Desperate for tax cuts, GOP flip-flops on debt

WASHINGTON — In 2009, almost every Republican in Congress opposed a $787 billion stimulus plan in the midst of an economic crisis because they said it would cause a dangerous increase in the federal debt.

“Yesterday, the Senate cast one of the most expensive votes in history,” Sen. Mitch McConnell, the minority leader, said at the time. “Americans are wondering how we’re going to pay for all this.”

Nine years later, during one of the longest economic expansions in U.S. history, almost every Republican in Congress — including McConnell, now the majority leader — was set to vote for a tax plan that is projected to cause an even larger increase in the federal debt.

Republicans got to that extraordinary point by a tangled path. First, they argued that the tax cuts would stimulate the economy enough to pay for themselves, only to be confronted Thursday with a report that said the cuts would add $1 trillion to the deficit over a decade. That bad news led to last-minute convulsions and a frantic search for more revenue.

But in the end, it looked as if the political imperative to pass what would be the only major piece of legislation of President Donald Trump’s first year, along with a nearreligious Republican belief in tax cuts, would override their previous concerns about fiscal prudence.

Assuming that the Senate plan was passed, the House and the Senate would still have to reach final agreement on the details, and Trump would have to sign his name, but the Republican Party now stands on the verge of driving up the national debt after spending much of the past decade promising rectitude and criticizing Democrats for profligacy.

The legislation reads “as if it were developed for a country whose debt problems have been solved, when in reality debt is the highest it has ever been other than around World War II,” declared the co-chairmen of a bipartisan commission created in 2010 to propose measures for reducing the debt.

Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, formerly President Bill Clinton’s chief of staff, said the current crop of Republicans is avoiding “nearly all the hard choices.”

McConnell has a well-documented history of fretting about the debt.

“We’d like to do something about the nation’s biggest problem, spending and debt, which of course is the reason for this economic malaise,” he said in 2011. He added that Republicans could not address the problem because they did not control the White House or Senate.

Last year, with Republicans in control of the House and the Senate and about to claim the White House, he reiterated his distaste for debt. “I think this level of national debt is dangerous and unacceptable,” McConnell said. “My preference on tax reform is that it be revenue neutral.”

He continued in words that now seem particularly striking. “What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,” he said. “Take you

back to 2009. We borrowed $1 trillion, and nobody could find that it did much of anything. So we need to do this carefully and correctly, and the issue of how to pay for it needs to be dealt with responsibly.”

This week, the congressional scorekeeper, the Joint Committee on Taxation, reported that the Senate’s tax plan is, in fact, a stimulus plan that costs $1 trillion — the amount it would add to the debt over the next decade after accounting for its significant economic benefits.

House Speaker Paul Ryan, who shepherded the House’s version of the tax bill — which also would add $1 trillion to the deficit over a decade — has assiduously cultivated a reputation for concern about the federal debt.

In 2011, he released “The Path to Prosperity,” a budget plan proposing large spending cuts to balance the books. He said fiscal discipline was unpopular but necessary.

“What I do know is I can’t look my kids and my constituents in the eyes with my conscience being clear and not know that I didn’t do everything I could to try and fix this problem,” Ryan said in a 2011 interview with CNBC.

In 2013, he said the debt “will weigh down our country like an anchor.”

Republicans are gambling that voters would rather have tax cuts now and worry about debt later. That is certainly the position of the corporate sector, which has abandoned pious expressions of concern about Washington’s extravagance in favor of earnest pleas for tax relief.

“Passing tax reform is the single most important thing that Congress can do to make American companies more competitive,” Jamie Dimon, the chief executive of JP Morgan Chase, said last month.

A number of prominent Republicans have defiantly insisted that economic forecasters are wrong about the likely cost of the tax cuts. They say the legislation will cause a surge of economic growth that will allow the government to collect just as much money at lower tax rates.

Sen. Orrin G. Hatch, R-Utah, chairman of the Finance Committee, dismissed the analysis of the economists Congress employs for that purpose, using techniques he has endorsed, as “curious.”

The Trump administration, without offering evidence, continues to insist the federal debt will not rise.

Republicans also have long distinguished between deficits caused by spending increases and deficits caused by tax cuts. They argue that tax cuts are good for the economy and that the resulting problem of larger deficits should be addressed by reducing government spending.

“You also have to bring spending under control,” Sen. Marco Rubio, R-Fla., said last week. “And not discretionary spending. That isn’t the driver of our debt. The driver of our debt is the structure of Social Security and Medicare for future beneficiaries.”

The tax cuts, however, would increase the scale of that challenge.

“Reagan proved that deficits don’t matter,” Vice President Dick Cheney said in 2002. Many Republicans take the view that the George W. Bush administration’s tax cuts in 2001 and 2003 proved the same point.

But federal borrowing imposes real economic costs, not least the need to make interest payments. It also restricts the funding available to private-sector investors. And experts continue to warn that the United States is on an unsustainable trajectory, particularly because the government has promised benefits to an expanding population of older Americans that will further outstrip tax revenue.

“It’s the type of thing that should keep people awake at night,” Janet Yellen, the outgoing Federal Reserve chairwoman, told a congressional committee last week.

But in Washington, in 2017, such warnings are no longer in vogue.