Most independent analysts have concluded the $1.5 trillion "tax reform" recently approved by both houses of Congress will be a windfall for rich families like the Trumps and Rauners -- while leading to tax increases on middle class families. But that is only part of this particular horror story.
Even under the rosiest of economic growth scenarios, these plans blow at least a $1 trillion hole in the federal budget. As a result, both the president and Congress have signaled that everything from the State Department to programs on which millions of low and moderate income families rely will be on the chopping block.
This includes President Donald Trump's proposal to eliminate two programs that aid nearly half a million Illinois residents each year -- the Public Service Loan Forgiveness (PSLF) program and HUD's Community Development Block Grant (CDBG) program.
The CDBG program gives state and local government access to flexible funding for infrastructure projects, economic development initiatives, crime prevention, housing rehabilitation programs and critical services like job training and child care for some of our state's most disadvantaged populations.
Recent research by the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign shows that elimination of CDBG would result in more than 460,000 of our state's low-to-moderate income residents losing direct assistance, the loss of over 1,800 full-time jobs paying an average income of over $62,000, and a $168 million reduction to our state's economic output.
Nationally, the elimination of the CDBG program would shut down 11,000 city and county infrastructure projects, eliminate 60,000 jobs, and result in nearly 24 million low-to-moderate income people losing direct assistance -- including 4.5 million special needs persons, 4 million elderly Americans, and about 150,000 veterans.
Created in 2007 by President George W. Bush, the PSLF program helps workers engaged in public service repay their student loans. In Illinois, beneficiaries earn about $50,000 per year but carry and average of $80,000 in student debt -- and include teachers, librarians, social workers, psychologists, detectives, fire marshals, scientists, engineers, researchers, and religious workers, among others.
The Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign estimate that more than 21,000 young workers would lose this vital assistance in Illinois if the PSLF program is eliminated. On average, these workers would lose $7,400 per year in annual benefits, face $600 more per month in student debt, and would have $125 million less to spend in our state's economy. And worse, taxpayers would lose a valuable tool for recruiting young people to work in lower-paying -- yet vital -- public service careers.
While public service workers and low-income residents stand to lose from the current tax and budget proposals, there are those who stand to gain.
For example, the elimination of the Alternative Minimum Tax (AMT), which was included in the House tax bill, stands to save the president -- a self-described "very wealthy" billionaire -- up to $31 million per year based on what little we know of his prior tax returns. The House measure also includes elimination of the inheritance tax (also known as the estate tax), which will save the Trump children and other billionaires hundreds of millions of dollars. Under current tax and budget scenarios, profitable defense contractors will not only see their marginal corporate tax rate cut almost in half, but will see billions of dollars in new investment in equipment that the military has said it doesn't even want.
The Trump Administration and Illinois' congressional delegation must consider the negative economic impacts of a $1.5 trillion tax cut that relies on leaving millions of students, low to moderate income families, veterans, and elderly persons without the financial assistance and vital care that they need.
Tax and budget policy can be complicated. But ultimately, it's about very basic policy choices that ultimately produce winners and losers. By any objective standard, the proposals under consideration in Washington amount to Robin Hood in reverse -- both for taxpayers, and our already shrinking middle class.
Frank Manzo IV is policy director of the Illinois Economic Policy Institute.