The quintessential American folk singer Woody Guthrie had a sticker on his guitar that read: “This machine kills fascists.”
This came to mind as I was collecting facts for a number of media appearances in recent days, mining the information on the website of the Center on Budget and Policy Priorities. “This institute kills falsehoods,” I (self-servingly*) thought. Or at least it tries to lay out the facts of the current economic debates in ways every voter needs to know in this benighted election cycle. (*Full disclosure: I’m a jolly-good senior fellow at CBPP.)
Trust when I tell you: I know the facts are on the run. When every big media outlet leads with the news that Trump a) acknowledged President Obama was born in the United States and b) claimed it was Hillary Clinton who started the birther movement, you know we’ve missed the plane to Factville and caught the direct flight to Cray-cray.
But let me show you, by way of randomly poking around CBPP’s website, why turning that plane around is so important.
First, there’s this report by Chuck Marr and Chye-Ching Huang on the tax-cutting plan recently put forward by House Speaker Paul D. Ryan (R-Wis.) and the Republican majority in the House. Sounds obscure, I know, until you realize that this tax plan is both roughly the basis for Trump’s tax plan and a classic example of the Republicans’ strategy for rewarding their wealthy donor base and shrinking government.
The report, based on information from the Tax Policy Center, reveals that initially about three-quarters of the tax cuts from the plan accrue to the top 1 percent of households (average pretax income: $2.4 million), and that “by 2025, essentially all of the net tax cuts — 99.6 percent — would go to the top 1 percent” [see figure below]. The comparable figures (re their share of the tax cut) for the middle class are 3 percent in 2017 and less than 1 percent in 2025.
The splashy release of the GOP tax plan was part of the Republicans’ “Better Way” campaign, their “vision for a confident America,” wherein they argue that “in a Confident America, the tax code and the IRS work for us, not against us.” That only makes sense when “us” is the millionaire and billionaire classes.
The House plan also loses $2.5 to $3 trillion in revenue over 10 years, while Trump’s related proposal loses at least $4 trillion. Thus, the only way these plans don’t expand the budget deficit is if you sprinkle them with supply-side fairy dust (I’ll get to that) or cut a bunch of spending elsewhere.
That brings us to the next CBPP report I want to highlight. Trump says he’ll partially offset the cost of his tax plan by cutting nondefense programs, other than Social Security and Medicare, by a mere 1 percent per year. Budget wonks call this category “non-defense discretionary,” since unlike social insurance programs that must expand with need, these smaller programs are funded by yearly allocations; they include veterans’ medical care, child care, the national parks, housing assistance for low-income families and key infrastructure spending like the maintenance of ports and water systems.
Richard Kogan and David Reich point out while Trump’s proposed cuts “may sound modest,” in 10 years, real spending on these programs would fall by about 30 percent. “Moreover, the cuts would come on top of cuts over the past six years,” such that by 2026, such spending would be far lower as a share of the economy than it has ever been, as shown in the next figure.
Now, why should vets’ medical care get stiffed to give a massive tax break to the income class that’s already been the beneficiary of most of the growth in market incomes over the past few decades? That’s one of them there rhetorical questions, but as long as we’re busy with birther stories, it won’t even get asked.
Last, Trump argues that his tax plan, leavened with a heavy dose of deregulation, can get the economy growing at 4 percent instead of the 2 percent trend that’s prevailed in recent years.
As CBPP’s Chad Stone explains, there is no plausible map that gets you from Trump’s plan to faster GDP growth. Stone shows that GDP did grow at 4 percent in years gone by, but both main growth engines — the labor force and productivity — have significantly slowed since then.
What in Trump’s plan would boost labor supply? Part of this is the inexorable retirement of the baby boomers, and presidents can’t change demography. Except, of course, through a welcoming immigration policy, but suffice it to say that’s not part of Trump’s plan.
To help boost productivity, we’re going to need to invest more in the types of human and physical capital I noted on the list of discretionary programs above, i.e., spending that’s slated for historically “yuge” cuts.
Why am I trying to shove all these facts into the fact-free zone a.k.a. the 2016 election? Why tout CBPP’s muscular, quantitative arguments when the coin of the realm is bravado, assertion and fantasy?
Because it’s the right thing to do. We can survive — not thrive — on dysfunctional government and foolish but titillating media dust-ups for only so long. At some point, the ship of state needs an accurate map or it founders on the shoals of ignorance.
CBPP, among numerous other quality think tanks in town, provides reliable directions from that map. Thus, we have a choice. Either our leaders and our electorate return to fact-based analysis, or our politics continues to deteriorate, ultimately bringing the country down with it.