This was a very good year for billionaires — and that was before the massive tax cuts arrive.

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If you thought this was a great year for billionaires — the world’s 500 richest are $1 trillion better off so far — just wait until 2018, when the bounty from the Republican tax cuts kicks in.

One trillion dollars equals the gross domestic product of Indonesia, the fourth most populous nation on the planet. It would fund Amtrak’s annual subsidy ($1.4 billion, which President Donald Trump wants to kill) for centuries. Imagine the high-speed rail system it could build? A trillion would make a big start on universal healthcare ($3.3 trillion total health spending in 2016, including inefficient, cost-ballooning private insurance). America could have a real manned space program — Project Apollo cost $145 billion in today’s dollars.

But no nice things for most of us. When we went to the moon, tax rates on the wealthiest were 70 percent or more. They’ve fallen below 40 percent, with plenty of offshore shelters. Under the new law, they will fall to 37 percent, with abundant opportunities for legal evasion. The cost of this looting of the Treasury: $1.5 trillion. To paraphrase the quip attributed to Sen. Everett Dirksen, “A trillion here, a trillion there, and pretty soon we’re talking real money.”

But little real money for most of us. As Eduardo Porter pointed out in the New York Times, the bottom 50 percent of incomes have been stagnant since the Reagan tax cuts of the 1980s, while the very wealthy gained mightily from those windfalls. That’s a feature, not a bug, as people like to say. Wealthy donors pushed hard for this latest GOP giveaway.

I could defend the two richest men on earth who happen to reside in the Seattle area. At least they built productive, even revolutionary, enterprises that provide tens of thousands of good jobs here. Bill and Melinda Gates have become the world’s largest philanthropists. Maybe Bezos will get there, someday. On the other hand, the size and market power of their companies, especially Amazon, would make Theodore Roosevelt and other Progressive-era trust busters spin.

This year’s trillion-dollar windfall is almost entirely a result of the long bull market and other financial plays. It shows the stark divide between those who make money off investments, and the majority who work for wages. And wages have been flatlined for many. No wonder most American households have yet to recoup their losses from the Great Recession. The super-rich will use their extra scratch from the tax cut to… invest in the stock market and other financial plays.

The emboldened Republicans will use the deficit caused by the tax cuts as an excuse to come after Medicaid, Medicare and Social Security. Forget about funding the research necessary for economic breakthroughs (e.g. the internet). Also, more surprises continue to fall out of this legislative Fibber McGhee’s closet, passed on the fly without hearings or most members even reading it. For example, a tweak to the structure of deductions could devastate charitable giving.

Meanwhile, all this additional hot money — combined with the Trump administration rollback of rules governing the financial sector — will set up the next crash. Wait for it. They can blame it on minorities and liberals — and half the country will believe them.


Today’s Econ Haiku:

Overweight in tech

The stock index funds, they are

Yoda has a point