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House Conservatives Demand That Tax Reform Add to the Deficit

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Odd, isn’t it? It’s almost as though they lack consistency and/or rational thinking. Eric Levitz writes in New York magazine:

The House Freedom Caucus believes that the national debt poses such a profound threat to our grandchildren’s prosperity, true conservatives must threaten to sabotage the economy unless Congress agrees to pass draconian spending cuts.

They also believe that the corporate tax rate should be cut from 35 percent to 16 percent — and that true conservatives must resist any attempt to offset the (roughly) $2 trillion revenue loss that this would generate by closing loopholes in the tax code.

On Wednesday night, Axios’s Jonathan Swan reported that the 35 Über-reactionary House members are preparing to release their own tax plan, much to the chagrin of their party’s leadership. The exact details of that plan have yet to be hammered out, but Swan’s sources outline its core features:

• Slashes the corporate tax rate from 35% to 16%.

• Doubles the standard deduction for individuals.

• Abandons “revenue neutrality,” the dogma that tax reform mustn’t worsen currently projected deficits.

It’s worth noting that even Republicans who endorse “revenue neutrality” generally use “dynamic scoring” to get there — which is to say, they presume that tax cuts for the rich are partially offset by generating higher economic growth. The Freedom Caucus position isn’t that giant tax cuts don’t add to the deficit, but that growing the deficit is perfectly fine, so long as the national “credit card” is being used to redistribute wealth to the rich, and not to the poor.

To be fair, the conservatives will, ostensibly, call for offsetting the cost of their tax cuts by soaking the latter. Members of the Freedom Caucus have, historically, reconciled the tension between their deficit-hawkery and support for giant tax cuts by insisting on commensurate reductions in social spending. And according to Swan, their proposal will include “some form of ‘welfare reform.’”

But conservatives have consistently failed to pass “welfare reforms” draconian enough to close the current deficit. The fact that they are willing to grow that deficit by more than $2 trillion over ten years, amid decades of evidence that their movement lacks both the influence necessary to roll back Social Security and Medicare and the will to cut defense spending — suggests that these tea-partyers don’t actually believe that the debt poses a catastrophic threat to their progeny, or else they love income inequality more than their grandkids. One could argue that these conservatives believe cutting taxes actually helps reduce the deficit in the long term, because “starving the beast” is the only politically feasible way of rolling back entitlement spending. But we now have decades of evidence to suggest this isn’t the case — the Bush and Reagan tax cuts did not produce an outpouring of popular support for cutting Social Security. In fact, cutting taxes actually seems to increase public support for the social safety net, since doing so makes government programs seem like a better deal. So, the cause for doubting the sincerity of the Freedom Caucus’s deficit scaremongering remains the same: They are blithe about increasing the national debt through tax cuts, even though they have no basis for thinking that they can subsequently offset lost revenue through massive cuts in social spending.

The only alternative explanation is that . . .

Continue reading.

Written by Leisureguy

7 September 2017 at 1:48 pm

Posted in Congress, Daily life, GOP

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