It's not too late for the Senate to avoid fiscal disaster

Published on Tuesday, 17 October 2017 19:03
Written by

The Washington Post

Republicans want to pass the biggest rewrite of the federal tax code since 1986. They could do so the right way, taking care to simplify the code without harming the country’s already stretched finances. Or they could hypocritically balloon the debt to pay for tax cuts, nullifying the benefits of the rewrite by plunging the country into dangerous fiscal territory.

A plan before the Senate, possibly to be voted onthis week, would do tax reform the wrong way. Any Republican who ever breathed a word of concern about the debt when Democrats were in charge has no excuse to support this plan. They should reject the budget outline.

The reason is simple: The Senate budget plan would allow lawmakers to add a whopping $1.5 trillion to the debt over a decade in order to cut taxes. Backers of the idea insist that the impact would not be as bad as this top-line figure would suggest. The way the Congressional Budget Office calculates the budget baseline is not realistic, they insist, and must be adjusted. Tax cuts pay for themselves, they add. In other words, their response is a combination of budget gimmickry and magical thinking. There is no credible model showing that a big tax cut would pay for itself. There is no historical precedent justifying Republicans’ exuberance. Outside experts insist that, though economic growth would allow the government to recoup some of the revenue it loses by cutting taxes, the level of growth that would be necessary to fully offset a big cut is massive - and totally unrealistic outside of a rigged economic projection.

The country’s debt already equals nearly 80 percent of the economy. Large numbers of babyboomers are retiring and will demand expensive old-age benefits. Health-care costs continue to rise. Spending on entitlements and debt service promises to crowd out investments in infrastructure, education and every other public need. Tighter military spending is already affecting the readiness of U.S. forces. The last thing the Senate should do is make these problems worse.

While imperfect in several ways, the House budget plan points to a better path. It calls for tax reform that is revenue-neutral. Under this proposal, Republicans would slash corporate and personal income-tax rates, but they would have to pay for them, ideally offsetting those cuts by eliminating tax deductions and other loopholes. The result would be a simpler code with fewer twists and turns that distort where people and companies invest. The country would become more competitive relative to other nations with simpler tax codes and more favorable corporate rates. And there would be no net impact on the debt.

It is not too late for the Senate to avoid fiscal disaster. Senators still have the option of following through on years of rhetoric promising budgetary responsibility. They should reject the reckless budget outline they have before them.

Posted in New Britain Herald, Columns on Tuesday, 17 October 2017 19:03. Updated: Tuesday, 17 October 2017 19:05.