There’s an a itty-bitty problem with the Republican tax scheme being cooked up by Trump & Co. Not the only problem, of course, but let’s start with this one. The math doesn’t work. Their tax cuts will explode the deficit. Yes, there are times when deficit spending makes sense, and projects that are worth borrowing money to invest in. However, it makes no sense to borrow money to send out the door to the wealthiest among us, people who don’t need it and won’t spend it. And that is the case for these Republican tax cuts, no matter what the Orange Julius Caesar promises about the wealthy not benefiting.
But back to the math. You see, the Republicans want to be able to trickle dollars up the economic ladder, but still be able to pretend that doing so won’t cost the U.S. Treasury. It will, of course, at least according to economists and experts who are not on the Republican Party’s payroll.
The GOP supply side argument has always been that their tax cuts can pay for themselves by increasing economic growth. The Trump tax plan has been estimated to result in $1.5 trillion in higher deficits over ten years. Here’s what a conservative who still operates in the real world had to say:
“If it is a well-designed tax policy, it will partially offset the cost,” said Douglas Holtz-Eakin, a conservative economist who served in the George W. Bush administration and advised John McCain’s 2008 presidential campaign. But, he added, “there’s no evidence anywhere that a tax cut of that magnitude, regardless of composition, will offset” the entire $1.5 trillion.
That’s a problem both in terms of politics, i.e., selling the plan, and because any plan that increases deficits can only go through the reconciliation process in the Senate if it sunsets after ten years. If a plan is judged by the experts over at the official, nonpartisan Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) to be deficit neutral, it can be passed by 50 senators and become law with no sunset. That’s a big deal. So what are Republicans to do in the face of, well, math? The answer should be obvious to anyone who’s watched these guys for more than a few minutes.
You see, they aren’t required, by law, to rely on the JCT and the CBO. It’s just customary like, you know, holding hearings and a vote on a president’s nominee to the Supreme Court. Some Republicans are advocating asking different economists to judge their plan, ones who will use different math. Sen. Bob Corker (R-TN), a key player on the tax issue, offered this on Friday:
“I do think it is time for us to have a real debate and to have real economists weighing in and we should take other things into account other than Joint Tax and C.B.O,” Mr. Corker said. “I think it’s fair for us to get outside help.”
He added: “We’ve learned during the health care debate, these guys are not super-people.”
In other words, the experts wouldn’t use our fuzzy math, and their stupid (i.e., real) math made our plans to get rid of Obamacare look bad. We won’t let that happen again on tax cuts. We’ll use our own math!
Conservatives want to use what they call “dynamic scoring” to determine the cost of the tax cuts. This is a method that estimates the effect of a given proposal on economic growth, and thus tax revenues, and incorporates those estimates into the proposal’s projected cost to the government. The problem is that such estimates are, in a word, hooey. Republicans used them to claim that the Bush tax cuts (which went overwhelmingly to the rich) would pay for themselves. They didn’t. And they did nothing for economic growth either.
This is incredibly stupid, if you actually care about deficits (as Republicans claim to, but clearly don’t, at least not when they are the ones running the show). Here’s an assessment of what’s going on here that qualifies as obvious to anyone who approaches this matter with even a modicum of honesty:
“If you change the rules in ways that allow you to make the debt grow larger, it’s a bad thing,” said David Wessel, a senior fellow in Economic Studies at the Brookings Institution. “All that’s doing is putting on blinders and pretending tax cuts will pay for themselves.”
As on so many other issues (climate change, anyone?), and as has been the case long before Donald Trump came along, Republicans just make shit up. They decide what they want to do, and then find someone, anyone, they can trot out to say that their approach will work. That’s what happened with the Bush tax cuts. How in holy hell are we right back here again?
Ian Reifowitz is the author of Obama’s America: A Transformative Vision of Our National Identity (Potomac Books).