Congressional Budget Plan a Major Step Toward Costly, Ill-Advised Tax Cuts
Big, deficit-increasing tax cuts would have damaging consequences. The congressional budget plan calls for deep cuts in many important programs largely to address existing deficits. There should be little doubt that if the tax cuts are enacted, many of their proponents will, in future years, cite the resulting increases in deficits in arguing for sharp budgetary cutbacks. And low- and middle-income families would almost certainly bear much of the weight of such budget cuts, even though they would receive little benefit from the tax cuts.
Tax Plan Would Swell Deficits
A few Republican lawmakers have been openly skeptical of claims that the tax cuts would pay for themselves. Senator
Among senators and House members who should be particularly skeptical are senior members who supported the 2001 Bush tax cuts. Their support for those tax cuts rested in part on the extremely bright budget outlook at that time: In 2001, the federal government was running a budget surplus, the federal debt was relatively low and shrinking, and large surpluses were forecast for years to come. Today's fiscal outlook is far less sanguine. And that's in part because of the Bush-era tax cuts themselves, which are responsible for an estimated one-third of the current federal debt.[2]
Looking forward, the nation faces major long-term fiscal challenges, which stem from the imbalance between the tax revenues projected under current law and the projected level of federal expenditures, which will rise in coming decades as the aging of the baby-boom generation raises federal health and retirement costs.[3] Policymakers risk compounding these fiscal challenges if they enact big tax cuts while failing to offset the cost by closing unproductive loopholes and inefficient tax preferences (or by raising other sources of revenue, such as through a carbon or other energy tax).
Moreover, the budgetary damage from unpaid-for tax cuts could substantially exceed the
Republican tax writers may now be heading down the same dangerous path. Their tax-cut wish list is far larger than the already indefensible
Swollen Deficits Create Excuse for Later Program Cuts
Ballooning the deficit matters. If deficits continually rise faster than the economy grows, that is likely to ultimately have adverse economic consequences. Moreover, one sure cost of rising deficits and debt is that the
The budget resolution that
Such cuts would necessarily fall most heavily on families and individuals with low or modest incomes. Moreover, many of the families that would be hit by such budget cuts would gain little if anything from the
Indeed, Roll Call reports today that it "interviewed half a dozen
The GOP Tax Plan's Sharp Upward Tilt
The tax plan that congressional leaders and the Administration released last month would primarily benefit those at the top of the economic ladder, while doing little or nothing to help most of those who are struggling -- the people
In response, the Administration argues that its cut in the corporate tax rate would greatly boost the wages of workers because they, not shareholders, bear most of the burden of the corporate income tax.
Furthermore, many of the same low- and middle-income families that likely would gain little or nothing from the proposed tax cuts almost surely would bear a large share of the burden when
Due to such concerns, especially with regard to who would benefit from the tax cuts, several Republican senators offered hortatory amendments to the budget plan on the
But meeting tests such as these would require fundamentally altering the tax plan, not tinkering around the edges. We hope that senators who voted for these amendments will follow up by insisting on such changes as the tax legislation is written. They should withhold support for any forthcoming tax bill that doesn't meet these tests or that swells budget deficits.
Many members of
Footnotes:
[1] CBPP, "GOP Tax Plans Would Emulate Failed Kansas Experiment," https://www.cbpp.org/research/federal-tax/gop-tax-plans-would-emulate-failed-kansas-experiment.
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