The Republican budget already assumes $4 trillion in cuts to mandatory spending over 10 years, a euphemism for Social Security and Medicare.
President Donald Trump and congressional Republicans want Americans to think that their proposed tax legislation is all about increasing economic growth.
That’s their stated goal. But the stealth goal of GOP tax cuts is to start down the path toward gutting the New Deal and the Great Society — and if tax cuts pass, they might get away with it.
There’s no evidence that a tax cut now would spur growth. Yet leaders such as House Speaker Paul Ryan, R-Wisconsin, still maintain the fantasy that their brew of income and corporate tax cuts will mean “faster economic growth” and “better jobs being created.”
But with near-full employment and a roaring stock market, you don’t cut taxes.
When past presidents — John F. Kennedy, Ronald Reagan, George W. Bush — proposed tax cuts, it was always when the economy had considerable slack: underutilized resources such as unemployed workers and idle factories. In each case, according to the National Bureau of Economic Research, we were either in a recession or just past one.
If anything, by enacting a stimulus now in the form of a tax cut when the economy is near full employment, the government risks raising inflation, which would mean the stimulus generates higher prices rather than reduced unemployment.
So why do it? Because for decades conservative intellectuals have pushed for big tax cuts; less to grow the economy and more because they want to “starve the beast.” They want to force a major overall spending cut that would be a political non-starter without first passing a tax cut that creates a deficit so large, something must be done about it.
The stage is being set for an all-out attack on the welfare state the minute a tax cut is signed into law. The Republican budget already assumes $4 trillion in cuts to mandatory spending over 10 years, a euphemism for Social Security and Medicare.
Indeed, as The Washington Post reported, the Congressional Budget Office has warned that the tax cut would “add $1.5 trillion to the debt over the next decade,” potentially leading to an automatic cut of $25 billion to Medicare in 2018 because of a law known as paygo (pay-as-you-go) designed to prevent higher deficits.
By framing their opposition to Trump’s tax plan as a worry that it does too little for the middle class, as they’ve done so far, congressional Democrats risk playing into the Republican playbook by agreeing in principle to the virtue of tax cuts.
I’ve yet to hear a Democrat say that no tax cut is either necessary or justified by current economic conditions. While it is true that the middle class is suffering, it’s not from high income taxes, which are at a historically low level. According to the Tax Policy Center, a family with the median income pays an income tax rate of just 5.34 percent, less than half what it paid during the Reagan administration, even after the 1981 tax cut.
Democrats should oppose any tax cut. And of course they should oppose slashing Social Security and Medicare — by making these programs less attractive, it aids in their gradual abolition through privatization, another goal of the GOP. They may not have much leverage in the tax debate, but they should try to force Republicans to put on the table details about the spending cuts that their tax cut is designed to bring about.
If they’re worried about political cover, they shouldn’t be: A Quinnipiac Poll released Wednesday shows that by a 2-1 margin, Americans oppose Republicans’ current plan.
Once we can see the whole picture, Americans will have a clearer idea of the net benefit to them. The rich don’t need either Social Security or Medicare — it’s the middle class, which depends on both, that needs to know how tax cuts and spending cuts affect them. If Social Security and Medicare cuts follow tax cuts, on net, even those who would get a tiny tax cut will be much worse off when the spending cuts are factored in. This will give a true, complete picture of the distribution of pain and gain in the GOP program.