Before discussing federal tax cuts, it’s important to note the backdrop against which they are proposed. The Concord Coalition, a nonpartisan budget watchdog, provides a stark overview:
“The federal debt recently passed the $20 trillion mark, and the Congressional Budget Office (CBO) projects that under current law the government is on track to add more than $10 trillion to that in the next 10 years. This version of the tax plan will add at least another $1.5 trillion onto that projection.”
We’ve been through enough cycles of power change in Washington, D.C., to say with certainty that neither political party is serious about balancing the budget.
When Democrats are in power, Republicans focus on the nation’s debt and deficit. The scripts swap hands when Republicans take charge. Neither party wants to take the adult role of saying “eat your vegetables.” Instead they entice the public with sweet tax cuts and fattened entitlements with the promise of exercising and eating better in the future. This is simply unhealthy and unrealistic.
But here we are again with no talk of reining in entitlement spending (Social Security and Medicare), and a hard push for more tax cuts under a thin veil called “reform.”
Our leaders know it will take a combination of tax increases and spending cuts to get to the point where the U.S. government is running responsible budgets. The nation still needs that “grand bargain” that eluded then-President Barack Obama and then-House Speaker John Boehner.
The essential budget facts have not changed since that failure. The federal government spends more than it takes in. Under the current GOP tax plan, this would be exacerbated.
When most states cut taxes, they come up with spending cuts at the same time. The budget either balances or it doesn’t. It’s pay as you go. Past federal tax cuts have led to widening deficits, because lawmakers don’t have the nerve to enact the spending cuts to offset lost revenue.
The answer is that leaders from both parties must agree to make painful, unpopular decisions. The last time Congress did this, it worked.
The Budget Enforcement Act of 1990 combined tax increases, which Republicans disliked, with spending discipline, which Democrats disliked. By 1998, Congress faced a projected budget surplus thanks to that compromise. But the budget law expired in 2002, and deficits have mounted ever since.
We get it. The topic of debt is boring, and addressing it doesn’t net short-term satisfaction. What most people remember from the 1990 legislation isn’t that then-President George H.W. Bush compromised with Democratic leaders to set the nation on a responsible budget path; it was that he broke a campaign promise (”Read my lips: No new taxes!”). Ever since then, politicians have been signing pledges to never raise taxes again, and the federal budget picture has gotten worse.
Part of the problem is the public doesn’t appreciate or reward budgetary discipline. That can change with a voters’ pledge to politicians:
Read our lips: No new deficits!