AFTER ALL the GOP howling about deficits when President Barack Obama was trying to stave off a depression in 2009, Republicans now in power are getting ever closer to adding an enormous amount to the debt — not to save the economy but to finance a big tax cut. The hypocrisy is bad, but if they succeed, the consequences for the country would be far worse.
Republicans began their push to reshape the tax system by promising to make their reforms revenue neutral. Individual and corporate tax rates would be cut, they vowed, but so would expensive loopholes. With enough offsets, the government would lose no money and end up with a more efficient tax code.
But tax cuts are easy to hand out, while closing loopholes takes a bit more spine. So “tax reform” has steadily evolved toward “tax cuts.” And last week the Spineless Caucus scored a notable victory when Sen. Bob Corker (R-Tenn.), who had pressed for revenue neutrality, agreed to a budget framework that would allow $1.5 trillion in tax cuts without direct offsets.
Defenders of the plan say that it could still end up being revenue neutral, in part because economic growth would offset much or all of that $1.5 trillion hit. Outside experts, however, warn that these assurances are too optimistic. Changes in taxing and spending policy certainly can affect the rate of economic growth. But economists cannot project how much, nor the effects on federal revenue, with precision. Given the country’s already stretched finances, the only reasonable option is to avoid tax plans that could make budget problems worse, burdening future generations even more than they already will be.
The United States is in the midst of one of the longest periods of uninterrupted economic expansion in the country’s history, negating the case for a short-term stimulus in the form of unpaid-for tax cuts. Moreover, a demographic wave is set to clobber public finances, as baby boomers retire and demand expensive social services. No amount of wishful thinking can override these realities.
The White House and congressional leaders aim to release a tax-reform outline this week. Following that, Republicans will work on budget outlines that set broad taxing and spending goals. As the process has proceeded, Republicans have moved steadily further away from the prudence they demanded of Democrats just a few years ago. No GOP plan that proposes tax cuts without fully offsetting loophole cuts or spending reductions should be taken seriously. As talks continue, Mr. Corker and others who have shown they understand the danger still have an opportunity to resist piling on more debt. They should hold firm.
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