Republicans’ ‘Trojan horse’ trap on infrastructure

Heads I win, tails you lose. That is Republicans’ ominous warning to Democrats working to design and (to their credit!) actually pay for an infrastructure bill.

“I think the Trojan horse will be called infrastructure, but inside the Trojan horse will be all the tax increases,” Senate Minority Leader Mitch McConnell, R-Ky., said this week. “They want to raise taxes across the board.”

For those struggling to decode these comments, here’s the trap McConnell is laying.

Any major upgrade of America’s roads, bridges, broadband network, water systems and other infrastructure will be expensive. That’s part of the reason “Infrastructure Week,” though much hyped in recent years, still hasn’t happened, despite the obvious need for more infrastructure investment and the popularity of such proposals. If Democrats try to undertake this expensive project without paying for it, Republicans will no doubt accuse them of running up the debt and thereby stoking out-of-control inflation.

How do we know? Because that’s the critique McConnell and other Republicans levied against the recently enacted $1.9 trillion American Rescue Plan. Not a single Republican voted for the bill because, they said, they were concerned about “adding all this money to the national debt” (per McConnell), since unfunded spending of that magnitude would “unleash inflation” (South Dakota Sen. John Thune). Deficit-financed spending would “pour gasoline on the inflationary fires” (Iowa Sen. Charles Grassley) and ultimately lead to a “day of reckoning” (Wisconsin Sen. Ron Johnson).

Democrats are addressing concerns about debt and inflation risks by brainstorming ways to pay for their ambitious infrastructure plans — likely through increases to individual and corporate income taxes. Anticipating this, Republicans have preemptively accused Democrats of using infrastructure as a “Trojan horse” for tax hikes.

Presumably the only option left is to cut spending on Medicaid or Social Security or some other popular safety-net program Republicans have long salivated over slashing. But in the (extremely unlikely) event Democrats ever proposed such cuts, Republicans would clearly use that against them in attack ads, too.

Democrats should be lauded for their willingness to weigh difficult choices about how to pay for things, including through tax increases. Raising taxes will ultimately be necessary but remains politically painful. Neither party likes doing it, despite Republicans’ portrayal of Democrats as tax-hike-happy Trojan warriors. This is pretty clear from Democrats’ own tax policies. Sure, Democrats often claim to support more taxes on the “rich” -- but they keep redefining who counts as “rich” into an ever-tinier segment of the population. President Joe Biden has said only households making at least $400,000 should get a tax increase. Meanwhile, Senate Democrats are lobbying him to repeal the cap on state and local tax deductions — which would entail a tax cut that mostly benefits the top 1%.

If Democrats end up passing tax hikes this year, on anyone at all, it’ll be to bite the bullet and actually pay for stuff. Not for funzies.

Republicans have, of course, adopted a different strategy when pushing through their own fiscal priorities -- such as the 2017 tax cut, which added nearly $2 trillion to the deficit. They didn’t bother trying to come up with offsets because they promised that the policy would “pay for itself” through gangbusters economic growth. This growth never materialized.

In recent years Democrats have sometimes toyed with their own version of this voodoo economics, and they should be praised when they resist the temptation. This is what they seem to be doing now, in contemplating at least partial pay-fors for both infrastructure and other priorities.

You might wonder what kinds of fiscal policies Republicans have been pushing lately while they pooh-pooh Democrats’ toounfunded-yet-also-too-funded agenda. The answer defies parody: more tax cuts for dead millionaires and billionaires.

Republicans are championing a full repeal of the estate tax, which right now applies only to people who leave a taxable estate worth more than $11.7 million (or $23.4 million for couples). This policy would also increase the deficit, has no apparent offsets and has no hope of paying for itself. But then, when it comes to their own pet policies, Republicans have always played by different rules.