Fiscally sane commentators are abuzz with the stark data coming out of the latest Congressional Budget Office (CBO) report, showing our nation’s dire deficit situation after 11 months of this fiscal year have passed. As has been the case for a long time, the primary problem boils down to one simple fact…
Partisan Ideologues Refuse to Accept Basic Fiscal Math
Every time either major party has had control of the White House and Congress, they’ve pushed through legislation that made the debt and deficit worse, while rejecting plans (like the Simpson-Bowles Debt Commission recommendations, or Rivlin-Domenici from the Bipartisan Policy Center) that would start lowering the debt to manageable levels that don’t pose a serious threat to our economic future, and stop stealing so much from our children, their children and future generations.
That’s true for both major parties, but the party, and administration, currently in power is – as it has with so many other things – taken it to a whole new low.
While some ideologues would have you believe that it’s just because of spending, or just because of taxes being too low, the reality is that the problem is the gap between the two. Anyone telling you that it’s one or the other is, quite literally / as the saying goes, ‘selling you something’ – specifically a jug of partisan Kool-Aid, meant to distract you from how they’re stealing from our children, so they can give their base more than they can afford in exchange for votes.
Here are the three simple numbers neither side is willing to recognize – unless they’re in the minority, and attacking the majority for ignoring it (like they did, the last time they were in power) – from the Congressional Budget Office’s latest monthly budget review:
- The economy is growing at about 3%
- Tax cuts lowered revenue growth to only 1%, primarily because:
- Individual Income Taxes – up $105 billion (+4%)
- Corporate Income Taxes – down $71 billion (-30%) – not a typo… THIRTY PERCENT
- Spending grew by 7%, primarily stemming from:
- Social Security – up $39 billion (+5%)
- Medicare – up $22 billion (+4%)
- Interest on National Debt – up $55 billion (+19%)
- Department of Defense – up $33 billion (+6%)
- Department of Homeland Security – up $21 billion (+48%) – not a typo… FORTY-EIGHT PERCENT
So, even though the economy is healthy and growing, when deficits should be shrinking, the deficit for this fiscal year is set to be around $895 billion – $222 billion more than last year. Notice that the biggest line item, in dollars, is ‘interest on the national debt’ – that’s current tax payers paying for just the interest (not even paying it down) on the selfishness of lawmakers of the past.
Next year, it is set to top one trillion. One. Trillion.
Now They Want to Dig an Even Deeper Fiscal Hole
As if this massive and growing pile of despicably corrupt, short-sighted greed wasn’t enough, President Trump and the Republican Party are pushing for a new raft of proposed tax cuts that would make the problem significantly worse.
Among other things, these new tax cuts prove concerns that us fiscally sane people had that Republicans had used a budget gimmick of making some of their earlier tax cuts cut off after a few years go away, so their bill seemed less expensive, but would later (AKA, right now) try to make them permanent.
The damage, from the nonpartisan Committee for a Responsible Federal Budget – one of the rare few organizations that genuinely fight for fiscal sanity:
Most of the non-corporate tax cuts enacted in the December 2017 tax law are set to expire at the end of 2025 as a budget gimmick to reduce the bill’s cost and comply with the reconciliation rules that governed the bill’s passage. Because current law budget projections include the 2017 tax law, the cost of the extensions is largely in the final three years of the budget window.
Because the tax cuts are concentrated in the last three years, the bills’ costs look artificially smaller over the typically used ten-year budget window. …they would add roughly $4 trillion to debt over the next 20 years, or $5 trillion with interest.
In short, the tax cuts have failed to come even remotely close to delivering the wage or overall economic growth necessary for the tax cuts to pay for themselves, and yet the Republicans want to make the tax cuts permanent, and expand on them.
Republican Tax Cuts a Failure Based on GOP’s Own Metrics
In fact, inflation adjusted wage growth has gone from 0.6% in the 7 months before the tax cuts passed, to 0.2% in the seven months after (according to BLS numbers). That’s a decrease of around two-thirds, for those not keeping score, roughly 2.6% of (or 38 times smaller than) the wage growth Republicans promised – and not all of that meager number came from the tax cuts, as wages were growing before the tax cuts passed.
In real dollar terms, Republicans promised that the tax plan would deliver $4,000 to $9,000 in wage growth, and so far we’ve seen something in the neighborhood of $105 (again – only part of which could be attributed to the tax cuts).
Since the effects of the tax returns trail off the more time passes, there is essentially no chance that even the minimum $4,000 amount will be reached, nor a chance that the tax cuts will ever pay for themselves.
In exchange for this tiny amount of wage growth, and piles of money delivered on a silver platter primarily to those in the least need of help from the government, we’re stealing hundreds of billions of dollars a year from our children, most likely their children and who knows how many generations in the future… and Republicans want to even worse.
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Nobody who voted for the passed Republican tax cut bill can ever again honestly say that they’re for anything resembling fiscal sanity, and given all of the evidence (of which the information above is but the tip of the iceberg), anyone willing to vote for making the tax cuts permanent, as well as adding to them, is an active and enthusiastic supporter of undercutting our nation’s economic future.
Perhaps worse, the sad reality is that there isn’t a single member of Congress that has been in office during a period when their ‘side’ had the power to make the fiscal situation better that didn’t vote for a number of bills that made it worse. Given that, the least bad option available to us is keeping either major party with control of more than two of the House, Senate and White House.