economic growth” (“The Latest”). The question of how the government plans to balance the upcoming loss of revenue is still up in the air.
Varvel’s cartoon bears several parallels with John Knott’s March 26, 1937 cartoon entitled, “The Tax Expert,” which referred to a tax remission bill proposed in the Texas House of Representatives — a topic of controversy in the state in the 1930’s (Knott). First, the bill Knott portrayed was fueled by the same idea behind Trump’s proposed tax cuts, ultimately aiming to provide the same kind of economic relief in a time of financial difficulty for citizens. While Trump today faces decade-old remnants of the Great Recession of 2008, the Texas Legislature in 1937 was caught up in the distress of the Great Depression of the 1930’s. The 1937 tax remission proposal intended to provide a tax rebate to all Texas counties, which could then use the money as they pleased to improve the conditions of their respective areas. In the same way, Trump’s plan maintains a large focus on cutting taxes for businesses with the thought that if there was more money available to be spent at the corporate level, investment would increase and thus “[extend] economic opportunities to American workers, small business, and middle-income families” (Bryan). Essentially, the overall goal of both measures was and is to to establish a fairer and more evenly distributed method of taxation by getting the money out of the hands of the government and into the control of smaller units — Texas counties and United States businesses — and trusting the basics of economics to guide the money into the hands of the people at every level below.
In regard to balancing the government revenue with the release of funds in the form of tax remission or tax cuts, both cartoons emphasize the uncertainty that comes with such measures. In Varvel’s cartoon, the donkey asks the obvious question about the course of action in place to make a tax cut feasible in terms of the federal budget. The fact that the donkey is empty-handed and Trump is only holding the tax cut seeds and no other economic measures proposes that there is not a good, tangible method made available as an offset to the revenue that will be lost as a result of the cuts, and Democratic Party is skeptical of the Republican claim that the cuts themselves will consequentially refill the revenue by means of the trickle-down model. Opponents of the Trump tax reform believe that it is likely that there really isn’t a decent way to pay for the plan and therefore a large federal budget deficit would ensue (Stewart). Knott’s cartoon displayed the same sort of doubtfulness, suggesting that the passage of the tax remission bill could not in reality stand alone without some way to balance the budget. In Knott’s view and the view of the democratic governor at the time, James Allred, the likely result of large-scale tax remission would be higher taxes for the regular taxpayer, as depicted by the legislators hand reaching into the pocket of Old Man Texas for money (“Tax Remission”).
The opposition — primarily the Democratic Party — has historically offered a different solution on the other end of the spectrum of economic policy. The concept of Keynesian economics has been the dominant force of Democratic legislation since President Franklin D. Roosevelt’s utilization of the theory in the New Deal after the onset of the Great Depression of the 1930’s, and the large amount of government spending required by World War II that proved to improve the United States economy (May 540-541). Despite being opposed to the Trump tax cuts on the basis that they will cause the deficit to bubble to an unhealthy level because there is no other source of revenue as a part of the plan, Democratic policy has been characterized by the same problem. Responding to the 2008 Recession, Obama implemented the American Recovery and Reinvestment Act, which largely increased the government’s spending while reducing its revenue-raising options (Sahadi). Thus, the roles of Varvel’s cartoon were reversed, as members of the Republican Party, concerned about a ballooning deficit themselves, criticized the policy with an argument similar to that of the Democratic Party in response to Trump’s plan.
Both cartoons highlight that it is extremely difficult to come up with a balanced fiscal policy. No matter the side — republican, democratic, conservative, liberal, or any other party or ideology — there will be opponents claiming that there is no way to pay for the proposed plan. As seen in both 1937 and 2017, the fight over the government’s role in the economy and ensuing impact on the federal or state budget deficit has remained fundamentally the same. The cases of Knott and Varvel portray the concept of the government placing control over money in the hands of the governed to improve their financial situation and ultimately the economy as a whole, and the opposing argument that there exists no viable source to provide those funds to the people. Yet the two sides can easily be switched when the government spends excessively. In general, the major economic ideologies of supply-side economics and Keynesian economics differ only in who is put in charge of spending — either the people or the government, respectively — but both lead to the same problem of balance. As we move forward, it is important to realize that the same problem may have many different methods for solving it, and while the economy is a massive enigma, by working together we can begin to progress toward better and better reform.
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