Tax cuts created current budget mess
Last updated 2/21/2018 at 4:42pm
When conservative members of Congress worked with the White House to force through a tax cut that was a huge windfall for millionaires and billionaires, many observed how this would inflate the Federal deficit. After decades of presenting themselves as the “deficit hawk” party, and warning of the danger of our national debt and of government spending, how did the Republicans come to be the party that explodes the deficit?
The Republican tax plan takes $1.5 trillion in revenues out of the budget, and no serious economic analysis believes that this will create such explosive economic growth that we would make the revenue back. This claim that it would is outrageous for a couple of reasons. The first being that tax cuts in a time of high employment have never stimulated the economy. The second being that if you wanted to design a tax cut that would stimulate an economy, you’d write a very different tax reform bill.
A tax cut that would theoretically stimulate lasting economic growth would be focused on the middle class. The idea would be that putting more money in the pockets of workers and consumers who would turn around and buy things like clothes, food, entertainment, services, home improvements, new cars or technology, or other goods and services. Instead, they designed a tax plan that disproportionately favors the wealthy, leaves massive loopholes for people who invest in the stock market which adds no value to the economy, and has middle-class tax cuts that end in 2027, while leaving the huge corporate tax cuts permanent.
This tax plan proves that these members never really cared about the deficit. If they did, they wouldn’t have added $1.5 trillion to it in order to give tax breaks to corporations, wealthy investors, and most importantly their donors. However, creating a budget crisis, and then suddenly pretending you care about deficit spending, gives you an excuse to do what you wanted all along: slash budgets for essential services like Medicare, Medicaid and Social Security.
That’s exactly what the budget proposal released by the White House does. In order to pay for this massive windfall to the uber-wealthy, they’re proposing a $1.3 trillion cut to Medicaid, a $554 billion cut to Medicare and a $10 billion cut to the Social Security Disability Insurance Program.
If you had to choose who needed more help from federal programs, you’d probably choose people living in poverty, children, the elderly and the disabled before you picked CEOs, corporations and investment firms. Apparently, Congressional Republicans and the White House feel differently, because they took $1.864 trillion from the former and gave $1.5 trillion to the latter.
These tax cuts were never designed to help the middle class. These tax cuts were designed as a gift to the wealthy and to create an excuse for slashing essential programs. While giving a token, temporary gift to the middle class in the form of minimal tax decreases, they plan to destroy programs that they depend on for their health and financial well-being. This budget is just the next step.
Dr. Gerald Friedman is a Professor of Economics & Undergraduate Program Director at the University of Massachusetts Amherst. A graduate of Columbia and Harvard, he has drafted funding plans for both statewide and federal single-payer systems. He is on the Board of Advisors to the Business Initiative for Health Policy.