Tax cuts talk veils soaring US debt
Quietens deafening Republican call for fiscal discipline
WITH US President Donald Trump pressing for politically popular tax cuts and billions more for the military, few are complaining about the nation’s soaring debt.
Tax cuts in the works could add hundreds of billions of dollars to the debt while bipartisan pressure for more money for defence, infrastructure and domestic agencies could mean almost $100 billion in additional spending next year.
The bottom line: the $20 trillion national debt promises to spiral ever higher with Republicans controlling both Congress and the White House.
“Republicans gave up on caring about deficits long ago,” bemoaned Republican Senator Rand Paul.
Now, deficits are back with a vengeance. Medicare and Social Security are drawing closer to insolvency.
Fiscal hawks and watchdogs like the Congressional Budget Office warn that the debt is eventually going to drag the economy down.
“Voters, frankly, after these huge deficits, are saying, ‘Well, how much do deficits really matter?’” said former Senator Rick Santorum. “We’re not Greece yet, right?”
Topping the immediate agenda, however, is a debtfinanced drive to overhaul the tax system.
Top Capitol Hill Republicans such as House Speaker Paul Ryan and Senate Majority Leader Mitch Mcconnell had promised for months that a tax overhaul would not add to the deficit, with rate cuts financed by closing loopholes and other steps.
Instead, Republicans are talking about tax cuts whose costs to the debt – still under negotiation – would be justified by assumptions of greater economic growth.
“We want pro-growth tax reform that will get the economy going, that will get people back to work, that will give middle-income taxpayers a cut and that will put American businesses in a better competitive playing field so we keep American businesses in America,” Ryan said. “That’s more important than anything else.”
He backed off months of promises that the Republicans’ tax plan won’t add to the nation’s ballooning deficit.
The Republican moves could justify $800bn or so in tax cuts over 10 years, but the administration is pressing behind the scenes to push the envelope beyond that range.
“They’re starting to talk about tax cuts instead of tax reform,” said former senator John Sununu. “When people are desperate to find legislation that they can pass they tend to take the easy path.”
Among the few deficit hawk holdouts is Senator Bob Corker, a key vote on the Senate Budget Committee, who’s been pumping the brakes on taxes, a stand that’s earned him face-to-face meetings with Treasury Secretary Steven Mnuchin and Trump. Corker says he believes in some adjustments but doesn’t want to “let this be party time that takes us no place but massive deficits down the road”.
Anger over Trump’s debt bargain has conservatives vowing that issues of spending and deficits won’t be kicked to the curb for long. – AP
A model presents a creation from Francis Montesinos’s spring/summer 2018 collection during the Mercedesbenz Fashion Week in Madrid, Spain, this week.