Taxes are down, the economy is roaring and the federal deficit is soaring.
That about sums up the nation’s economic and budgetary outlook.
As rosy as things look economically, the candidates seeking the state’s U.S. Senate and 8th Congressional District seats differ sharply on President Donald Trump’s tax cuts, as well as the best way to keep the economy going and the deficit from exploding.
In the 8th District, U.S. Rep. Matt Cartwright, a Moosic Democrat, hopes to fend off Republican John Chrin, Barrett Twp., Monroe County. In the Senate race, U.S. Rep. Lou Barletta, a Hazleton Republican; Neal Taylor Gale, a Green from Abington Twp., Montgomery County; and Dale R. Kerns Jr., a Libertarian from Ridley Twp., Delaware County; want to unseat incumbent Sen. Bob Casey, a Scranton Democrat.
The December 2017 tax cut package looms large across taxation, budgeting and the economy.
In 2018, people in the middle 20 percent of taxpayers — $49,000 to $86,000 a year — received a 1.6 percent increase in their after-tax income, $930 on average, and 11.2 percent of the overall tax cut, according to an analysis by the Tax Policy Center. People in the top 20 percent of taxpayers 149,400 and above — received a 2.9 percent increase and 65.3 percent of the overall cut. The top 1 percent would get 20.5 percent of the overall cuts.
In 2027, two years after individual tax cuts expire, the middle 20 percent would see no increase in their after-tax income and their share of the overall cut would actually decline by 2.1 percent while people in the top 20 percent of income would get almost all the tax-cut benefits because taxes on investment income would stay down. The top 1 percent would get 82.8 percent of all cuts.
Republicans say it’s unlikely Congress would let the individual tax cuts expire. They say the cuts have fueled the economic surge that lowered unemployment to 3.7 percent in September. Since the cuts, the economy has created 1.875 million new jobs, according to federal Bureau of Labor Statistics, and 4.06 million since January 2016 when Trump took office.
Real average hourly earnings increased 1.1 percent in September from September 2017, a measurement that takes into account inflation, according to the bureau.
The nation’s gross domestic product rose at a 4.2 percent annual rate in the second quarter, well above recent quarters.
Republicans’ predictions that the tax cuts would boost the economy were right, but the nation’s deficit for the fiscal year that ended Sept. 30 was $779 billion, up from $666 billion the previous year. Democrats blame the tax cuts, which they say benefitted the wealthy far too much.
Republicans blame the cost of the three main entitlement programs: Social Security, Medicare and Medicaid.
Cartwright, a House member since 2013 and House Appropriations Committee member since September 2014, said he has played a role in the federal government sending more than $692.6 million into Northeast Pennsylvania. That kind of money boosts the regional economy, he argues.
He plans to increase the return as he gains appropriations seniority.
“I ran for Congress to take care of people in Northeast Pennsylvania and that’s probably the most significant thing I can do for our area is improve the jobs prospects,” he said.
If Democrats win back control of the House, their No. 1 priority will be an infrastructure bill of at least $1 trillion, which will produce thousands of jobs, he said.
“We need to repair our roads, our bridges, our water systems, our sewer systems. We need to do electrical grid upgrades, rail systems, broadband access,” he said.
He promised to refocus the tax cuts on “regular working people” instead of the “top 1 percent of earners and corporations.”
Reversing tax cuts for the wealthy should cut budgets deficits, too, he said. He vowed to fight attempts to cut Social Security, Medicare and Medicaid to balance the budgets.
Chrin said he spent his adult life “as a banker, as an investor, as a venture capitalist ... to find the capital to take great ideas and grow businesses” and create “wonderful jobs.”
“I’m able to understand where the economy is headed and by virtue of my background in finance and engineering, I get it,” Chrin said.
He plans to create a business plan for each county and center local resources on carrying out the plan. He sees Lackawanna County as a potential hub for battery research and a renewed manufacturing base. He wants to improve and secure the region’s electrical grid to make the region stand out for prospective new companies.
He likes the tax cuts, especially cutting the corporate rate from 35 to 21 percent, because that “really sets the United States up for a renaissance in ... manufacturing and capital investment ... over the next 10, 20, 30 years.”
However, he wants to make the individual cuts permanent.
“I really am about fairness for the average working family,” he said. “Because that’s who I am.”
He denies Republicans want to use deficits to cut Social Security, Medicare and Medicaid and said, “I can tell you straightforwardly, I will not be a part of that. I’m not going to be a mean-spirited person who’s going to go in and cut programs.”
He promised to ferret out waste and fraud to reduce deficits.
Barletta said his vote for the tax cut helped boost job growth, pointing to the 4 million new jobs and bonuses or wage increases offered by more than 6,000 companies. He plans to continue to keep down taxes and will work to prevent Democrats from implementing unnecessary regulations and help Pennsylvania capitalize on its natural gas industry.
“I think we’ve just begun to see the benefits of that,” he said. “Pennsylvania can become a state among nations. ... This is an opportunity that we’re going to be able to keep our young people here.”
He acknowledged the tax cut contributed to the increased deficit, but said growth will reduce deficits in the long run. He also denied Republicans plan to target entitlement benefits for senior citizens to control spending.
“We need to make sure that those entitlement programs, Social Security and Medicare and Medicaid, are there for the long haul,” he said. “The easiest thing we can do is cut out all the waste.”
He pointed to $4.4 billion in savings he produced by requiring long-term leases of federal office space.
Casey said he has fought for projects that created thousands of jobs. They include renovation of the lock-and-dam systems on Pittsburgh’s rivers and deepening the Delaware River near Philadelphia to allow for larger cargo ships. His vote for President Barack Obama’s recovery act produced a major injection of money that reversed the recession, he said.
He voted against the tax cut because he said he thinks more should have gone to the middle class. A bigger middle-class cut and a larger child tax credit would have really boosted the economy, he said.
“Those two things alone, short-term and long-term, would lead to much more economic growth than the tax cut would,” he said.
They also would reduce deficits, he said. He said he could have gone along with a smaller corporate tax cut if the revenues paid for a large infrastructure bill.
He pointed to Republicans on the House Budget Committee who voted in June to substantially trim Medicare and Medicaid, he said. Barletta is not a member of that committee.
Kerns said the best way to create jobs is for government to “get out of the way and let businesses invest in their businesses, invest in their employees and compete on the marketplace.”
He wants to find incentives to get people on welfare and Social Security disability back to work, bring American troops home from Afghanistan, and to boost the number of available skilled workers.
He said he favors the tax cuts because taxpayers spend the money and that makes the economy healthier. He also favors eliminating the income and estate taxes and replacing them with a national value-added tax on goods and services. To trim the deficit, he would eliminate the education and agriculture departments and limit the Federal Reserve’s power.
“There’s isn’t anything I wouldn’t put on the table,” he said.
Gale said he would turn the federal government’s focus away from fossil fuels and toward encouraging use of renewable energy sources like wind and solar with the goal of 100 percent renewables someday. That will create hundreds of thousands of jobs, he said.
He said he doesn’t think the deficit is unmanageable for now, and would prefer to concentrate on incentives to get people who have stopped looking for work to return to the workforce.
He said he would alter the tax cuts to benefit lower- and middle-income citizens because the current tax structure overwhelmingly benefits the wealthy, who, he warned, are usurping the federal government to benefit themselves.
“It’s being normalized day in and day out,” Gale said.
The Citizens Voice
By Borys Krawczeniuk
October 21, 2018