SIMI VALLEY, CALIFORNIA — Republicans passed a sweeping tax bill last year that mainly benefited wealthy individuals and corporations, but that hasn’t stopped Rep. Steve Knight (R-CA) from arguing it deeply changed the economy to benefit everyone.
In a debate on Thursday night with his Democratic opponent, Katie Hill, Knight said the economy was “explosive” thanks to the tax bill passed last year. His statements ignore the reality of the bill he voted for, as well as many important details about the economy and people’s quality of life in the U.S.
The event’s moderator, David Maron, asked the candidates about their views on tax cuts.
Hill said the recent tax cuts put a burden on the middle class and “We’re paying for those tax cuts on the backs of Social Security, Medicare, Medicaid, and other programs that are vital for us in future.”
Knight responded, “When the tax cut plan came forward, it was for the middle and lower income. That was exactly what happened.”
Belly laughs and a few gasps reverberated throughout the auditorium in response.
He added:
What we did in this district was we had 50 families, they could have had one child or two children and they could have made $40,000 or $75,000. It all came down to a cut in their tax liability, so as we saw that I said that makes sense. It makes sense for our district and I’m going to vote for it. Look at what the tax plan did. We have 3.7 percent unemployment. We actually more jobs than we have people to fill them right now. We have one of the most explosive economies. The New York Times said we don’t have any more adjectives to explain how explosive this economy is. The New York Times.
Knight was referring to this New York Times article, which read, “The real question in analyzing the May jobs numbers released Friday is whether there are enough synonyms for ‘good’ in an online thesaurus to describe them adequately.”
But what he doesn’t mention from the article is this key line: “It isn’t perfect — wage growth remains unexceptional despite its growth spurt in May, and the ratio of prime-age adults working remains below its historical levels.”
Since 2000, wage gains have gone to those at the top, with real wages rising 15.7 percent for people of the top tenth of the earnings distribution and only 3 percent for workers at the lowest tenth, according to Pew Research Center. Although it’s true that in January, the average hourly earnings for the monthly job report had the strongest wage growth since mid-2009 — which President Trump bragged about repeatedly — that’s only part of the story. Long-term wages haven’t moved as much as economists expected it would given how low unemployment is.
There also isn’t reason to believe that the tax bill would have been responsible for any improvements to the average American’s quality of life in the long term. Although Republicans have argued that the bill would bring earnings home through “repatriation” of the overseas profits from U.S. corporations, those earnings are already in the financial system. And in 2027, there will be a tax increase that more than half of all Americans will have to reckon with while wealthier Americans chiefly benefit from the law. Meanwhile, Republican members of Congress are looking to slash Medicare, Medicaid, and Social Security to make up for the growing deficit their tax cuts created.
“We’re not hearing that the economy is not working for everyone,” said Hill, who is the executive director of the nonprofit People Assisting The Homeless. “The stock market is not the economy.”
When asked about people at the lower end of the income scale, Knight expressed caution about raising the minimum wage. “We can’t move too fast and we can’t move too slow … you can’t move too fast because then some things can happen that will hurt minimum wage jobs …”
Knight did not say how far he thought the minimum wage could move up to avoid moving “too slow,” however.
The federal minimum wage is $7.25. Despite productivity roughly doubling since 1968, workers receiving the federal minimum wage make 25 percent less than workers did in 1968, according to the Economic Policy Institute.