IN PART to placate party moderates whose votes they need, House Republican leaders are proposing modest cuts in the cost of the tax bill they are scheduled to bring to the floor this week. But no one should be fooled by this, least of all the moderates whose stock in trade is that they take governing seriously. The leadership trims don't begin to undo the egregious recklessness of this bill. There are three main problems.
(1) The surplus the sponsors are using to finance the tax cut the bill would grant is mostly phony. It is predicated on a willingness of future Congresses to make deep spending cuts from just the first phase of which this Congress already is retreating. Most programs would have to be cut more than 20 percent in real terms. Without such cuts, about three-fourths of the imaginary surplus in other than Social Security funds disappears; the amount goes from $1 trillion over the next 10 years to perhaps $250 billion. If they set aside some money for Medicare, as they are bound to do, even less will be available for tax cuts -- most likely nothing.
(2) The bill when fully effective would actually cost much more than the projected surplus. The cost is masked by the fact that so many provisions have been carefully backloaded -- written to take effect only toward the end of the 10-year estimating period. The estimated cost of the first 10 years of the Ways and Means Committee bill is $864 billion. The likely cost of the next 10 years would be three times that; one estimate puts it at $2.8 trillion. This is a ludicrous bill, a lemming-like effort to put political points on the board whose effect would be to return the government to the destructive cycle of borrow-and-spend from which it only now is painfully emerging. The economy and the ability of the government to function both would be harmed.
(3) The principal beneficiaries would be people at the very top of the income scale. The rhetoric and some of the analysis surrounding the bill suggest otherwise. But here again, backloading comes into play. Some of the provisions slowest to take effect are those that would be of greatest benefit to the better-off. In the end, one analysis indicates that nearly half the benefit of the bill would accrue to households in the top one percent of the income distribution.
This is a bill that would mainly benefit relatively few people at the expense of many. It would once more strand the government -- leave it with obligations far in excess of its means -- and in the process do serious social as well as fiscal and economic harm. Not even as a political billboard that the president can be counted upon to veto should it pass. There ought not be a tax cut. The parties ought not use imaginary money to cut a deal at public expense. The greatest favor that this Congress could do the country would be to pass the appropriations bills and go home.