With all the wrangling that is going on among Republicans right now about their tax cut plans, perhaps it would be helpful to step back for a moment and look at the big picture. Over the last few decades their agenda has failed because they have presented mutually exclusive goals.
On the one hand, no matter what is happening in the economy, Republicans have supported big tax cuts, primarily for the wealthy. Diametrically opposed to that goal, they have touted themselves as the party of fiscal responsibility with the aim of reducing federal deficits. As we see with their current tax plan, those goals are at odds with each other. When you pass out big tax cuts, especially to the wealthy and big corporations, the government takes in less revenue and the deficit grows.
In order to use the reconciliation process to pass their tax cuts, Congressional Republicans passed a budget blueprint that includes a $1.5 trillion increase in the federal deficit over the next 10 years. They’ve been trying to fit their plan into that ceiling by eliminating many middle class deductions and repealing the Obamacare mandate. But keep in mind, they’ve already agreed to increase the deficit enormously.
Some Republicans, like Trump and Ryan, emphasize the importance of tax cuts for the Republican agenda, while people like Bob Corker and Rand Paul are more committed to deficit reduction. The former explain their position by claiming that reducing taxes will somehow spur huge economic growth that will make up for the revenue shortfall that tax cuts incur. We can thank Ronald Reagan for that one. His primary opponent in 1980, George H.W. Bush, rightly called it “voodoo economics.” Experience has told us that Bush was right, as the Center on Budget and Policy Priorities documented.
Despite promises from proponents of the tax cuts, evidence suggests that they did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.
There are some Republicans like Rand Paul, who address this problem by simply suggesting that the federal government should be scaled back so far that deficits are eliminated. It’s the old, “shrink it till we can drown it in the bathtub” approach championed by Grover Norquist.
There are two huge problems with that. The first is that the Republican ranks are also filled with a lot of military hawks. The kind of cuts Paul is talking about would eat deeply into their territory when it comes to funding for the Pentagon. Otherwise, most Republicans aren’t willing to court the kind of political backlash that would be prompted by that approach. So for cover, the resort to voodoo economics.
What all this comes down to is a scam the Republicans have been running on this country for decades now in order to cover up the fact that their stated goals are mutually exclusive. Most of us know what’s up and are getting damn tired of it all.