Tax reform, maybe the Republican Party’s signature issue, is off to a rough start, largely because the GOP is making it clear that the principles upon which it claims to stand aren’t principles after all.
Suddenly, after eight years of fretting about deficits and debt, the GOP no longer seems to care much about either. If it did, it would not consider embracing a tax proposal this week from the White House that could cost federal coffers $2 trillion in revenue over the next decade. The proposal also would raise taxes on some middle-class families while some wealthy families – like President Trump’s – could gain more than a billion dollars, according to an analysis by The New York Times.
Among the notable points of this plan is that Republicans spent seven years trying to sabotage the Affordable Care Act, which helped reduce the deficit. Now, with a tax plan that would surely do the opposite, Republicans aren’t so alarmed about the issue. Mark Walker, who represents the Sixth District of North Carolina in the U.S. House, recently told The New York Times this about the deficit:
“It’s a great talking point when you have an administration that’s Democrat-led. It’s a little different now that Republicans have both houses and the administration.”
Walker was making an observation about colleagues and not himself, but the message is unambiguous either way given that Walker, head of the ultra-conservative Republican Study Committee, has embraced a tax outline that will explode the deficit.
The annual deficit ballooned to about $1.5 trillion during President George W. Bush’s final year in office. By the time President Barack Obama ended his second term, it had been shaved by roughly two-thirds. Debt – nearly on autopilot because of a variety of obligations baked into federal spending, automatic stabilizers that kick in during times of severe economic stress, and interest payments – climbed above $19 trillion. It recently passed the $20 trillion mark.
The deficit is projected to rise back above $700 billion soon and even higher in coming years. That’s not a solid foundation upon which to enact another tax cut. Despite what Republicans insist, tax cuts don’t pay for themselves, and they are not the reason wages rise and the GDP increases. Wages fell for several years after a big tax cut during the Reagan era. The economy soared after the U.S. implemented some of the biggest tax increases ever under President Clinton, then sank into the worst economic downturn since the Great Depression years after President Bush signed a couple of historically large tax cuts into law.
Not only that, there is little evidence current rates have hampered corporate performance. The stock market just set another high – after repeatedly setting and resetting highs during the Obama presidency – and in recent years, corporate profits have broken records. Let us also not forget that a corporate tax holiday in 2004 designed to entice companies to repatriate earnings led to neither new jobs nor faster economic growth. That’s why the Center for Budget and Policy Priorities released a report in 2011 saying another such scheme would only increase the deficit.
If Walker is serious about the debt and deficit as he insists, he will have to show more leadership than he or his party has so far.