With big tax cuts on table, deficit hawks hardly chirp
GOP lawmakers betting supercharged growth will make up for lost revenue
WASHINGTON — In 2001, when surging budget surpluses fueled hopes of extinguishing the national debt, a pitched battle broke out over President George W. Bush’s proposed $1.6 trillion tax cut. Never mind that the tax cut’s 10-year tab was supposed to leave behind more than $3 trillion in surpluses — Democrats and some Republicans said that the tax cut was just too large.
Fast forward to President Donald Trump’s Washington, where the budget deficit for this fiscal year is projected to near $700 billion and the federal debt has topped $20 trillion.
A new tax cut is emerging to rival those of the Bush years, and the deficit hawks have hardly peeped.
“It’s a great talking point when you have an administration that’s Democratled,” said Rep. Mark Walker, R-N.C., and chairman of the Republican Study Committee, a group of about 150 conservative House members. “It’s a little different now that Republicans have both houses and the administration.”
For years, Republican lawmakers lamented the soaring national debt, pressing for spending cuts and clinging to the mantle of fiscal responsibility. But last week, Senate Republicans hammered out a deal to allow for as much as $1.5 trillion in tax cuts, betting that supercharged growth will make up for lost revenue, a potentially dubious prospect. The tax plan outlined Wednesday by the White House and Republican leaders in the House and Senate could
cost more than $2 trillion over the next decade, according to a preliminary estimate by the Committee for a Responsible Federal Budget, a nonpartisan advocacy group.
This month, the majority of Republicans in the House and the Senate voted to raise the debt limit without doing anything to rein in spending.
Republican lawmakers are pushing to increase military spending by tens of billions of dollars, topping even Trump’s request for a beefed-up military. Democrats are sharing in the fiscal intemperance, lining up behind a “Medicare for all” proposal despite having no definitive plan for how to pay for universal, government-provided health coverage.
And as Congress mulls large tax cuts, the tabs for Hurricanes Harvey, Irma and Maria keep rising.
When Bush took office and pushed for a big tax cut, the fiscal outlook was strong. The Congressional Budget Office in 2001 was projecting $5.6 trillion in budget surpluses over 10 years.
Now, the budget office forecasts that deficits will total $10.1 trillion over the next decade. The deficit is expected to top $1 trillion a year in 2022 and keep growing from there. Federal debt held by the public is at the highest level since shortly after World War II, at 77 percent of the gross domestic product.
“I think the greatest threat to our nation is us,” warned Sen. Bob Corker, R-Tenn., and a member of the Senate Budget Committee. “The way we handle our finances, we as a nation are the greatest threat to our nation. It’s not ISIS. It’s not North Korea. It’s not ascendant China. It’s not Russia. We are the greatest threat.”
But such voices are strangely quiet these days in Washington. Even Corker seems accommodating.
Last week, he reached a deal with another Republican on the budget panel, Sen. Patrick J. Toomey of Pennsylvania, to allow a tax cut of up to $1.5 trillion over a decade, helping pave the way for the overhaul of the tax code that is a top goal for Trump and congressional Republicans. He did say he would not vote for a final tax plan if it would add to the deficit. The mantra now is economic growth. “Every Republican I know of is concerned about the deficit,” said Sen. John Kennedy, R-La. “Every Republican I know of is concerned about tepid growth, too.”
While Republicans denounced the ballooning debt when President Barack Obama was in office, they have much less of a political incentive to dwell on the issue now that their party controls the government.
“There’s been less talk about it this year with a Republican-led administration than there has been the last seven or eight years,” said Walker, who bristled at the Senate’s plan for tax cuts that would add to the deficit. He said it was imperative that lawmakers pay attention to the debt.
Trump, who has called himself “the king of debt,” may be setting the tone.
During his presidential campaign, he insisted that he could eliminate the national debt in eight years, even as he promised to protect Social Security and Medicare, programs that are projected to consume an ever larger share of federal spending as the country’s population ages.
After Trump struck a deal with Democrats on a short-term debt limit extension, Rep. David Schweikert, R-Ariz., asked, “In this entire discussion, how many members have you heard, how many from the White House said, ‘We’re in the middle of a demographic crisis that’s going to crush us in just a few years; let’s get to work on it’?”
He left unsaid the answer to his question: Not many.
The change in tone on fiscal matters has been swift. This spring, Sen. Mitch McConnell, R-Ky., the majority leader, asserted that the tax overhaul needed to be revenue neutral, citing the nation’s debt and invoking Trump’s Democratic predecessor.
“We added an enormous amount of debt during the Obama years,” McConnell said.
Now, Republican lawmakers are betting that economic growth will fix the nation’s fiscal woes with no pain and a lot of gain.
“The only way we’re going to solve our long-term debt and deficit issue to allow the federal government to have the revenue it’s going to need to fund all these promises made is with strong — and I mean strong — economic growth,” said Sen. Ron Johnson, R-Wis., and a member of the Senate Budget Committee. “You’re not going to achieve that with an awful tax system.”
Kennedy, another member of the budget panel, said Americans have to have faith.
“If we do it right, then the economy will be stimulated appropriately and tax revenues will go up and the deficit won’t increase,” Kennedy said. “Now, I can’t prove to you that that will happen. But neither can anybody else.”