November 21, 2024

ICYMI: At Hearing, Warren Slams Trump’s Plan to Give Billionaires Handouts Instead of Investing in Working People

“Are we a country that invests in roads and bridges, in housing, in health care, in our children, or a nation that cuts taxes for billionaires and billionaire corporations?”

“Next year is a chance to fight for a tax code that works for working people…to fight against more giveaways to the wealthy and giant corporations and flat out reject any package that includes billionaire handouts.”

Hearing Recording (Senate BHUA Committee Website)

Washington, D.C. – At a hearing of the Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy, U.S. Senator Elizabeth Warren (D-Mass.) asked witnesses about the implications of Trump’s 2025 tax agenda on the economy and American families. Senator Warren is chair of the Economic Policy subcommittee and will become the top Democrat on the Senate Banking Committee in the next Congress.

In 2017, then-President Trump passed a tax cut that mainly went to giant corporations and the wealthy. Next year, many of these tax cuts for billionaires expire, which creates an opening to rewrite the tax code.

During the hearing, the witnesses shared that Trump's initial tax cuts saved millionaires and billionaires trillions of dollars in tax breaks, yet left workers behind – for every dollar in tax cuts someone in the top 1% received, a worker in the bottom 60% got less than one cent. Brendan Duke, Senior Economic Policy Director at the Center of American Progress, confirmed that the 2017 tax cuts did not trickle down as claimed while executive pay, stock buybacks, and corporate profits increased. The National Urban League’s President and CEO, Marc Morial, emphasized that the tax cuts widened the racial wealth and income gap. Liz Shuler, President of the AFL-CIO, rejected Republican plans for more tax cuts for billionaires next year as a scam, saying what Trump and Congressional Republicans are proposing is a bad deal for workers. 

Additionally, given the size of the 2017 tax package, Republicans had to use budget gimmicks and accounting tricks, including defunding the IRS, in order to hide the true cost; this was wildly inefficient. Mr. Duke testified that by cutting the IRS’ enforcement budget, the federal deficit increases by $2.50 for every dollar cut, with some estimates showing an increase as high as $11 per dollar cut. 

Senator Warren also pushed back on the Republican claim that because the Trump tax cuts are an extension of existing policy, they would come without a cost. She noted that Republicans have a decades-long history of giving massive tax cuts to the wealthy – increasing the deficit – and then hiding the true cost by cutting programs that help working class Americans. Mr. Morial called this cycle a “scam,” and called for an end to the “tax cut fever.” Mr. Morial also committed to working with Senator Warren to ensure the American people get “a fair deal, a better deal when it comes to tax and fiscal policy.” 

Senator Warren called on Democrats to reject Trump’s tax cuts for the wealthy next year, and to fight for a tax policy that ensures billionaires and corporations pay their fair share. She emphasized the importance of investing in American workers, which ultimately will build a stronger economy. 

Transcript: Hearing on the Tax Policy in 2025, Focusing on Implications for the American Economy
Senate Banking Subcommittee on Economic Policy
November 20, 2024 

Round 1: 2017 TCJA

Senator Elizabeth Warren: A progressive tax code can give a break to families and small businesses, while making sure that those at the top pay a fair share. And that gives us enough money to make the investments we need to make in roads and bridges and infrastructure to schools and Social Security, and the things we need to buy to keep this country going.

I want to talk for just a minute though, about the politics and power about how all of this works. For decades now, instead of a tax system running that way, we have gotten caught in a doom loop on taxes. So Republicans pass these giant tax cuts for the wealthy, they toss a few small breaks to everyone else, and then, because of the special tax breaks they get, the rich get richer, and their growing piles of cash fund the armies of lobbyists that demand even greater tax breaks.  Meanwhile, because billionaires and billionaire corporations are skipping out on their tax bills, deficits go through the roof. Republicans then use rising deficits as an excuse to cut the programs that American families rely on. Over time, the rich get richer and everyone else gets left behind.

The result? Jeff Bezos and Elon Musk pay a lower tax rate than firefighters and public school teachers.

So, let’s look at the most recent tax scam. I know we’ve gone over this a little bit, but I want to see if we can get it on the record and tie it into other parts of what is happening here. $2 trillion tax giveaway to millionaires and billionaires that Donald Trump signed in 2017, and the sequel he’s now promised that he will renew for his billionaire buddies next year.

Mr. Duke, what was the impact of the 2017 Trump tax cuts on the U.S. economy? Did those tax cuts trickle down and supercharge our economy? 

Mr. Duke: No. Economic growth stayed the same, business investment fell, stock buybacks, though, did surge. 

Senator Warren: Okay, so let’s see. Business investment actually fell?

Mr. Duke: Slightly. And housing investment cratered.

Senator Warren: Housing investment cratered. Corporate profits,what happened to them?

Mr. Duke: They went up after tax.

Senator Warren: Corporate profits went up. Stock buybacks?

Mr. Duke: Record.

Senator Warren: Record stock buybacks up. And executive pay?

Mr. Duke: That also went up.

Senator Warren: Okay. Ms Shuler, tell me. Did the Trump tax cuts trickle down to the 12.5 million union workers you represent at the AFL-CIO? Transportation workers, food workers, teachers, construction, nurses, and more?

Ms. Shuler: The simple answer is no. The tax cuts, of course, went to CEOs, shareholders, not workers. And every dollar in tax cuts that say bigwig in the top 1% got, a worker at the bottom 60% got less than one cent. 

Senator Warren: So the rich get a dollar, and the workers get a penny?

Ms. Shuler: Less than a penny.

Senator Warren: Less than a penny.

Ms. Shuler: Yep, yep.

Senator Warren: Okay. I think we’re detecting a theme here. And Mr. Morial, did the 2017 tax cuts for millionaires and billion or lift up Black Americans and other underserved communities that you represent at the National Urban League?

Mr. Morial: Not at all. Not at all. The tax cuts widened the racial wealth gap, and there was no impact on incomes or on closing the twin of the racial wealth gap, which is the racial income gap. So there was no impact, there is no evidence it had any impact, and any positive movement between then and now came from the American Rescue Plan, came from the post-Covid investments that were led by the Biden administration and many of you. That’s important. So any improvement cannot be attributed to the 2017 tax cuts.

Senator Warren: Okay so, this time around, it’s going to be the same old scam. Trump has promised that he’ll splash out another $4 trillion extending all of his rich pals’ tax cuts, and throw in a few more goodies for good measure and that he will give another rate cut for billionaire corporations. And he’s promised a little something extra for Big Oil, and that means one more loophole for Wall Street. Here’s the part, now, that I want to see if we can draw a connection. Special interests lavished eye-popping amounts of money to get Donald Trump reelected, and now these same special interests are ready to collect. “But wait,” Donald Trump says, “Don't mind all of that.” He says he will cut taxes on overtime pay and social security for everyone else. So, that is how this is going to work out. Ms. Shuler, you represent these workers. Is that a good deal for workers? 

Ms. Shuler: No, and the operative word is scam. It is the exact same scam we have seen before. So, the Trump plan is to give your average worker pennies or less than a penny, as we have said, while the real money and benefits of the plan actually go to the rich, and so widening the gap we have been talking about. Not taxing overtime sounds good, but we all heard Trump's Project 2025 would eliminate overtime. We keep saying, well, I guess you can make a promise to not tax something that does not exist. It’s pretty easy. Taxing zero is zero. But we’ve also seen that a Trump appointed judge just blocked the Biden administration's rule to provide overtime pay protections for 4 million workers, as we saw in the Biden administration, that expansion. And so, that Trump-appointed judge blocked it. This is another, as we have said, another attempt to pay for a tax giveaway to the people who don't need it. People like Elon Musk who proposed to slash federal programs, whether it is Social Security to affordable childcare to investments in good manufacturing jobs, like we have seen with clean energy investments that we know have been coming. If you eliminate those, that’s actually going to create a downward pressure on the ability to have a pathway to the middle class and have good jobs in this country, to pay for these tax cuts that we do not need.

Senator Warren: That’s right. So, think about that. Donald Trump says he will slash taxes, end taxes on overtime, but he will also end overtime. And says he will cut taxes on social security, at the same time as his running buddy right now, Elon Musk, is saying they are going to slash Social Security. Trump and his buddies think that if they throw small cuts to working people that no one will notice that millionaires and billionaires are pocketing trillions of dollars. They think that if they give small cuts to working people, that they won't notice when infrastructure jobs dry up or when their Social Security checks are cut. But the American people are not so easily fooled. In December of 2017, when Donald Trump signed his $2 trillion dollar tax giveaway into law, it was his lowest approval rating of his entire presidency, second only to the insurrection he stoked on January 6. The American people know a scam when they see one. Trump's last tax giveaway was a scam of giant proportions and his plan for another tax cut for billionaires is more of the same. Thank you. 

Round 2: Budget gimmicks

Senator Warren: Thank you, Senator Helmy. And thank you for the comments on this. So, the Trump tax scam playbook has more than one page. Page one is hiding the giveaways to the wealthy by trying to throw some small cuts – or at least allegedly throw some small cuts to working Americans. 

Then there is page two, using magic math to pretend the tax cuts don't cost anything at all. The 2017 Trump tax cut was so big that Republicans had to use budget gimmicks and accounting tricks in order to hide the true cost. One of the main tools was to set up a bunch of the cuts to expire next year. That limited the cost to “just “$2 trillion. So, what is Trump's second term agenda? Keep cutting taxes for billionaires and pretend they don't cost anything. Magic math formula number one – “save money” by defunding the IRS and letting wealthy tax cheats off the hook. 

Mr. Duke, help us double check the math here. Does cutting the IRS enforcement budget actually save any money?

Mr. Duke: No. The Congressional Budget Office estimates every dollar cut from IRS enforcement actually increases the deficit by $2.50. Other estimates go as high as $11. Fundamentally, they are trying to pay for tax cuts for the rich with tax cuts for the rich. It breaks the laws of arithmetic.  

Senator Warren: Yeah. But that’s not the only magic math. Senator Crapo, the incoming chief Republican tax writer in the Senate, has an even better scam. He’s running around Capitol Hill saying Congress shouldn’t pay for a single cent of the $5 trillion in the Trump tax cut extensions, because that is just extending current policy, and if you’re extending current policy, it doesn’t cost anything; it’s free. 

Mr. Duke, another math question for you. Does $2 trillion in tax cuts in 2017 plus another $5 trillion in extensions in 2025 equal zero dollars in cost?

Mr. Duke: No. I didn’t hear Senator Crapo say that extending the American Rescue Plan child tax credit was also free because it would have just been expending current policy, either. This is just a way to hide the cost of enormous tax cuts for the wealthy, while clearing the way for Elon Musk’s cuts to health care and food for families.

Senator Warren: Yeah. You know, none of this is new. For decades, Republicans have, over and over, passed massive giveaways to the wealthy, used fake math to try to hide the true cost, and then turned around and claim to be shocked, shocked by the ballooning deficit. Then, in fake outrage, they demand that we cut the deficit by cutting funding for everything from Social Security to public schools. Trump and his MAGA buddies have made clear that they plan to run the same play again next year. They want to hide the true cost of tax cuts for billionaires and billionaire corporations and do it while claiming that they’re helping working people. 

Mr. Morial, should working people buy this?

Mr. Morial: No. And Senator Warren, since tax cut fever in the GOP began in the 1980s – I encourage all Americans to go look at the widening gap between rich and poor Americans, between rich Americans and middle-class Americans that so many people in elected office professed to champion for, and to look at the widening wealth and income gap since tax cut fever began in the 1980s in the GOP. You can do a throughline. 

In the Reagan years, the economy was about a $5 trillion economy. Today it is almost a $25 trillion economy. Yet wages for the bottom 70% of Americans have not kept pace with that growth. In fact, it has gone in reverse. It’s time for this tax cut fever, this tax cut fever to get the proper dosage of medicine to end this, if you will – call it a scam? Yes. I call it razzu. Razzu and a head fake, right? Get Americans looking over here believing they are going to get something, and they get crumbs. 

While over on the other side, massive subsidies are given to Americans who don't want nor need these subsidies. And then behind it come back and challenge the programs – workforce, Medicaid, Medicare, Social Security, aid to education, aid to small businesses that we sorely need. So, you have, I think, Senator Warren, accurately characterized the current situation. And I am just proud and committed to working with you and others to get a fair deal for the American people. The American people need a fair deal, a better deal when it comes to tax and fiscal policy.

Closing Remarks

Senator Warren: I very much appreciate your comments on this. Look, Democrats in Congress should flat out reject Trump's Tax Scam 2.0, and the junk math Republicans are using to try to sell this thing. The tax code is not about magic math, it is about choices. Are we a country that invests in roads and bridges, in housing, in health care, in our children, or a nation that cuts taxes for billionaires and billionaire corporations? 

American families are counting on us to have their backs. And that means fighting for a tax code that demands that the wealthy pay their fair share just like everyone else. A tax code that invests in American workers. A tax code that helps build a stronger economy, in which everyone gets a chance to participate. In next year's tax debate, every person in the United States Senate will have the opportunity to show the American people whose side they are on – the side of billionaires clamoring for more handouts, or the side of hard-working Americans? Because next year is a chance to fight for a tax code that works for working people. A chance to fight against more giveaways to the wealthy and giant corporations and flat out reject any package that includes billionaire handouts. It is a chance, next year, to fight for a tax code that raises taxes on the wealthy to fund the investments that we all need. And I am proud to stand shoulder to shoulder with working people across this country in this fight. 

I want to say one more time how much I thank the witnesses for being here today, for the testimony that you provide, and for the work you do every day. For any Senators who wish to submit questions for the record, those questions will be due one week from today, Wednesday, November 27. And for our witnesses, you will have 45 days to respond to any questions. Thank you again. And with that, this hearing is adjourned.

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