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      The US credit rating has been downgraded. But there’s an easy fix for our debt | Robert Reich

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      On Friday, the credit rating of the United States was downgraded. Moody’s, the ratings firm, announced that the government’s rising debt levels would grow further if the Trump Republican package of new tax cuts were enacted. This makes lending to the US riskier.Moody’s is the third of the three major credit-rating agencies to downgrade the credit rating of the United States.So-called “bond vigilantes” have already been selling the US government’s debt, as the Republican tax package moves through Congress. They’re expected to sell even more, driving long-term interest rates even higher to make up for the growing risk of holding US debt.Some rightwing Republicans in Congress are using the Moody’s downgrade to justify deeper spending cuts in Medicaid, food stamps and other social programs that lower-income Americans depend on.But, hello? There’s a far easier way to reduce the federal debt. Just end the Trump tax cuts that mainly benefit the wealthy and big corporations – and instead raise taxes on them.I’m old enough to remember when the US’s super-rich financed the government with their tax payments. Under Dwight Eisenhower – hardly a leftwing radical – the highest marginal tax rate was 91%. (Even after all tax credits and deductions were figured in, the super-rich paid way over half their top marginal incomes in taxes.)But since the Reagan, George W Bush and Trump 1 tax cuts, tax rates on the super-rich have plummeted.So instead of financing the government with their taxes, the super-rich have been financing the US government by lending it money.skip past newsletter promotionafter newsletter promotion(You may have heard that the US’s debt is held mainly by foreigners. Wrong. More than 70% of it is held by Americans – and most of them are wealthy.)This means that an ever-increasing portion of the taxes from the rest of us are dedicated to paying ever-increasing interest payments on the debt – payments that go largely to the super-rich.So when the debt of the United States is downgraded because Trump Republicans are planning another big tax cut mainly benefiting the rich and big corporations, most Americans could end up paying in three different ways:

      They’ll pay even more interest on the growing debt – to the super-rich.

      They’ll pay higher interest rates on all other long-term debt. (As higher rates on treasury bonds waft through the economy, they raise borrowing costs on everything from mortgages to auto loans.)

      The debt crisis will give Republicans even more excuse to do what they’re always wanting to do: slash safety nets. So many Americans could lose benefits they rely on, such as Medicaid and food stamps.
      The “bond vigilantes” are not the cause of this absurdity. Neither is Moody’s or the other credit-rating agencies. Nor, for that matter, is the growing national debt.What’s the underlying cause? Just follow the money. It’s the growing political power of the super-rich and big corporations to lower their taxes at the expense of most Americans.

      Robert Reich, a former US secretary of labor, is a professor of public policy emeritus at the University of California, Berkeley. He is a Guardian US columnist. His newsletter is at robertreich.substack.com More

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      Why is Trump considering raising taxes on millionaires? | Alex Bronzini-Vender

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      “I actually love the concept,” Donald Trump recently told Time magazine of a proposal circulating within his cabinet to raise taxes upon those earning over $1m. “I don’t want it to be used against me politically, because I’ve seen people lose elections for less, especially with the fake news.”Few presidential administrations have killed sacred cows at a faster rate than that of Donald Trump. But this really is shocking: a sitting Republican president praising a proposal to raise taxes upon the wealthy, adding only the slight caveat that it would be adversely spun by those in “the fake news”. A tax increase, Trump apparently believes, would be tenable as policy but not as politics.Trump says something similar of almost every idea thrown his way, and commentators have long observed that the surest way to change the president’s mind is to be the last person who spoke to him. Perhaps more interesting than Trump’s judgment on the issue, then, is that leading members of his cabinet have endorsed a similar tax hike. Longtime anti-tax activists are panicked. As the Lever recently noted, there’s every reason to believe that serious cracks are appearing in the Republican anti-tax coalition.First: why? The proposal itself is a brainchild of the conservative American Compass thinktank, which, in a June 2024 white paper, proposed raising taxes upon the wealthy to pay down the American national debt. “The constituency and base of the Republican party is shifting,” Oren Cass, American Compass’s founder, told the Atlantic in April. To extend Trump’s 2017 tax cuts by simply adding $5tn to the American national debt would be, in Cass’s words, “pathetic, embarrassing, and outright cheating”.Steve Bannon, like Cass, has long fretted about the contradiction between the Maga movement’s populist posture and its upwardly redistributive governance. “This is a 1932-type realignment, if we do this right,” Bannon told Semafor in December. “You have to break that mindset that stock buybacks are fine, that crony capitalism is fine, and the tax breaks for the corporations are fine, then you’re going to squander a unique moment in history.”The proposal’s origins might be among the movement’s heterodox policy impresarios, but – more confusingly – its potential backers within the White House aren’t just self-styled economic populists like JD Vance. Those reportedly open to the idea also include mainstream conservatives like Russell Vought, director of the office of management and budget and a stalwart of the Heritage Foundation, and Scott Bessent, a former hedge fund manager and Trump’s treasury secretary.Their voices confound the expectation that the party’s “realignment” wing is driving the breakdown of the Republican consensus on tax-cutting. Instead, it’s something much more prosaic: the Trump administration’s economic team has realized that an abnormally large slice of the American debt needs to be refinanced this year.Trump administration officials hoped that, following Trump’s “liberation day” tariff announcement, investors would seek safety from a faltering stock market by shifting capital into US treasury bonds. Such a move, they reasoned, would drive bond prices up and yields down – since bond yields fall when prices rise, as the fixed interest payments become less attractive relative to the purchase price. Lower yields, in turn, would ease the government’s borrowing costs.And for a moment, it seemed the plan was working. The 10-year yield dipped, and Trump touted it as validating his tariff strategy. But the movement didn’t hold. Rather than rotating into bonds, investors fled both equities and treasuries, spooked by inflationary pressure from tariffs, fiscal instability and rising geopolitical risk. The result was a sharp drop in demand for government debt, a spike in yields and a higher cost of borrowing – precisely the outcome the White House had hoped to avoid.The Trump administration’s one weird trick to refinance at lower costs than necessary failed. Now, the Republicans have two remaining options: cut spending, or cut the tax-cutters loose.What does that portend for the future of American conservatism? Whether or not the Trump administration follows through on raising taxes on the wealthy – it likely won’t – the fiscal compact that’s underpinned American conservatism has, at least in the near term, become unsustainable.skip past newsletter promotionafter newsletter promotionSince the presidency of Ronald Reagan, conservatives have largely managed to slash taxes on the wealthy without pursuing correspondingly deep austerity measures. Public debt has made up the difference. “Reagan proved deficits don’t matter,” Dick Cheney reportedly told the treasury secretary as the Bush administration sought a second round of tax cuts in 2003. But, at least over the next year, deficits will very much matter. And however the Republicans choose to resolve their impasse, a critical flank of the Trump coalition – either the wealthy or the party’s increasingly working-class base – will need to pay.If the Republican fiscal bargain is breaking apart, the GOP will need another way to unify its increasingly disparate base. The Democrats have long suffered from a similar issue: the statistician Andrew Gelman observed in 2007 that the real mystery of Americans’ voting behavior wasn’t that working-class voters were drifting towards the GOP – an overstated effect at the time – but that rich and poor alike were casting their lot with Democrats. The Democrats resolved this, but to mixed results. Rather than take on the deeper structural questions of economic inequality, they focused their campaigns on defending existing programs like social security and Medicare, advancing measured reforms in the name of racial justice, and protecting rights to abortion and same-sex marriage.Perhaps the crack-up of the tax-cutting coalition will lead the Republican party to attempt that compromise a l’envers. Just as the Democrats sidestepped thorny economic issues by rallying around the defense of widely accepted civil rights, the GOP could turn away from its longstanding economic bargain – the one that has defined its politics since Reagan – and instead double down on its campaign to undermine those same rights. In deepening its abuses against noncitizens, racial and sexual minorities, and activists on behalf of Palestinian rights, the Trump administration might perceive itself as restoring purpose to a party sorely lacking it.It’s too soon to tell. What is certain, however, is that the tax-cutting coalition as we know it has become deeply unsustainable. Tax-cutting once unified the Republicans. But, in forcing Trump to choose between taxing the top or deeper austerity for the bottom, it now threatens to blow it apart.

      Alex Bronzini-Vender is a writer living in New York More

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      While Trump slashes jobs, his golf trips are costing taxpayers millions | Mohamad Bazzi

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      It’s no secret that Donald Trump loves to golf, especially at his own resorts. But Trump’s habit is costing US taxpayers tens of millions of dollars – even as he decries fraud and claims to slash waste in federal spending.Since he took office, Trump has fired tens of thousands of federal workers and tried to shut down agencies, part of his effort to unilaterally dismantle the government. He has also made seven trips to Florida and the golf courses he owns there.This weekend, Trump made his seventh visit to Florida and his sixth to his waterfront mansion and private club at Mar-a-Lago since his inauguration on 20 January. As Richard Luscombe noted in the Guardian last week, Trump’s frequent trips to his own properties not only cost taxpayer funds, but they benefit him directly – his businesses have charged the US government to house Secret Service agents and other White House staff. In other words, American taxpayers pay the Trump Organization for the right to protect Trump and his family.During Trump’s first term, his properties had a history of overcharging the Secret Service, by as much as 300% beyond the authorized government hotel rates, according to a report issued by Democrats in Congress last year. The report found that the Trump Organization charged the Secret Service as much as $1,815 a room per night to stay at the Trump International hotel in Washington DC – billing the US government significantly more than the hotel did for “rooms rented by the Qatari royal family and Chinese business interests”.It’s difficult to gauge exactly how much the Secret Service and other agencies spent at Trump properties, since various reports and audits focus on specific time periods instead of his full four years in office. The watchdog group Citizens for Responsibility and Ethics in Washington (Crew) estimated that the Secret Service paid nearly $2m to Trump-owned properties. Trump visited his properties an astounding 547 times during his first term, according to an analysis by Crew. That included 145 trips to Mar-a-Lago, 328 visits to Trump’s various golf courses and 33 visits to the Trump hotel in Washington, which his company sold in 2022 but is now negotiating to buy back.The cost to US taxpayers for Trump’s jaunts to Mar-a-Lago, which he calls his “winter White House”, far exceeds renting rooms for the president’s security entourage. A 2019 report by the Government Accountability Office (GAO), which examined four trips that Trump took to his Palm Beach resort during his first term, put the total cost at $13.6m, or about $3.4m for each visit. That includes flying Air Force One, along with a separate cargo plane that carries the presidential motorcade, between Washington and the Palm Beach international airport. With seven trips so far into his current term, the US government has likely already spent more than $23m on Trump’s golf outings.And that estimate doesn’t capture the full costs to taxpayers. The GAO report does not account for additional federal funds to reimburse local law enforcement agencies for protecting Trump while he’s in Florida. The Palm Beach county sheriff, Ric Bradshaw, has said that his department spends $240,000 a day to help the Secret Service protect Trump. Bradshaw recently asked county commissioners for $45m in additional funds to provide security for Trump’s visits through the rest of this year – and the county is asking Congress to reimburse those costs.Trump often conducted official business and brought other senior US officials on his golf-focused trips to his properties – and he is repeating this pattern early in his second term, when he has visited Mar-a-Lago nearly every weekend. Trump’s frequent trips to his golf clubs send the message to foreign leaders, business executives, lobbyists, Republicans in Congress, and others who want to curry favor with the Trump administration that his properties are open for business. Throughout his first term, Trump dodged accusations that he was violating the US constitution’s emoluments clause as his businesses accepted money from foreign governments or lobbyists connected to them. Trump’s businesses received $7.8m from at least 20 foreign governments during his first administration, according to a report issued by congressional Democrats last year, although a later analysis by Crew estimated that payments from foreign governments reached $13.6m.At Mar-a-Lago, business leaders were recently offered one-on-one meetings with Trump for $5m, while others paid $1m a seat for a small-group candlelight dinner with the president. Those funds seem to be going to Make America Great Again Inc, a Super Pac that spent more than $450m on Trump’s presidential campaign last year, and is now expected to raise funds for a presidential library that would be built after Trump leaves office.Previous US presidents enjoyed playing golf, including Barack Obama and George W Bush. In fact, as a private citizen, Trump mocked Obama dozens of times for leaving Washington to play golf during his presidency. In August 2016, during his first presidential campaign, Trump pledged he wouldn’t have much time to hit the greens. “I’m going to be working for you,” he told a rally in Virginia. “I’m not going to have time to go play golf.”Of course, Trump ended up spending far more of his first term as president playing golf than Obama had. And Trump’s problem is not how often he plays or how many weekends he takes off. Because Trump refuses to divest from ownership of his family business, his frequent golf outings go beyond questionable government spending – the president is enriching himself through payments that US agencies make to Mar-a-Lago and other Trump properties.The president is exempt from conflict of interest laws that ban federal employees from taking actions that would directly benefit them. Since the 1970s, US presidents have voluntarily abided by these laws, and put their financial holdings in a blind trust. But Trump refused to divest from his extensive business interests during his first term, creating a web of conflicts and potential corruption. Today, Trump is more emboldened to ignore US laws and norms set by past presidents, partly thanks to last year’s supreme court ruling that concluded that Trump has “presumptive immunity from prosecution for all his official acts”.Since taking office in January, Trump and his allies, especially the billionaire Elon Musk, rushed to dismantle many of the safeguards put in place after the Watergate scandal to monitor government corruption and punish officials involved in ethics violations. Trump fired 17 inspectors general who served as watchdogs over federal agencies, and he gutted a unit at the justice department that was created in 1976, after Watergate, to prosecute public corruption cases.In his first term, Trump did not suffer any consequences for playing a lot of golf – and using the presidency to enrich himself and his family. Now, he seems determined to spend even more time shuttling back and forth to his golf courses at taxpayer expense, with a chunk of that money going to his businesses.

      Mohamad Bazzi is the director of the Hagop Kevorkian Center for Near Eastern studies, and a journalism professor at New York University More

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      Read the signs of Trump’s federal firings: AI is coming for private sector jobs too

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      The Trump administration recently announced that it would be laying off approximately 6,700 workers at the Internal Revenue Service, about 8% of the people employed by the agency. Tens of thousands of federal employees at other agencies are also losing their jobs.The timing could not be worse. We’re in the middle of the tax season with corporations and individuals facing filing deadlines in March and April. Millions of returns will need to be processed. Refunds will be due. Questions will need to be answered. But that’s not all.In just a few short months, Congress will be debating – and probably passing – new rules that will significantly change our tax laws. Republicans are pushing to either extend or make permanent many of the provisions of the 2017 Tax Cuts and Jobs Act, most of which expire at the end of this year. There are proposals to eliminate taxes on tips, social security income and overtime wages. The Democrats will be fighting some of these provisions, arguing their effect on future deficits. Regardless, there will be an enormous amount of change to rules, forms and guidance that will need to be made by the IRS.The remaining employees at the agency, already demoralized and now seriously short-staffed, will now be asked to handle this looming workload. Taxpayers and their accountants will need to be patient. I can already foresee my profession’s future frustration as they wait for guidance on a myriad of tax changes that will affect their clients. After barely recovering from all the disruptions caused by the pandemic, these layoffs are sure to set things back.But let’s not pretend this isn’t part of a wider trend.We all know the technology already exists to do much of the work that many IRS employees do now. My clients already use tech platforms to automate their accounts payment and payments. These systems – which leverage AI and optical character recognition – can very accurately (and affordably) scan, read and extract data from any document and ensure that the information is integrated into their accounting systems, where payments are automatically scheduled for review and disbursement. Considering that most of the tax returns filed are done in a similar fashion – and are mostly routine – it seems obvious that similar systems could be doing the same functions, which would probably eliminate a much greater percentage of workers who have already been chopped by the current administration.Look what technology is doing elsewhere. The financing platform Klarna announced last summer it was laying off about 2,000 workers – half of its workforce – as a result of its new AI customer service system that did their work instead. Morgan Stanley, JP Morgan Chase, UBS and other Wall Street firms are building AI-based systems that are eliminating the need for investment analysts, wealth managers and other human workers. Google, Ikea, Salesforce and a number of other firms are rapidly replacing their workers with AI systems. Mark Zuckerberg has publicly said that AI applications will be doing the work of mid-level engineers at Meta this year.About $80bn was allocated to the IRS under Joe Biden’s Inflation Reduction Act to “modernize” tax collection. Government being the government, I’m sure that progress has so far been slower than it should be. But if you’re working at the IRS, or any federal agency, do you not see the writing on the wall? And if you’re working in customer service, marketing, accounting or any of these jobs in the private sector do you also not see what’s happening?The firing of federal workers is a preview of what’s about to happen in the corporate world. CEOs at numerous companies have already demonstrated that technology can do the work of people and replace them. And they’re just getting started. The tech companies like to say that AI will “work alongside” humans or “increase employees’ productivity” but that’s nonsense. Like the federal workers, many in the private sector are about to be replaced too. More

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      From weather apps to taxes: the trickle-down effects of Trump’s federal worker firings

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      You wake up to dark clouds outside, so you check the weather on your phone: a storm is coming.That weather app uses data from the National Weather Service, a part of the National Oceanic and Atmospheric Administration, a small organization which could see as much as 10% of its workforce cut this week.You grab food to make breakfast: eggs, meat, formula for your baby. The safety of your food is regulated and inspected by a host of federal employees, who flag and investigate when items shouldn’t be eaten.The former head of the Food and Drug Administration’s food division resigned this week because he thought firings and layoffs at the agency would hinder its work. “I didn’t want to spend the next six months of my career on activities that are fundamentally about dismantling an organization, as opposed to working on the stated agenda,” he told Stat News.You check your flight reservations for an upcoming trip to a national park. The safety of that flight is overseen by the Federal Aviation Administration, which experienced layoffs this month despite recent high-profile aviation accidents. The national park will probably see its staff gutted, leaving it more vulnerable to wildfires and without search and rescue capabilities. “I honestly can’t imagine how the parks will operate without my position,” a park ranger who was cut wrote on Instagram. “I mean, they just can’t. I am the only EMT at my park and the first responder for any emergency. This is flat-out reckless.”You keep an eye on the bird flu levels and a measles outbreak – the winter has been punishing for illnesses. The Centers for Disease Control and Prevention were hit with a first round of layoffs this week, which could affect outbreak response and reporting. The Epidemic Intelligence Service, a disease-detective training program, could be on the chopping block.Oh, and you’re working on your taxes – while thousands of Internal Revenue Service probationary employees are expected to be laid off during tax season.The government certainly has room for improvement – backlogs that should be cleared, investigations that should be more thorough, communication that should be sharper, actions that should be more transparent. But all of this work is done by the federal government and its millions of workers and contractors, whose daily jobs touch the lives of all Americans and many around the globe.In the first weeks of the Trump administration, the president and the billionaire Elon Musk, tasked with cutting government through the so-called “department of government efficiency” (Doge), have waged war against federal workers. Musk and his team have moved from agency to agency, indiscriminately firing probationary employees and those whose work they say doesn’t align with the administration’s priorities, including many who work on diversity initiatives or in international development.The result is a hobbled and terrified federal workforce that is just at the beginning of the expected cuts – and an American public that is starting to experience the repercussions.“We’re playing Russian roulette, and basically you’re putting a whole bunch of more bullets in the chambers,” said Max Stier, the CEO of the Partnership for Public Service, a non-profit that advocates for a strong civil service. “You can’t prevent all bad things from happening, but our federal government is, in a lot of ways, a manager of risk, and it does a pretty darn good job of managing that risk, even though it can be improved.”An email went out in January to millions of federal employees offering a deferred resignation, which the White House says about 75,000 people have accepted, although it’s unclear how many of the people who accepted are actually eligible.Joel Smith works at the Social Security Administration and is the president of the American Federation of Government Employees Local 3184, which covers more than 90 agency offices in parts of Arizona, New Mexico, Texas and Louisiana. He said the office of management and budget, which has coordinated the buyout program it’s calling a “fork in the road”, hasn’t communicated with the agencies about which employees accepted the buyout. Some employees didn’t show up the first day the program’s leave was supposed to begin, and the agency had to call them to figure out where they were, he said.“It’s just chaos on top of chaos, on top of terror, on top of employees that want to leave are being told they can’t leave. I’m trying to think of a good word for it. I don’t know if there is one, other than clusterfuck,” Smith said.Those that remain in their jobs worry about whether they’re next as they add to their workloads to cover for those who lost their jobs or quit. People eyeing next career moves will avoid civil service, previously seen as a stable career, to stay out of the current chaos.Many people take core functions of the federal government for granted, as it protects them from disasters or national security concerns, but might not otherwise affect them. But that could change after widespread firings. For example, layoffs in the Environmental Protection Agency mean that those remaining in their positions have less capacity to do their jobs.“That could come in the guise of someone not being able to respond to an environmental disaster,” said Nicole Cantello, president of the American Federation of Government Employees Local 704. “Or what about if there’s a facility illegally flaring air pollutants? We might not be as able to respond to something like that which could have health effects. There could be devastating effects to the American people.”If you or your loved ones use any direct services such as benefits programs, you could see the effects of a beleaguered federal workforce up close.Let’s say you’re helping your parents sign up for social security. The Social Security Administration is already understaffed, so losing any positions will make wait times longer for people who need to access benefits, Smith said.Smith’s father filed for retirement benefits in November to begin in February, but by February, his case hadn’t been processed – it was stuck in somebody’s backlog. A member of Congress had to intervene to bring attention to the delay, a frequent tactic to overcome stalled claims.“What people think they’re witnessing now and they’re complaining about now, in terms of delays, is going to be considered the good old days here in a year or two if this continues,” he said. “We already don’t have the people to do the work.”For federal workers and their families, the impact is heavy and immediate if they lose their livelihoods.“The way it’s working now is that the career civil servants are viewed as the villains,” said Rob Shriver, former acting director of the US office of personnel management who now works at Democracy Forward. “They’re viewed as people who are to be worked around and not worked with. They’re being deprived of the thing that’s most important to them, which is to contribute to the agency’s mission and bring their skills and expertise to the table to help inform decision makers.”Though many have focused on the disruption caused in Washington, federal workers live throughout the US and, in some cases, other parts of the world.“There’s a human aspect of it, which is these people are not just being fired, but they’re being fired in the worst way. No notice, no nothing. This is true across the board. There is zero humanity being demonstrated,” said Stier, of the Partnership for Public Service. “It is unbelievably costly to the individuals involved, and it’s costly to the system and to the American taxpayers. It’s going to cost the American taxpayer a ton of money. It is not going to save any money.”Send us a tipIf you have information you’d like to share securely with the Guardian about the impact of cuts to federal programs or the federal workforce, please use a non-work device to contact us via the Signal messaging app at (646) 886-8761. More

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      Trump advisers contemplating cuts to Medicaid and other welfare programs

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      Donald Trump’s economic advisers and congressional Republicans are discussing possible cuts to Medicaid, food stamps and other government welfare programmes to cover the costs of extending the president-elect’s multitrillion-dollar 2017 tax cut.The cuts could mean new work requirements and spending caps, according to the Washington Post, citing sources involved in the talks, including aides in Trump’s transition team.Extending the tax cuts – most of which are due to expire next year – could add $4tn to the national debt, which already stands at $36tn.But Republicans fear triggering a political backlash by slashing programmes that serve an estimated 70 million Americans to pay for a tax cut that disproportionately benefits the wealthy.The 2017 tax cuts were criticised for being skewed in favour of the rich, with households in the top 1% income bracket receiving a reduction of $60,000 in 2025, compared with less than $500 for those in the bottom 60%, according to the Center on Budget and Policy Priorities.Trump campaigned on extending the 2017 reduction while also vowing to abolish taxes on tips for restaurant workers.Republicans support the extension but worry that the loss of revenue could add to government borrowing – prompting them to search for savings in others areas.In addition to safety net programme cuts, some Republicans are considering re-purposing clean energy funds passed by Democrats.The GOP has warned that the costs of Medicaid – whose claimants can include low-income people, newborns, people who are blind or disabled, and those suffering from certain illnesses – has ballooned with the expansion of the Affordable Care Act, also known as Obamacare.Jodey Arrington, the chair of the House of Representatives’ budget committee, told reporters that a “responsible and reasonable work requirement” could save $100bn in Medicaid costs, while another $160bn could be cut by checking eligibility more than once a year.The Paragon Health Institute, a rightwing thinktank, published a study in the summer proposing other reductions that it said could save $500bn over a decade. It said rule changes to Medicaid recently enacted over the past year by the Biden administration could cost up to $135bn nationally and between $46.3bn and $82.3bn at state level over the next five years.Alterations to food stamps – officially known as the Supplemental Nutrition Assistance Program – could take the form of limiting which items recipients can purchase with benefits or broadening work requirements. The latter proposal was floated in the Heritage Foundation’s Project 2025 blueprint for radically overhauling US government.Qualifying criteria are tailored to assist the poorest households, with eligibility determined by income and household size. A single person with no dependents needs to be earning less than $1,354 a month to qualify. A household with two or more people but earning $1,800 per month would also be eligible.The projected cuts to welfare entitlement programmes come as the Republicans prepare to control the White House and both chambers of Congress following this month’s election.It also coincides with Trump’s choice of Elon Musk, the Tesla and Space X entrepreneur, to head a newly formed Department of Government Efficiency along with Vivek Ramaswamy, his former Republican primary opponent, with the brief of slashing waste from federal spending. Musk has spoken of making around $2tn in spending cuts.The US is currently running a budget deficit at around 6% of its gross domestic product. The national debt held by the public is currently worth around 97% of the national economy.The non-partisan Committee for a Responsible Federal Budget has argued that, without major spending reductions, the deficit would widen significantly in the next 10 years, while the US national debt could soar to 143% of the economy. More

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      No tax on tips fires up Nevada hospitality workers: ‘I want that!’

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      Kristine serves gamblers playing countertop video poker screens at the center bar of Las Vegas’s Ellis Island casino. She declines to share her last name for privacy reasons, but is not timid about her support for Donald Trump when asked about his campaign promise to end federal taxation on tips.“I want that!” Kristine says as she fulfills cocktail waitresses’ orders. “Our tip compliance is too high. They take so much from our paycheck.”Tip compliance – the tax process for expected earnings from tips – has become a political football in Nevada, with federal lawmakers from both parties piling in to co-sponsor bills or present their vision for how tax exemption for tips should work.The push for tax relief for a specific sector of wageworker may seem out of the blue if the idea wasn’t so brazenly opportunistic. According to state employment figures, one in four jobs in this crucial swing state are in leisure and hospitality, many if not most of which are tip-earning positions at bars, restaurants, casinos, spas and hotels in Las Vegas and Reno.The frenzy over the issue started in June, during a Trump rally in Las Vegas, where he surprised supporters, press and members of his own party, saying: “Hotel workers and people that get tips, you’re going to be very happy because when I get to office we are going to not charge taxes on tips.”It was a “wild-ass promise”, says Ted Pappageorge, treasurer for the Culinary Union Local 226, which represents 60,000 hospitality workers in Nevada.He points out that during Trump’s four years in office and the four years since, the union’s heard “not a peep out of him” regarding overtaxed wage workers. Indeed, Trump’s signature legislative achievement as president was a tax cut that mainly benefited corporations, real estate developers, and billionaires and millionaires transferring wealth to their scions. “One of the problems is Trump lies, and he lies a lot,” Pappageorge said.But, Pappageorge added, Trump’s comments created an opening. “There’s actually a requirement now to have a discussion and an opportunity for us to wedge into the discussion, to make it real.”The union is now seeking tip compliance relief for their members while also advocating to raise the federal sub-minimum wage, which allows employers in some states to pay tipped earners as little as $2.13 per hour.Trump’s opponents have been listening. In Kamala Harris’s first Las Vegas rally as the presumptive Democratic nominee, she announced that she wouldas also pursue no taxes on tips, delighting rank-and-file Democrats who had become intrigued with the proposal, and irritating Trump supporters who wanted him to have the policy all to himself.“Why is she copying him?” says Kristine, the Ellis Island bartender. She voted for Trump in the last two election cycles and will again this fall. “I believe in women power, but I feel like we need a better president, like a strong personality, a tough one, to put [things] back to normal.”Wistful for the pre-pandemic economy, before food, fuel and housing prices shot up, Kristine says it would be nice if people could afford to enjoy themselves again: “Go on vacation again, because everything we make goes to bills, that’s it, and it’s not enough still. Everything is so expensive and you’re making the same money.”Southern Nevada’s vulnerability to economic slumps has led to two local sayings: the region is “the first to suffer, last to recover” because “when the economy gets sick, Las Vegas catches pneumonia.”The city was hit hard by pandemic-era travel restrictions. Since then, resorts have recovered strongly, reporting record profits from gaming each of the past three years. In resorts and casinos that are unionized (Ellis Island is not), the culinary union leveraged these historic profits to negotiate higher wages for their members.Still, many workers say their tip earnings have remained stagnant.Machines such as the Smarttender beverage-mixer and screen-based ordering systems have depressed tip earnings by dehumanizing the experience and distorting the scale of service, says Sheri Earl, 51, a cocktail waitress at Mandalay Bay. “It looks like a lot of the servers are bringing out so many drinks, but we’re not being tipped on all of those.View image in fullscreen“Also,” Earl adds, “people just aren’t tipping the way that they used to because they don’t have the money. I noticed when I’m serving, more people will give $1 for four drinks, whereas it used to be $1 per drink, so I’m serving more drinks, but bringing back less money.”A lifelong Democrat, Earl’s loyalty to the party had wavered in recent years, and her conversations in the employee break room suggest that many her colleagues will support Trump out of nostalgia for how they thrived before Covid.But Harris’s candidacy has reaffirmed her allegiance to the Democratic ticket, Earl says. “She’s very optimistic about changes that she wants to do as a female president, and a lot of the tax cuts for the working class helps.“Now, I don’t think there will ever be no taxes on tips,” Earl clarified. “I expect to pay it, but not at rates where it’s unrealistic, or I can’t support my family, or I can’t pay my bills at the end of the month.”Others were less inspired.“It’s a ‘so you vote for me’ promise,” says Samantha, a blackjack dealer at Ellis Island. “I don’t think Congress will let it happen. [The candidates] can say it, and they can hope that because they said it, you’re going to vote for them, but it isn’t going to happen.” Shrugging, she says she does not intend to vote. “Unfortunately, I don’t believe that my vote matters.”Democratic presidential candidates have enjoyed a winning streak in Nevada that goes back four cycles from Biden’s narrow 2020 win, to Hillary Clinton’s 2.4% margin over Trump, to Barack Obama’s victories in 2012 and 2008. Survey averages currently show Trump leading Harris by 2 to 3 percentage points.Before Biden dropped out, Trump led by 9 points in Nevada. Harris has rejuvenated Democratic enthusiasm and made strides to corral the unwieldly coalition that defeated Trump four years ago, but Nevada is proving to be a different beast. It’s one of the few swing states in which Trump continues to lead in most major polls. But her canny decision to jump on the no tax bandwagon may help.Badass Tax Guys, a tax preparation company in Henderson, Nevada, has hundreds of tip-earning clients, and many have mentioned to owner Robert Wagner that the proposal, while intriguing, seems too good to be true.“‘We see all the upside, and we love keeping our money, but what’s the catch potentially?’ is what I’m hearing right now,” he paraphrases while warning that it would be exploited if not written carefully to solely target those who need relief.“I would put a tip jar on my desk, you know what I mean?” Wagner quips. “I’ll charge lower fees and you can throw the difference in the tip jar. All of a sudden, my income is to going to go down quite a bit. I generally like the idea overall, but if you’re going to do that there needs to be a way to stop Wall Street from taking advantage of it.” More

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      Extremist or mainstream: how do Tim Walz’s policies match up globally?

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      Within hours of Minnesota’s governor, Tim Walz, being chosen by Kamala Harris to be her Democratic presidential running mate, Donald Trump and team began attacking him as a “dangerously liberal extremist”.Trump surrogates seized on Walz’s record of expanding voting rights for former felons, combatting the climate crisis, and other measures as proof that Harris-Walz would be the “most radical ticket in American history”.If you step back from the melee, and look at his gubernatorial acts through a global lens, they appear anything but extreme. From the perspective of other industrialised nations, what Trump denounces as leftwing radicalism looks little more than basic public welfare provisions.Far from being militant and revolutionary, initiatives such as paid family leave, free college tuition and rudimentary gun controls – all championed by Walz in Minnesota – have long been regarded as middle-of-the-road and unremarkable in large swathes of the world. Through this frame, it is not Walz who is the outlier, but his Republican critics.Here are how some of Walz’s most impactful reforms compare with the rest of the world.Free school lunchesView image in fullscreenWalz’s record: “What a monster! Kids are eating and having full bellies so they can go learn.” That was Walz’s sardonic reply to CNN when he was asked about having introduced free breakfast and lunch for all Minnesota schoolkids. The 2023 measure puts Minnesota among just eight US states that offer school meals at no cost to all children, no matter their family’s income.Around the world: Several countries provide free lunches for their children nationwide. Sweden, Finland and the three Baltic nations all provide meals at no cost for all schoolchildren irrespective of income, and many more European countries provide targeted or subsidised meals. Even a developing country such as India ensures access to lunch for more than 100 million kids daily.“The idea of offering free meals to all students during the school day is hardly new – many countries already do so,” said Alexis Bylander at the Food Research and Action Center, a US anti-hunger organisation. “Numerous studies show the benefits, including improving student attendance, behaviour and academic success.”Combatting the climate crisisView image in fullscreenWalz’s record: In February 2023 Walz signed legislation committing Minnesota to having all its electricity produced by wind, solar and other clean energy sources by 2040 – an even more ambitious timeframe than adopted by California, America’s sustainable energy leader. The legislature also passed more than 40 climate initiatives, including expanding charging infrastructure for electric vehicles and introducing a new code for commercial buildings to cut energy use by 80% by 2036.Around the world: By global standards, Minnesota’s ambitions do not stand out. Some 27 countries have written into law target dates by which they will become net zero – that is, stop loading additional greenhouse gases into the atmosphere. In the developed world, Finland is leading the way, pledging to be net zero by 2035, and to begin absorbing more carbon dioxide than it produces by 2040. In December, almost 200 countries at the Cop28 climate summit in Dubai agreed to call on all countries to transition away from fossil fuels and for global renewable energy to be tripled by 2030.Child tax creditView image in fullscreenWalz’s record: Last year the governor signed into law a child tax credit program for low-income Minnesota families. The measure sought to fill the hole left by a federal scheme that expired in 2021 after Congress failed to extend it. The Minnesota plan is the most generous of its type in the US, offering $1,750 per child and reaching more than 400,000 children.Around the world: The Organisation for Economic Co-operation and Development (OECD), the forum of high-income democracies, reported in 2018 that 34 of the 35 countries with available information provided their people with some form of family benefit including tax credits. The OECD compared the value of family benefits for two-child families, measured as a percentage of average earnings, across 41 countries and found that the US came in at No 40, with only Turkey being less generous in its support.Basic gun controlsView image in fullscreenWalz’s record: The governor identifies as a proud gun-owner and hunter, and he accepted Harris’s invitation to be her running mate wearing a camo hat. That didn’t stop him in May 2023 enacting a slew of gun safety measures, including requiring all private sales of handguns and semi-automatic rifles to go through an FBI background check that looks for evidence of criminal or mental health risks. The changes also introduced a “red flag law” that allows relatives and other interested parties to intervene when someone is in danger of injuring themselves or others with guns.Around the world: International comparisons show that Americans own vastly more guns than civilians in other rich countries – 121 guns per 100 Americans, compared with five guns per 100 people in the United Kingdom. The number of gun killings per 100,000 people is also vastly higher: 4.12 in the US, 0.04 in the UK.Other countries also have much tougher gun controls that make those introduced by Walz look weak by comparison. Canada requires gun buyers to have a licence to possess or acquire a firearm and first time applicants have to wait a mandatory 28 days; it also imposes mandatory safety training and a ban on military-style rifles that does not exist in the US. The UK also bans some semi-automatic rifles and most handguns. Japan tightly restricts gun ownership, banning most guns other than air guns and a few other special categories and even then requiring owners to submit to annual inspections.Paid family and medical leaveWalz’s record: House File 2, enacted by the governor last year, gave Minnesotans access to up to 20 weeks in every year of partial wages to cover medical leave after a life-changing diagnosis, mental health leave, or time off to care for a new baby. “Paid family and medical leave is about investing in the people that made our state and economy strong in the first place,” Walz said as he signed the bill.Around the world: The US is the only OECD member country without a national law giving all workers access to paid leave for new mothers. Thirty-seven out 38 OECD countries offer national paid maternity leave – the only exception being the US. France, which holds the top spot, allows mothers and fathers to take paid leave until their child is three years old.The US is also one of only six countries with no form of national paid leave covering either family or medical leave in the case of a health concern.Voting rights for former felonsWalz’s record: The governor signed a bill that restores the vote to more than 50,000 Minnesotans who have been convicted of a felony. The Trump campaign denounced the measure as evidence of Walz’s “dangerously liberal agenda”, which is ironic, given that Trump himself, as a convicted felon, will only be able to vote for himself in November thanks to a similar reform in New York.Around the world: A report released by Human Rights Watch (HRW) in June concluded that the US was an “outlier nation in that it strips voting rights from millions of citizens solely on the basis of a criminal conviction”. In 2022, more than 4 million people in the US were disenfranchised on those grounds. By contrast, when HRW surveyed 136 countries around the world, it found that the majority never or rarely deny the vote because of a criminal record, while those with restrictions tend to be much less draconian in their approach than US states. More