Tax plan is a growth plan
The Trump administration’s tax plan includes reforms that are just what we need to jump- start our economy, generate growth and income gains, and fulfill a major campaign promise.
So what are the obstacles to getting some version of the president’s tax reform done? First, doing it right will increase budget deficits in the short run, according to government accountants. Second, the Democrats’ lack of interest in the project means Republicans will almost certainly have to use budget rules allowing us to pass tax legislation with just 51 votes in the Senate instead of the usual 60- vote requirement. But neither of these challenges should prevent us from enacting dramatic, pro- growth tax reform.
For starters, the projections of increasing deficits are very likely to be wrong. As former Sen. Phil Gramm pointed out recently, past official scoring of tax legislation failed to fully anticipate the economic gains that follow pro- growth tax reductions. The revenue surge of the Reagan tax cuts, for example, was largely missed.
Even if the scorekeepers are right, our economy is still laboring under the weight of more than $ 2 trillion in Obama tax increases. Accepting a net tax cut of this magnitude would simply restore us to the pre- Obama levels.
But what about the restrictive budget rules we Republicans will have to use to pass tax reform in the Senate? It is widely reported that those rules, which allow for passage of the measure with 51 votes rather than 60, forbid tax changes that increase deficits beyond 10 years, so many have suggested tax reform must either be revenue- neutral or expire.
Making major tax reform temporary— even for 10 years— undermines its effectiveness because many business projects and decisions depend on forecasting beyond that period.
Fortunately, the conventional reporting on budget rules is incorrect. It confuses recent practice with statutory obligation.
Every year Congress is supposed to pass a budget resolution setting revenue and spending targets for the next several years. This resolution can contain reconciliation instructions allowing budgetary changes to be made with a simple majority.
Americans are rightly fed up with the feeble growth of recent years. Dramatic pro- growth tax reform will enable us to return to the robust growth that is normal for America, and that creates opportunities, raises our living standards and ensures that our kids have a realistic shot at a better life than their parents.
Congress must seize this rare opportunity. We can’t let a fixation on deficit predictions or arcane budget rules get in the way. We were elected to get this done.