Many economists and officials are predicting that the tax bill will drive up the deficit, destabilize healthcare markets and exacerbate income inequality.
Protestors
convene on Wall Street to protest the Republican tax plan in
early December. mpi43/MediaPunch
As Republicans in the House and Senate hash out their tax bill
differences in a conference committee behind closed doors, with
the goal of producing a final bill before the holiday break,
conservative economists tell TPM that the policies likely to
become law will wreak havoc on the country for many years to
come.
Though Republicans insisted repeatedly over the past few
weeks that the $1.4 trillion in tax cuts, most of them geared
toward wealthy individuals and corporations, would pay for
themselves by stimulating economic growth, they presented no
evidence to support their claims.
Instead, the economists and former government officials
predicted, the bill will drive up the federal
deficit, shrink and destabilize the health care
market, exacerbate already historic income inequality, and pressure Congress to
make deep cuts to the social safety net and government programs.
“I don’t see how this bill makes America great again,” said
Bill Hoagland, a self-described “deficit hawk” Republican who
worked for decades for the Senate Budget Committee and
now serves as the senior vice president of the Bipartisan
Policy Center. “With the populist direction the country has gone
in this year, it just doesn’t seem right to give big corporations
a permanent tax cut and not individuals.
And it’s an open question with those companies—will they
translate that back into actual jobs and not into stock options
and buybacks?”
Chip Somodevilla/Getty Images
Republican senators, who for the last several years have railed
against and campaigned on the specter of the federal deficit,
voted Saturday on a bill that several independent analyses have
said will cost the government at least $1 trillion dollars over
10 years—even taking into account the economic growth it may
generate.
In the face of two official government bodies scoring the bill,
the Congressional Budget Office and the Joint Committee on
Taxation, as well as independent studies by the Tax Policy
Center, the Tax Foundation and the Wharton School of Businesses,
GOP lawmakers insisted that the tax cuts would spur so much
economic growth that they would pay for themselves and then some.
“I am absolutely convinced that this bill will end
up reducing the deficit,” Sen. Rob Portman (R-OH) told
reporters. “I feel very good about the fiscal situation.”
They provided zero evidence to support this claim. (A promised
report from the Treasury Department showing a surge of economic
growth turned out not to exist —prompting
an investigation by the department’s
inspector general.)
Instead, GOP lawmakers coordinated to undermine and
discredit the reports showing their bill would bleed the
government of more than a trillion dollars in the coming decade.
Sen. Ted Cruz (R-TX) told TPM before the vote that the “the
JCT report is exceptionally shoddy.”
“They’re always going to be wrong,” his fellow Texan John Cornyn,
the Senate majority whip, told reporters.
Both conservative and moderate economists told TPM that they have
seen nothing to support the lawmaker’s assertions, and called the
bill “economically irresponsible.”
“It never was a question in my mind that tax cuts do not pay for
themselves,” Hoagland told TPM. “Adding this much to the debt,
which is already growing, is a tax on future generations. I
think what this tells you is that Republicans were so desperate
for a victory that policy didn’t matter.”
In defending their tax bill, Cruz and other Republicans cited the
economic boost past tax overhauls created.
But Bruce Bartlett, an economic adviser to President Ronald
Reagan who helped craft the 1986 tax bill, said such
comparisons are extremely misleading.
“There is no historical evidence that any tax cut in history
comes anywhere near paying for itself,” he said bluntly. “At the
most you get back a third of the revenue you lose, but that might
be overly optimistic.”
Bartlett, who also served as a Treasury Department official
under George H. W. Bush, added that most previous tax cuts were
enacted during economic downturns with high unemployment, and
argued this bill will have far less positive impact because the
economy is already doing well.
“When there is more slack in the economy, you get more bang for
the buck,” he explained. “But there’s no reason to think that
now, when we’re at a cyclical peak, that we’ll see any
stimulative effect at all. If I were a corporate executive, I
wouldn’t be building new factories for all the new sales I’m
going to get.”
Stan Collender, a former top staffer on the House and Senate
Budget Committees, who worked under both Republican and
Democratic administrations, said not only will the current bill
fail to help the country, it will cause significant harm.
“Unless the laws of economics have been repealed, and not even
Trump can do that, this has the potential for being one of the
biggest disasters in American history,” he told TPM. “The deficit
hawks who for the last few months have been in a witness
protection program are going to emerge with a vengeance to demand
the deficit they just increased exponentially is a problem, and
the pressure on Social Security and Medicaid is going to be
pretty intense.”
Trump
holds an example of what a new tax form may look like during a
meeting on tax policy with Republican lawmakers in
November. Evan
Vucci/AP
Even with unified Republican control, President Trump and
Congress have failed repeatedly this year to pass any
piece of major legislation. After multiple face-plants on
attempts to repeal the Affordable Care Act, the pressure to pass
something before the dawn of the 2018 midterm season ramped up
significantly. And what better to bring together a fractious gang
of Republicans than the Holy Grail of the GOP: tax cuts.
“They have to do this,” Dan Scandling, who worked as a
GOP House staffer for nearly 25 years, told TPM. “This is what
GOP candidate for years, for generations, have run on.
