No, Republican Tax Cuts Won't Explode The Deficit
Budgets: After eight years of silence during President Obama eight years in office, which saw deficits average $910 billion a year and the national debt explode by $9.3 trillion, Democrats are suddenly fretting about deficits. If only their concern were genuine and not a cynical attempt to derail much-needed tax reform.
The Republican plan is a "deficit-busting tax cut to benefit the wealthiest Republicans," says Senate Minority Leader Charles Schumer. House Minority Leader Nancy Pelosi warns that it would "take us so deeply into debt … it will necessitate a trillion dollars being cut out of Medicaid."
Various other Democrats say the tax cuts would "blow a massive hole" in the budget, while chastising Republicans for suddenly not caring about deficits.
Let's leave aside the fact that Democrats didn't raise a peep of protest during the Obama years, when deficits topped $1 trillion four years in a row, nor did they complain about the near doubling of the nation's debt.
The fact is that critics of the GOP tax plan are just plain wrong to pin the blame for future deficits on tax cuts.
First, some context.
According to the Congressional Budget Office, the House tax bill would boost deficits over the next 10 years by a total of $1.4 trillion. The added interest on the debt would kick that up to $1.7 trillion.
That looks like a lot of money. Except that equals just a 17% increase in total deficits projected over the next decade.
And that increase is a wild exaggeration, since it doesn't allow for any extra economic growth from the GOP's pro-growth tax cuts — a premise that even some honest liberal economists don't believe. The actual deficit boost, if there is any, will be far smaller than what the CBO says.
But let's accept the CBO's numbers as gospel truth.
Look more closely at the data and you see that what's driving deficits ever upward isn't the Republican tax cuts. It is out-of-control spending.
Over the past 50 years, despite all the myriad changes in tax laws, revenues as a share of GDP have remained remarkably close to the average: 17.4%. In fiscal year 2017, which ended in September, the share was 17.3%. In Bush's last in office, it was 17.1%. When Bill Clinton took office in 1991, it was 17.3%.
What happens if the Republican tax plan goes into effect? According to the CBO, taxes as a share of the economy in 2027 will be … 17.9%.
That's right. Even with an allegedly budget-busting tax cut, the federal government will claim a greater share of the nation's economy in 2027 than it does today, and that share will be above the average for the previous 50 years.
The only reason deficits continue to climb over the next decade is because federal spending is going up at an unsustainable rate.
This year, federal outlays will equal 20.8% of the nation's GDP. That's up from 20.5% in 2015, which was up from 20.2% in 2008 — President Bush's last year in office
Over the previous five decades, spending averaged 20.3% of GDP.
Look what happens over the next decade if the federal government is left on autopilot: Spending as share of GDP climbs to 23.6% by year 2027 — and goes up from there.
Keep in mind that outlays have only topped that level once in the past 50 years — and that was in 2009 to finance President Obama's failed stimulus programs.
What's propelling this spending increase is almost entirely entitlement programs — mainly Medicare, Medicaid, Social Security, and now ObamaCare.
Republicans can be spendthrifts just as much as Democrats. Even now they are considering abandoning the 2011 spending caps that have helped keep discretionary spending under a modicum of control over the past several years.
But the bigger problem is that any reasonable attempt to rein in any of the entitlement programs is met by fierce and unrelenting opposition from all those Democrats who now claim to worry about deficits. They will viciously demagogue any Republican who dares to propose real reforms of these programs, and then brag about any resulting election victories.
So, the next time you hear Democrats pretend to be deficit hawks, ask them what their plan is to bring entitlement spending under control.
RELATED:
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Surprise: It's Not The GOP's Middle Class Tax Cuts That Will Benefit The Middle Class
This Is Rich: Democrats Fight To Protect A $1.8 Trillion Tax Break That Benefits The Top 1%. https://www.investors.com/politics/editorials/gop-tax-cuts-federal-deficits/
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Why stop there? I love to see a CBO report on how the US economy would be affected if all churches that couldn't meet a charity threshold were taxed as businesses and the loss of the religious contributions tax deduction benefiting rwnj money launderers, at the expense of taxpayers.
Comedy! Talk about a gaggle of lies! First off Obama's deficit didn't average 910 billion and year! Obama came into office with a 1.16 trillion dollar deficit and is now leaving with a deficit projecting around 441 billion in his last 4 years it never went over 700 billion! But now you Republicans expect us to believe that INCREASING the national deficit is a GOOD thing?!
How is letting people that actually work to keep more of what THEY actually make....increasing the deficit ?
oh....oh....oh....pick me.....pick me...... I know !
DOOOOO YOOOOUUUU ?
You really don't know how a national deficit works do you?
How is letting RICH people that actually work to keep more of what THEY THE MIDDLE CLASS actually make....increasing the deficit ?
Fixed it for you.
But yet Obama was able to cut a 1.16 trillion dollar deficit into a 441 billion dollar one! Because you see the on thing no Republican will EVER admit to is you cant have a huge deficit and expect spending to and debt to go down!
meanwhile, the debt grew to over 19trillion under obama... last I checked.
Wrong Fix.
NO RICH......NO JOBS.....You haven't got that yet ?
I've never met a rich person I didn't like. Hand them a card, and more often than not.....my wife and I are going on our next vacation.
in case you didn't figure that out, they hire me, PAY ME, and my wife and I are GONZO for a few months.
Bet the poor folks pay you a bunch to work for them huh !
Oh please.....tell me, tell me, tell me. I want to learn too.
I'll try one more time....after that....you are a WASTE OF TIME !
"How is letting people that actually work to keep more of what THEY actually make....increasing the deficit ?"
No he didn't...
Because LESS MONEY IS COMING INTO THE GOVERNMENT! You can’t cut taxes by 5.8 trillion dollars, then increase government spending and expect to it to be paid for by itself! It doesn't matter how much spending you cut on other projects, if the money aint there IT"S CALLED A DEFICIT!
Oh! I forgot, it’s going to be paid for……by me and the rest of the middle class you Repubs claims to care about sooo much!
Wow, talk about swallowing it hook line and sinker.
Are you saying that if the CEO's of the major corporations, had their salaries cut to $250,000 or less, they would fire everyone and their corporation would never hire anyone else?
Or are you saying that the wealthy would chose to go out of business and eliminate all of their income generating businesses if they are unable to make $100 million next year instead of only $95 million?
Or are you saying that there is no small business in this country that hires anyone to work?
I didn't "SAY" any of what you posted.
Which Poor folks hired you again ?
So it's a government "Spending" problem huh !
When you run a business like that....you "GO OUT OF BUSINESS"!
Seems to me, and it should to you....Government needs to do some "Self" help and restructure their practices, not the other way around.
Sigh .....one persons teachable moment is another persons partisan propaganda ..... sigh again ....
Ummm .. not partisan? Try to push that BS on someone who doesn't know better. Nothing more partisan than your view on taxes
I hire people from time to time, and I'm not rich.
I'm good LMM. Yourself?
so the teachable moment you speak of is about what, Trigonometry?
That's good.
i'm happy you aren't for making the tax system even more progressive.
Really?
How much discussion was there about the deficit in the last 8 years, while the deficit ballooned to $9 TRILLION?
If the value of their assets increases or they make greater profit what does that have to do with anyone other than themselves?
Mirror, Mirror on the wall ?
Tell me the point you "Feel" is being made by others ?
So you are POOR ?
Nope, still wrong. Plenty of jobs created by not rich people, and even the rich don't create jobs for no reason. They only create jobs when they need them, tax cuts have nothing to do with it. Tax cuts either go to shareholders or in an off-shore account. Money does not trickle down, it only trickles up.
Mines gonna go right towards MORE vacation time for me and my wife.
What are you going to do with yours....Assuming you pay taxes by the way.
Dontchya love those that get more back than they pay into the system ?
The HR person hired me. Definitely not rich.
Rich people already have more than enough money to vacation whenever and wherever they want. So instead of stimulating the economy by being used it gets squirreled away off shore in some non-taxable tax haven.
Speaking for myself, I am middle class, so I don't get a tax cut under the current plans, I'll end up paying more.
Your doing something WRONG !
I must be doing something right then.......and I'm NOT rich !
By the way....who decides what "ENOUGH" is anyway.
I seriously doubt that unless you are single, and pay over 10k a year in state income tax
I seriously doubt that unless you are single, and pay over 10k a year in state income tax
You mean the company the HR person worked for.
Was the "Company" poor ?
Nah, just playing a little grade school game that's all.
Ignore it.
I pay $8k for fed and $5k for state income taxes every year, when you add in the sales tax that is deductible it approaches the $10k number you sighted.
I may be well over the median income in my State but I am still what is considered middle class as my family household income does fall well short of the $250k mark designated as the "Upper Class" . I do own my own business and have hired 6 individuals to perform various functions that I no longer wish to perform or don't have the time to perform. With that said, the "Rich" are not always the ones doing the hiring, Those that do the hiring are the ones that have a need for labor and a way to earn a profit utilizing that labor. Further, if you are hired by the HE department for a business, it is most likely that business is incorporated and that corporation is actually owned in most part by Hedge Funds which is pooled $$ from middle class retirement investment dollars. So once again it is not the "Rich" doing the hiring or writing the check, it is the business writing the check which is owned in majority by Middle Class.
What is your definition of Poor? a Teacher who makes less than $40k a year with a spouse and one child may be considered poor to me, but I bet all of them have some type of retirement vehicle they contribute to that finds its way to a hedge fund that owns stock in numerous corporations.
I would agree that the "Rich" those making in excess of $1,000,000 (my definition) annually do not need a tax break as it will not generate additional jobs, it might provide additional investment in existing enterprises though, and those enterprises will only create more jobs if there is more demand for their product or service, and that demand comes from the Poor and Middle class. If there is no room for growth through demand then there will be no investment.
Just my 2 cents, whatever its worth.
I can't see the future. Can you tell me specifically which (if any) tax plan gets passed, and the details of the final draft? If you can't, your's was a very non-smart question.
But you just stated....
So are you lying when you said the "tax cut" is going to your vacation, or when you claim that you are doing something right in response to my statement that the rich already have money for vacations? You can't claim both sides.
Ummmm....one doesn't have to be rich to go on vacation....do they ?
Where is the lie again ?
ASSumptions aren't very become of one.
That's because all current Republican tax proposals cause the middle class to pay more each year due to the elimination of various deductions. I know I will be paying more if one passes, I just don't know specifically how much they are going to @#% over the middle class.
I always have and always will pay my "fair share". Now you need to define the term "fair share" and apply that equally to all income groups to discover who is not paying it.
Cut taxes and hope that spurs enough growth to offset the revenue.
gambling with it all.
Good luck.
Hmmm, it failed miserably when Reagan promised that. It failed spectacularly when Bush promised that. So obviously it's time again for another even more massive failure of the same irrational myth. Truth is, republicans only really care about making rich people richer because that's who pays them. The economy for everyone else doesn't matter and deficits and debt matter even less than that.
Yep the rich pay to get people elected the elected people then owe their power to the rich.
He who has the Gold makes the rules, always has been, probably always will be.
But in America it was supposed to be different, We the people were supposed to hold the power, so much for that.