Be warned: Elected officials in Washington will try to buy your vote with your grandchildren’s money.
If recent history is any guide, they’ll do that by cutting taxes without cutting spending by at least the same amount, increasing the national debt. And a big reason why they would do it is because they cannot seem to do anything else. After failing to repeal Obamacare, they think they’ve got to do something.
The details of the proposal released by President Trump and congressional Republicans Sept. 27 are still vague. But among the highlights are, it would reduce the number of tax brackets from seven to three, the highest being 35 percent instead of the current 39.6 percent. Congress would have the option of creating a fourth, higher tax bracket for the wealthy. (Don’t hold your breath.) To offset some of the lost revenue, it would repeal many itemized deductions. (Lots of lobbyists will fight this one.) It also would end the estate tax and reduce the corporate tax rate from 35 percent to 20 percent.
Many of these provisions have merit. For example, the United States’ corporate tax rate of about 39 percent is the highest in the world. Many businesses pay much less thanks to the tax code’s complex web of deductions, giving an unfair advantage to those that can afford the most accountants and tax lawyers.
However, if these tax cuts aren’t accompanied by spending cuts, well, that’s where our grandchildren come in.
$2.7 trillion in new debt
The nonpartisan Committee for a Responsible Federal Budget (CRFB) says that, based on that vague framework, the tax cuts will reduce revenues to the federal government by $2.2 trillion by 2027. That amount, plus half a trillion for interest, will be added to the national debt.
These numbers are getting big. The debt is already $20 trillion, which is equal to $61,000 for every living American. Even without the tax cuts, the nonpartisan Congressional Budget Office was already projecting it would grow by $10 trillion over that time period, or another $30,000 per American. Another $2.7 trillion is another $8,200 for each of us.
Most of this debt has been incurred during the past 17 years. All of it will be passed down to our grandchildren, seeing as how we refuse to pay it back. If they’re under 18, they didn’t vote for anyone making these decisions. If they haven’t been born yet, the debt hasn’t benefited them.
We should be ashamed
At the risk of sounding preachy, it ought to trouble us that we’re doing this. So should this: We’re being told things that are untrue.
One of those untrue things is that the rich will not come out the winners in this deal. Of course they will. They’re the ones who contribute the campaign dollars.
The other untrue thing is that the tax cuts will stimulate so much economic growth that they’ll pay for themselves.
That’s a common argument that some who make it actually believe, but common sense and history say otherwise. You don’t collect more money by collecting less money. Tax cuts can stimulate some growth, but not enough to make up for the lost dollars. In fact, according to the CRFB, each dollar cut in taxes would have to produce at least $6 of economic activity to keep from adding to the debt. That won’t happen.
So if policymakers want to cut taxes, that’s fine. They should cut spending more. A budget bill passed by the House last week did include spending cuts, but that’s merely a framework that would be easily ignored.
If they end up cutting taxes without cutting spending by an equal amount, then at least they should be honest about their plans. They’re redistributing wealth from our grandchildren to us because those young and future Americans can’t defend themselves at the ballot box.
In fact, let’s be really honest and just call it stealing. That’s what we’re doing.
The truth can be troubling sometimes. Or at least, it ought to be.
© 2017 by Steve Brawner Communications, Inc.