No, the Tax Cuts Won’t Pay for Themselves. Again.

No, the Tax Cuts Won’t Pay for Themselves. Again. December 12, 2017

During the debate over the tax bill, Treasury Secretary Steven Mnuchin repeatedly assured Congress that the Treasury Department had a study that showed the cuts would pay for themselves in increased revenue, but they never actually showed that analysis. Until now. Guess what? It doesn’t say what he claimed it said. Not even close.

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For months now, top leaders in the Trump administration have been promising to produce a dynamic economic analysis that shows the growth-boosting powers of its tax plan are so impressive that they will negate any revenue loss. But the report — published by an agency overseen by Trump appointees and using methods Republicans say they favor — found that they have to assume large numbers of additional policy changes to get the growth they’ve promised.

Dozens of Republican Senators and members of Congress profess to believe that some such analysis is out there somewhere, and that it justifies their decision to ignore Joint Committee on Taxation findings that the plan would, in fact, add somewhere between $1 and $1.5 trillion to the deficit.

Instead of a dynamic analysis showing that the tax plan would boost annual economic growth by the 0.7 percentage points they need, they have an analysis claiming that if you passed that tax plan and did a bunch of other stuff you will get the growth…

That “other stuff” includes a big infrastructure bill, which will mean more spending with less revenue, and, of course, “entitlement reform,” a euphemism for cutting Medicaid, Medicare and Social Security (the last two of which won’t help on either the revenue or spending side). Basically, they’re saying that if Congress were to adopt Trump’s entire proposed budget, complete with the draconian cuts to social services and many other programs, then that would make up for the loss in revenue. It does not mean the tax cuts would spur enough additional growth to make up for those revenues. It’s a rather blatant bait-and-switch, and one that any observant person could see coming a mile away.

There is actually one reform to Social Security and Medicare that I would strongly support: means-testing. It would reduce spending on those programs and free up more money for those who really need it. For those over 65 who are significantly wealthier than the rest of the population, they should get much lower benefits and the money saved from that can be either set aside for future retirees (if Congress ever gets its act together and gets rid of the unified budget that puts Social Security and Medicare into the general fund) or used to increase benefits for those who need the additional help.

And yes, I know the argument that they paid into it so they should get out what they paid in. But for those with higher incomes, they also paid a much smaller percentage in payroll taxes than the poor and middle class because those taxes are capped after a certain income. And it isn’t like we don’t redistribute wealth in a thousand other ways already, and often for the better.

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