RUSH: I get so tired of it. I get so frustrated watching this stuff. It’s amazing after all these years I’m still sane. I just watched idiocy on CNN. I mean, idiocy above the norm. It’s about tax cuts and what these people are saying about tax cuts. “Well, you know…” They had some babe, some CNN, I don’t know, reporter, analyst, I don’t know who she was. I’ve never seen her before. Don’t know her name. Doesn’t matter. They’re all cookie cutters over there.
And this woman is out there saying, “If we’re gonna have tax cuts, we must find a way to pay for them, otherwise the deficit will explode out of control just like happened with Reagan, especially in the first term.” I’m pulling my hair out. Because it’s not what happened. The deficit didn’t grow; the deficit came down. The amount of money that was generated by tax cuts, tax rate cuts, they weren’t tax cuts. They were cuts in the rate. It led to more revenue being created.
In like eight years, Reagan almost doubled the amount of revenue that the government collected from taxes. This woman is obviously brain-dead and she’s just repeating and regurgitating in robot-like fashion the drivel and bilge that she’s been taught. And then, “Well, you know, we must start talking about deductions, too, because the Trump administration is only cutting taxes for the very rich and those who want to be very rich, and this is not fair, and we must seriously look at the home mortgage deduction. You know why? You know why? Because the home mortgage deduction is very, very bad. It’s leading us to buy McMansions, and that is not good.”
What? What did I just see? What did I just hear? The home mortgage deduction is leading us to buy McMansions that we don’t need and that’s not good? And all of this occurred over a graphic which said, “GOP Official: This is not a tax cut, this is a sham,” or some such thing. Some Republican is upset that it is not even really tax reform.
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RUSH: The Drive-By Media is breathlessly awaiting a press conference where the Trump tax reform package will be detailed. I happen to have here in my formerly nicotine-stained fingers some details. As a powerful, influential member of the media, I have connections. Here’s what it’s gonna be. Three personal income tax rates: 10%, 25%, 35%. Top marginal rate right now is 39%. So the upper bracket will get a 4% rate reduction. The corporate tax, currently at 35%, will be reduced to 15%. Supposedly there will be no border tax.
The standard deductions will double, and the child care tax credit, some form of one, is expected. Treasury Secretary Steven Mnuchin has said that Trump’s tax plan would be paid for through economic growth. Ha-ha. Ha-ha-ha-ha. He-he-he-he. You know what they’re gonna do to that. Remember what I saw on CNN as the program was starting, I saw some, is it twit — yes. I got in trouble once. I put the wrong vowel in that word. “I don’t think we can cut taxes right now, Mr. King. Cut taxes right now, you’re running too big a deficit. When you start cutting taxes, deficit balloons, and that’s not good for anyone.”
Since when has the deficit and spending mattered to these people? When Obama was spending like the whatever, nobody in the media had any concern about it. There wasn’t concern for the deficit. There was no concern for the national debt. There was no concern where the money was coming from! Now, on the other hand, Trump wants to cut taxes and pay for it this way. You can’t cut taxes without paying for it. You have to pay for it with reduction in government services or other things. It’s just not doable, Mr. King, just not doable.
Then they further discuss the concept of it. And this same twit — it’s twit, right? (laughing) You gotta be real careful. I mean, there’s microphones, there’s telescopes, there’s microscopes, I mean, there’s all kinds of listening gear tuned to every molecule of this program. So you gotta be real careful out there, folks. This woman was going on and saying it’s like the home mortgage deduction. “Everybody thinks it’s good, but it isn’t, Mr. King. You know why?”
“Why?”
“Well, because the home mortgage deduction is making all of us go out and buy McMansions, and that of course is not good.” I’m watching this. We’re all buying McMansions? Because of the home mortgage — see some twit — it’s twit, right? Some twit on CNN is suggesting that a home mortgage deduction needs to be gotten rid of ’cause people are buying houses they don’t need, they’re too big? Go to San Francisco where you can’t afford a house. Go to New York where you can’t afford — and we’re not talking about mansions. Do you know they’re now selling 30 square foot studio apartments for 250 grand in San Francisco? Thirty square feet. Folks, that’s three square yards. Think of what five yards looks like on a football field.
Anyway, when I start laughing hysterically here at the tax cut being paid for by economic growth, of course it can be, without question it can be. We’ve proven it. But you think that’s gonna last five minutes in the Drive-By Media? (laughing) They go absolutely bonkers at that suggestion because in their world a tax cut means government is losing precious resources, and those precious resources must be recouped somewhere. We must find a way to pay for the tax cut.
And remember the premise of this, folks, is that all money is Washington’s, not yours. So when Washington proposes a tax cut, i.e., you get to keep more of what you earn, Washington and the media look at it as the government losing money. And that cannot happen. And so government must find a way to pay for the tax cut, because a tax cut is not you keeping more of what you earn because what you earn is not yours. What you end up with is because of what the government says you can have. This is how people look at it, media people on the left. They’re doing the big press conference shebang show right now. We’re rolling on it.
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RUSH: Couple of other little tidbits. The only deductions that would remain are mortgage interest — which is good because Beyonce and what’s-his-face, they’re buying $120 million in Bel Air, a McMansion. Charity and mortgage interest. Another question: Why would Democrats oppose a tax plan that creates trillions of dollars of money for the government? I’ll tell you in a minute.
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RUSH: Okay, let’s talk about taxes here for just a second. And this is a challenge for me, because what I’m gonna explain to you is something I’ve explained I don’t know how many times during the years I’ve been hosting this program, and in my mind every damn one of you ought to know it by now. But we have an audience growth here that’s going out the wazoo. Twenty-six million now make up the EIB Network audience. It’s a weekly cume. It’s just a phenomenal growth rate that is happening.
When you stop and think about it, this program is coming up on 30 years old. That means the audience is, many of them, are 30 years older than they were when they started listening and they’re still here. And there have been new arrivals over the course of the years, and especially, particularly since the election last year, the growth rate is phenomenal. Normally audiences tend to level off and in some cases drop off after an election as intense as the one in November was. We are experiencing continued expansion here.
Now, the proposal here that Trump has brought forth, three tax rates down from seven. There’s seven tax rates now. Trump wants three: 10%, 25, and 35. 15% corporate rate, down from the current 35%. Capital gains, they want it 20% or maybe less. Child care, the exemption doubled. Standard deduction doubled. Only two deductions remaining will be for charitable contributions and home mortgage interest. And the death tax is eliminated. And Steve Mnuchin, the Treasury secretary, said that the way this is gonna be paid for is via economic growth.
And he’s right, folks. This is a very close tax cut, in terms of its structure, to the Reagan tax cuts of the eighties. Let me give you a little history here because the question that I get frequently from people, “Why would the Democrats oppose a tax structure that really increases the amount of money Washington has? Since Democrats are thought of as to be Big Government people and they love spending money, why on earth would they oppose a tax plan that creates even more money?”
It’s a great question, and there are many answers to it. But first a little history. The Democrats are going to refer to this as supply-side trickle-down as a means of destroying it. That’s what they did it to the Reagan tax cuts. Supply-side trickle-down. The Democrats want you to believe that the Republicans believe in tax cuts only for the rich, because what the rich will then do is give the money away. The rich are great people, we cut their taxes and then the rich will the give money away, and that’s trickle-down. Except it doesn’t happen because the rich are a bunch of SOBs, and they don’t give the money away, and there is no trickle-down, and the rich get richer, and the poor get poorer, and the middle class goes away.
This has been the age-old time-honored way of disfiguring and destroying the truth of the Reagan tax cuts, which rely on a singular belief, that economic growth occurs in the economy. That the government doesn’t have anything to do with economic growth because the government doesn’t create anything. All the government does is destroy wealth by taking it from people, but it does not create wealth.
Now, there are some ways that government actually does create wealth, but not in the sense we’re talking about. And I don’t want to get sidetracked by those. But the essential argument here is that when you cut taxes on businesses and on individuals, you leave both with much more income in their possession to do with whatever they choose: to spend it, to invest it, or what have you.
But regardless, it all ends up circulating in the economy. It is not in government, and it’s not being wasted, it’s not being spent on things to buy votes. It’s being spent on things that improve the lives of people. When businesses benefit from tax cuts, they can hire more employees because their businesses grow. When more people are hired, more taxpayers are created. More people paying taxes equals more money going to Washington.
It’s simple mathematics. This is the result of reducing tax rates. Reducing tax rates does not reduce tax revenue. Quite the opposite. Reducing tax rates means that taxpayers and businesses keep more of what is theirs. And how they use it grows the economy. Growing the economy means companies get bigger and need more employees. Individuals get wealthier and buy more things. All of this stimulates an economy which is growing.
Now, you’re saying, “Why would anybody be opposed to this?” Because this formula runs in diametric opposition to the entire existence of the Democrat Party. The Democrat Party, especially now, is not built on self-reliant people. The Democrat Party is built on people who cannot fend for themselves, who are not self-reliant. The Democrat Party is built and wants to be built further on people who are dependent on government for most of what they have and most of what they are able to do. The more self-reliant a people become, the less government is necessary. That means the less the Democrat Party is needed. That cannot be tolerated.
But their arguments against this go even deeper. But before I get to those, let me give you some evidence. When Ronald Reagan took office in 1981, the top marginal tax rate was 70%. Now, the definition of a marginal tax rate is the tax rate on the last dollars you earn. The 70% tax rate was on income of, say, $75,000 and up. And you only paid that rate of 70% on money over 75 grand. I don’t know if that’s the real number. I’m giving you made up numbers here just to illustrate.
While the top marginal rate was 70%, there were tax shelters and tax deductions galore. Nobody paid the 70% rate, but it was there, and because it was there — and there was a 60% rate and a 50% rate, a 45%, a 24.4%. There were 12 or 13 different rates. And the objective, as you acquired more money, was to avoid going up in those brackets. The incentive was to shelter your money in government-approved deductions or shelters to avoid paying that rate. The government was still directing where your money went, but you still at least got to keep control of it rather than giving it to them.
Reagan came in and said this is absurd. And in eight years the top marginal rate dropped from 70% to 28. Now, what happened to government revenue in those eight years? It nearly doubled, from $500 billion to almost a trillion dollars, reducing the marginal tax rate from 70% to 28%. The revenue doubled. The Democrat Party immediately began history revisionism and could not permit that stat to become common knowledge.
They could not permit that to become accepted fact so a smear campaign on supply-side and trickle-down economics and tax cuts began as soon as Reagan left office. In fact, it got started even before he did. And the effort was consistent and never ending, that Reagan’s tax cuts only benefited the rich, that the poor got poorer and the middle class stayed the same or got a little smaller, and it was not good. None of was true. They were lying through their teeth.
Even today, with the top marginal rate now 39%, see what happens, they take the deductions away and then they start creeping the brackets back up. Even now the top 1%, the people the Democrats say are not paying their fair share, the people the Democrats say benefit unfairly from trickle-down tax policy and economics, the top 1% are paying nearly 40% of all income tax revenue. Stop and think of that. The top 1%. You have to have an adjusted gross income of over a million dollars a year to be in the top 1%. Those people are paying nearly 40% of the entire tax burden while it is said the rich aren’t paying their fair share. It’s an out-and-out lie, like all of liberalism is and like most of the Democrat Party is.
The top 20% are paying 50%. The bottom 50% of wage earners in America are paying zero. The bottom 50% are paying effectively nothing. They are contributing, if you want to use that word, literally nothing. So the reality on the ground is the exact opposite of the way the Democrat Party has positioned all of this. It is inarguable that lowering tax rates — now, you reach a point where you can’t lower them and still create wealth, but we’re not there.
Thirty-nine percent, there’s a lot room we could go down, we’re gonna go down to 35 here. You could take it to 30 or 28, and you could still create all kinds of new money to Washington. This is important because the Trump people are saying the way they’re gonna pay for it is with economic growth. Now, this whole concept of paying for it needs to be shot full of holes, too, because that assumes that government is entitled to X-amount of money every year regardless how much they waste, how much they blow, how little they use in efficient ways, doesn’t matter.
When you buy into this notion that something like a tax cut has to be paid for, what you’re really acknowledging is that you agree with the premise that government cannot do with less. You can, when they raise your taxes, you’re supposed to suck it up and get along with it. When they raise your user fees, when they raise the payroll taxes, you’re just supposed to suck it up and find a way.
Government will never do with a penny less than the previous year. Government, in fact, will not do with even five — they mandate 5% growth every year regardless how the money is used. Thanks to the current services baseline. So the idea that we can’t keep more of our money without finding a way to pay for it, what that means is, if there’s gonna be a corporate income tax that’s gonna be scored statically, let’s say this income tax — well, this whole tax reform– and this is gonna be reported this way — the CBO’s gonna say it’s gonna cost — make up numbers — $3 trillion over the first five years.
What? Yeah, the government’s gonna be doing with $3 trillion less than what they have if this goes through. Oh, no, we can’t have that, we can’t have that. So we have to find a way to pay for this tax cut, which means over here while we’re cutting your tax rate and the corporate tax rate, we gotta find other ways to raise your taxes to make up for the income tax cut that you’re getting.
It’s a fraud. This entire way the CBO scores these things is designed to make you feel guilty and undeserving of a tax cut, because your government is going to be really hit hard. Your government is going to have to do with less. Your government is gonna have to find a way to pay. The Trump people are saying, “No, we won’t pay for anything because the growth, the economic growth that’s gonna happen here is gonna create so much more new money, the government’s not gonna miss anything.” And the Democrats are already starting, laughing at that, rejecting that, saying that that’s absurd. But it isn’t.
It’s happened every time there has been a significant tax rate reduction. The increase in revenue — I’ll tell you, in 2013 an accident happened. George W. Bush instituted tax reform. Democrats opposed it, same principle. Somebody effectively snuck in a reduction in the capital gains rate. I forget what it was, but it was cut in half. Do you know what happened? Within a year Washington had a trillion, $2 trillion more than they had accounted for.
They didn’t know where it came from at first, and somebody said, “Well, you cut the capital gains rate.” What’s that? It means people were no longer penalized for selling stocks that had appreciated in value. If they only had to pay a 20% tax rate they go ahead and sell the stock. Tee keep 80%, government gets 20, and that’s exactly what happened. We had massive turnover of stocks, people selling, paying the capital gains tax at 20% instead of 35%, and Washington got money it wasn’t even expecting.
Democrats were not happy. You know why? Because it wasn’t fair. It wasn’t fair because capital gains tax, that’s just for the rich. Capital gains, that’s for rich people who own stocks. And the little guy doesn’t own stocks. Does the little guy have a 401(k)? Does the little guy have a pension plan? Because if the little guy has a pension plan and the little guy has a 401(k), the little guy is damn well in the stock market. And the little guy was benefiting from the capital gains tax cut just like anybody else.
But the Democrats attack lowering — even with all this new revenue — on the premise that it is unfair. It’s unfair the rich should only pay such a tiny percentage of what they earn, and the Democrats then use this as class warfare techniques in campaigns. There are far more people who aren’t rich than people who are, so it’s not hard to create a gang of anti-rich voters. And all you have to do is tell ’em you’re getting a free ride, that the Republicans have engineered it so the rich don’t have to pay hardly anything, whereas you’re paying most of what you earn, it’s not fair. They create class envy, class warfare, and they exploit it.
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RUSH: Folks, this is the sound bite. This is what I saw right as the program was starting today, this twit, right, that was on CNN. Her name is Rana Foroohar, and she’s a Financial Times columnist. She’s talking to Kate Bolduan at CNN about the upcoming Trump tax cut plan.
FOROOHAR: I fundamentally don’t see any proof in the last 20 years that tax cuts have really created growth. There’s just not a lot of evidence that this works. And really, if you look back historically, businesses don’t invest because of low tax rates. They invest because they find new ideas and an environment in which they think that they can make money. I do also think that it’s important, if we are gonna have tax cuts, that we figure out a way to pay for it, because otherwise you end up running up the deficit, which is exactly, actually, what happened during the Reagan era.
RUSH: There it is. It’s classic. That is purebred denial and ignorance. (imitating Foroohar) “I fundamentally don’t see any proof in the last 20 years that tax cuts have really created growth.” Really? “And I don’t think businesses, just ’cause they have more money, that’s not why they invest, you can’t count on that. Businesses suck anyway. And then, we’re gonna really find a way to pay for it and we’re gonna run up the deficit which is exactly what happened in the Reagan era.” No, no, no. The deficit came down in the Reagan era. It’s Obama who blew the deficit and national debt out of the water.
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RUSH: One more audio sound bite from this babe from the Financial Times. She was on CNN around noontime today. Her name is Rana Foroohar. This is the sound bite where she says that the home mortgage deduction is really, really not good.
FAROOHAR: (laughing) Well, okay, first of all, yeah, great, if we could do it on a postcard, awesome, not holding my breath for that. I will say that, you know, when you talk to both individuals and businesses, they’ll say that the complexity, the sheer complexity of the U.S. tax code, even more than the rate, is really an issue for people. Deductions are a big issue too. I mean, I think it’s really important that we start closing some of these loopholes, particularly unproductive kinds of tax subsidized debt for both individuals and corporations. Everybody loves the mortgage interest deduction, but, frankly, it encourages all of us to buy McMansions. Not a great thing.
RUSH: Who the hell does she think is her audience? How many people watching CNN are out buying McMansions? Does this woman have no ability to relate? You know, she lives in this media bubble, and it does exist. But the problem is they live on the Upper West Side, if they’re in Manhattan, or they live down in the Village and they think everybody’s doing great, everybody’s doing fine. They don’t understand what life is like in the Rust Belt. They didn’t understand why Trump had support out there, and they’re stunned.
McMansions? That’s the problem with the home mortgage deduction, people are buying McMansions? What business is it of hers how big a house people choose to live in? I just saw the other day that Jay Z, the maestro rapper and his betrothed, the famous, lovely and gracious Beyonce. By the way, do they pronounce it Queen Bey or Queen Bee? Queen Bee. Queen — b-e-y. Okay, fine. Well, anyway, they just made a bid on — it’s not a McMansion. It’s a full-fledged mansion in Bel Air. I have seen this place when I go out and play the Bel Air Country Club golf course. You can see it up there on the hill. From the vantage point of the golf course, it looks like a — well, we make jokes about it, “Who’s putting in the Motel 8 up there?”
But at any the rate, this thing is $135 million listed. They have bid $120 million for it, 15 car garage, four different pools. It has a media room, a wine room, a room to be used as a studio for Jay Z and Queen Bey to do their recording. What else has it got? It’s got — well, not a helicopter pad, but 30,000 square feet, some guesthouses and stuff like that. They have bid $120 million for it. Do you think that Rana Foroohar of the Financial Times might have a problem with the purchase of the McMansion?
Do you think Jay Z will use the home mortgage deduction to finance it or just write a check? He won’t write a check. He’ll wire the money. People don’t write checks for $130 million. You don’t mess with the paper. You wire the funds. (interruption) I don’t know. I thought they had his and hers Gulf Streams. I’m not sure. Anyway, on the other hand, you know, Jay Z and Queen Bey might be of the belief that you use other people’s money. So they might go out and finance the home rather than deplete their own resources, maybe get a marginal loan for some of it, in which case — you know, but I’m sorry, I’m sorry, folks, I forgot, the rich don’t get to deduct the interest on their mortgage. I’m sorry.