Tax cuts talk veils soar­ing US debt

Qui­etens deafen­ing Repub­li­can call for fis­cal dis­ci­pline

Sunday Tribune - - FRONT PAGE -

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.

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