Cutting Taxes Is Great, Republicans, but Deficits Do Matter

Immediately following the Houses botched attempt to pass tax reform on Tuesday, the AP sent out a tweet that blared: BREAKING: House passes first rewrite of nation's tax laws in three decades, providing steep tax cuts for businesses, the wealthy.

It was technically true, but also misleading. And it reminded me of a synopsis of the movie The Wizard of Oz that describes the film thusly: "Transported to a surreal landscape, a young girl kills the first person she meets and then teams up with three strangers to kill again.

A better take on the GOP was tweeted by John Podhoretz, who observed that the apoplectic response was overwrought: This is what the two parties ARE. This is what they DO. This is the divide between them, people. (Or, as Nick Naylor says in the movie Thank You for Smoking,: Michael Jordan plays ball. Charles Manson kills people. I talk. Everyone has a talent.")

The point here is that its no surprise that Republicans like to cut taxes. If a Republican president cuts taxes and is personally enriched by it, as I suggest will most certainly happen the case for President Donald Trump, this is likely incidental. If, however, a Republican president somehow profits from doing something out of character, then that should raise red flags.

The knock on this bill from the media and Democrats (whats the old Ted Cruz joke?: But I repeat myself!) has been that it benefits the rich. This class warfare game is tired, predictable, and unpersuasivepartly because most Americans will receive a tax cut.

A more persuasive argument would be to hold conservatives accountable to their own stated standards. Along those lines, although I am optimistic that cutting the corporate tax will make America more competitive and stimulate growth, the most serious knock on this plan is that even the most conservative estimates suggest it will raise the deficit by more than $1 trillion.

This is a concern that, once upon a time, would have been a deal-breaker for a lot of conservatives (including now-House Speaker Paul Ryan). The United States ends fiscal year 2017 with an eerie $666 billion budget deficit. A large reason for this is higher outlays for entitlementsa problem President Trump refuses to address.

To get a better handle on this, I spoke to Maya MacGuineas, president of the Committee for a Responsible Federal Budget, and Ed Lorenzen, who is a senior advisor there.

MacGuineas laments that this bill was a huge lost opportunity because we could have done taxreform right. Though she predicts there may be a short-term boost of growth, something akin to a sugar high, she worries this tax reform bill will be "hugely damaging for the fiscal situation of the country. Likewise, Lorenzen describes it as a pretty big step backwards.

It turns out that deficit hawks like MacGuineas and Lorenzen had plenty of contact with Republicans while this plan was being crafted. We had many good conversations. And frankly, there were many Republicans in Congress who agreed with us that it would be better if tax reform was deficit neutral, Lorenzen tells me. But that the political reality became such that the offsets that were necessary to actually make tax reform deficit neutral proved to be too [politically] difficult.

So whos to blame? Paul Ryan? The Freedom Caucus? Mitch McConnell? Donald Trump?

Speaker Paul Ryan, via his Better Way plan, originally wanted a deficit neutral bill, Lorenzen says. But the pressure from Trump to remove offsets like the border adjustable tax, the complete elimination of deductions for state and local taxes (the current plan merely caps the deductions) and other itemized deductions, as well as Trumps desire to keep the corporate rate at 20 or 21 percent (instead of, say, 25 percent) led to this budget-busting bill.

What about the hypocrisy of Republicans (like Ryan) now essentially saying deficits dont matter? Lets take, for example, Sen.Bob Corker, who saidhe wouldn't vote for a tax bill if it added "one penny to the deficit." It did, and he did.While this hypocrisy is certainly worth pointing out, The bigger inconsistency is that in the past Republicans agreed that deficits wereharmful to the economy and could hurt the economy, Lorenzen tells me. And now, all theanalysis that assumes that tax cuts are going to have a positive effect on the economy essentially assume that deficits don't have an effect on the economy.

MacGuineas and Lorenzen are both worried about the precedent this tax reform bill sets. "I'm very concerned it's going to be followed by a whole lot of spending increases [where] the response is: 'Why should we pay for this when we didn't pay for tax cuts?'and that this is just going to open the floodgates on borrowing for everything, says MacGuineas

Part of the problem is that fiscal irresponsibility is used to justify fiscal irresponsibility in another place, add Lorenzen.

I suspect we would be better off with less partisan coverage about how this plan benefits the rich, and more serious commentary about how we need adults to address what the Simpson-Bowles plan attempted to fix. There seems to be little excitement on the left or the right for this kind of reform.

The hysterical reporting on this bill has ignored the fact that it is a pretty standard Republican offering. Its what you would expect a Republican administration to do, which is to say that it has the same pros and cons.

Not to conflate the debt with the deficit, but a wise man once said Weve got to tackle this debt crisis before it tackles us. We should find that guy. I have a feeling he could be going places.

More From this publisher : HERE ; This post was curated using : TrendingTraffic

    Recommended Products

Tags: man person better way publisher President Donald Trump

Related Post "Cutting Taxes Is Great, Republicans, but Deficits Do Matter"

London proptech startup Goodlord appoints LoveFilm co-founder William Reeve as CEO
London ‘proptech’ startup Goodlord, which offers cloud-based