A weak debt ‘trig­ger’

A pro­vi­sion to make up for lost rev­enue falls short.

The Washington Post - - POWER POST -

FOR A bill that has steadily got­ten worse with time, this week’s news that Se­nate Repub­li­cans might add a debt “trig­ger” to their big tax plan sig­naled a po­ten­tially healthy change in di­rec­tion. A mech­a­nism that would au­to­mat­i­cally close bud­get gaps re­sult­ing from the bill’s tax cuts could make it some­what more re­spon­si­ble — if it were well de­signed. The prob­lem is that the trig­ger ideas un­der con­sid­er­a­tion so far look in­ad­e­quate in the face of the na­tion’s mount­ing debt.

With the econ­omy hum­ming and busi­nesses sit­ting on piles of cash, there is no need to im­peril the fed­eral bud­get by pass­ing un­paid-for tax cuts. Yet that is pre­cisely what Repub­li­cans are propos­ing to do, at the cost of $1.4 tril­lion in new debt, ac­cord­ing to the Con­gres­sional Bud­get Of­fice. Repub­li­cans ar­gue that this plan would spur eco­nomic growth, in­crease tax re­ceipts and pay for it­self, but they have no ev­i­dence sup­port­ing this rosy sce­nario.

Ide­ally, Repub­li­cans would fully off­set the tax cuts by elim­i­nat­ing more tax breaks or lim­it­ing the size of cuts to what they are will­ing to pay for. If they nev­er­the­less bet the fed­eral bud­get on their it-will­pay-for-it­self fan­tasy, the least they could do is si­mul­ta­ne­ously adopt a con­tin­gency plan for the sce­nario most economists pre­dict — a tide of fresh red ink. If fed­eral rev­enue falls or deficits widen in the first cou­ple of years, some of the tax cuts could be can­celed or other rev­enue raised to re­pair the gap. In part to mol­lify Repub­li­cans such as Sen. Bob Corker (Tenn.), GOP lead­ers have been con­sid­er­ing such a trig­ger for the ver­sion of the tax bill that sen­a­tors may vote on this week.

The con­cept has many en­e­mies. Some ar­gue that noth­ing should risk the size of the tax cut, an ad­mis­sion of reck­less dis­re­gard for the fis­cal dan­ger to which they would ex­pose the coun­try. Oth­ers in­sist that a trig­ger would be harm­ful in case of re­ces­sion, au­to­mat­i­cally rais­ing taxes when the gov­ern­ment should be pump­ing more money into the econ­omy. Yet Congress is re­li­ably mo­ti­vated dur­ing re­ces­sions to pro­vide fis­cal stim­u­lus. A well-de­signed trig­ger would pro­tect against a fu­ture in which the econ­omy con­tin­ued to grow but un­wise tax cuts nev­er­the­less piled on more debt.

Un­for­tu­nately, the trig­ger ideas float­ing around the Se­nate fall short. A good trig­ger would re­quire tax ad­just­ments large enough to fully off­set any rev­enue short­fall the bill cre­ated; but the ver­sions un­der dis­cus­sion re­port­edly would cover only $350 bil­lion worth of short­falls over 10 years. A de­cent trig­ger would also raise rev­enue by scal­ing back tax cuts or cur­tail­ing tax breaks, not by sched­ul­ing spend­ing cuts that prob­a­bly would never ma­te­ri­al­ize, a pos­si­bil­ity some sen­a­tors floated Wed­nes­day.

A weak trig­ger pro­vi­sion would be bet­ter than none, but it would make the tax bill only some­what less grotesque. Yet that is the best-case re­sult of what has be­come a last-minute scram­ble to cob­ble to­gether pro­vi­sions that will win the votes of fence-sit­ting sen­a­tors such as Mr. Corker. Fu­ture gen­er­a­tions may pay dearly for such reck­less­ness.

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