Debt and Deficits

The GOP's New Tax Plan Proves Republicans Never Cared About the Federal Deficit

Republicans promised tax reform that wouldn't increase the debt. Their blueprint breaks that promise.


Ron Sachs/dpa/picture-alliance/Newscom

You may remember a time when Republicans pretended to care about debt and deficits.

As deficits skyrocketed during President Obama's initial years in office, Republicans harped on the burdens imposed by high debt levels at every possible occasion. Fiscal responsibility was a particular fixation for Rep. Paul Ryan, who in 2011 accused Obama of playing games with the budgeting process by "dodging tough choices," and offering "no real plan to avoid a spending-driven debt crisis."

As recently as January of this year, Ryan, now Speaker of the House, was insisting that the GOP tax plan would be "revenue neutral"—balancing out any tax reductions by eliminating carve-outs in order to avoid increasing the nation's debt. He flatly dismissed the idea that Republicans would cut taxes without corresponding offsets.

But perhaps it's a mistake to take Ryan strictly at his word. The Speaker also predicted at the same time that congressional Republicans would repeal Obamacare, rewrite the tax code, and fund a border wall by August. Those with a working sense of the passage of time will have noticed that it is now the end of September, and none of these things have happened. (On the wall, at least, that is good news.)

Yesterday, however, a group of six top Republicans, including Ryan, did finally manage to release a tax plan. Or at least a partial plan. It's more of a sketch, really, a starting point, like a builder who begins work on a house design by saying that it should have some bedrooms, a bathroom, and a kitchen, probably. You have to start somewhere.

In other words, there's a lot we don't know about the tax plan, which is to say that there's a lot Republicans don't know about their tax plan. The framework released yesterday calls for reducing the current seven tax brackets down to three—or possibly four. It specifies the new rates for the three brackets, but doesn't say where the income ranges for those brackets would begin or end, making it difficult to figure out who would be affected and how. It proposes increasing the child tax credit, but doesn't say by how much. There will be a kitchen and some bathrooms and some bedrooms, but we're still not sure how many.

Among the details that Republicans have yet to work out is how, or even whether, to offset the tax cuts in order to avoid blowing up the deficit.

The current plan proposes about $5.8 trillion in tax reduction offset by about $3.6 trillion in base-broadening offsets, meaning that it would result in a $2.2 trillion deficit increase over the next decade, according to an estimate by the Committee for a Responsible Federal Budget. These estimates are rough, and based on the incomplete information provided by the GOP plan. The exact number might be higher or lower, but what's more important is the scale. The deficit, and the debt, would rise by a lot.

The Senate, meanwhile, has worked out an initial deal to allow for a tax cut that would increase the deficit by $1.5 trillion. These sorts of tax cuts are, in some sense, not really tax cuts, because they leave spending in place, and to spend is to tax. They are just delaying mechanisms, a way of postponing paying the tab for a decade or two.

Now that Republicans are poised to overhaul the tax code, they tend to hand wave away concerns about deficit-increasing tax cuts by declaring that what they are really interested in is economic growth, enough of which will make the budget problem moot. In discussions about tax policy, Republicans often use "growth" as a sort of coded shorthand, a way to say, "I don't care about the deficit" without saying the precise words, "I don't care about the deficit."

"The only way we're going to solve our long-term debt and deficit issue to allow the federal government to have the revenue it's going to need to fund all these promises made is with strong — and I mean strong — economic growth," said Senator Ron Johnson, told The New York Times.

"If we do it right, then the economy will be stimulated appropriately and tax revenues will go up and the deficit won't increase," Sen. John Kennedy (R-La.) told the paper.

Sorry, but there is no way to "do it right." Contrary to the persistent Republican dogma, tax cuts do not pay for themselves. Although they can boost growth sometimes, even in the most favorable circumstances, the growth effects are smaller than the total tax cut. For those who favor smaller government, this should be good news. If it turned out that tax cuts always resulted in a corresponding and equal increase in government revenue thanks to economic growth, then cutting taxes would simply be a recipe for maintaining government at its current size.

In the world we live in, if you want to offset the budgetary effects of tax cuts and avoid deficit increases, you have two choices: You can raise additional revenue elsewhere in the tax code, by, for example, ending targeted tax breaks and deductions. Or you can cut spending.

But Republicans do not appear to have plans to do either. The budget blueprint Trump released earlier this year offered some narrowspending cuts, but offset those cuts with corresponding increases in defense spending. And although the GOP's new tax plan leaves out many details, what's clear is that it would increase the nation's debt, possibly by trillions. It's almost as if Republicans never really cared about the debt, and now that they are in power, are dodging tough choices on the budget because they have no real plan to avoid a debt crisis.

NEXT: Trump Waives Jones Act for Puerto Rico for 10 Days. That's Good, but It's Not Enough.

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88 responses to “The GOP's New Tax Plan Proves Republicans Never Cared About the Federal Deficit

    1. Indeed. Radically cut spending, restore the concept of limited government, and get rid of the income tax. The federal government has no business in almost anything it does. Even defense, which is a legitimate function, is all screwed up.

  1. You may remember a time when Republicans pretended to care about debt and deficits.

    You mean Republicans have been lying to their base for decades?

    Can't figure out why the base told them to fuck off and went Trump.

    1. Cuz Trump wants to cut spending...obviously.

      1. He doesn't. He didn't claim to, either. I'd prefer the honest one over the guys who kept saying "Well, if you give us MORE power, we will get this stuff done" and then engage in failure theater.

    2. Trump vaguely dismissed voodoo economics in his "populist" campaign, though he's apparently too stupid to realize that he's now trying to sell just that.

      1. Trump's opinion on economics is virtually indistinguishable from that of Comrade Bernie, which tells you all you should really need to know.

        1. To be fair, Trump lets better people actually implement economic policy.

          One thing about Trump is that what he tweets about is not necessarily what our government policy will be.

          1. Presumably nobody voted for him because they wanted to see rich people's taxes cut. Or maybe they did. You'd have to be some kind of historical fucking moron to vote for him.

    3. "Can't figure out why the base told them to fuck off and went Trump."

      Because there was no other Republican that ended up running against Billary and who wanted her?

      Many people voted Trump, or even republican over the last several elections, due to the false choice we were given.

      Do you want to eat a dog turd dipped in milk chocolate or dark chocolate.

      How about neither since both involve eating turds.

  2. The best way to make sure the government doesn't spend money is to make sure they can't get their hands on it in the first place.

    The belief that the government will ever be so flush with cash through higher taxation that they refuse to spend it and devote trillions to deficit reduction instead is laughable.

    1. The best way to make sure the government doesn't spend money is to make sure they can't get their hands on it in the first place.

      They spend what ain't there already, so it's not like tax cuts slow them down.

      1. They'd spend more.

        See my example of California and Prop 13 below.

        The solution to drunken sailors spending all our money is to cut them off--not to keep giving them more money to spend.

        1. States have balanced budget constraints and don't have their own currency. There's also a much greater risk of people fleeing from one state to another due to high taxes than people fleeing from one country to another.
          Not really analogous to the federal government. I think the notion that they'll respond to reduced revenue by cutting spending is pretty naive. Even if/when we actually get to a point where the debt is so big that they have no choice but to cut the deficit (a situation I'd like to avoid before we get there), your logic runs into another problem - the assumption that in this situation, they'll respond by cutting spending instead of increasing taxes.

          1. The relationship between tax cutting and spending is directly analogous to federal government.

            They spend every penny they get.

            I think you're right that we'd be better off with a balanced budget amendment, but that would need to be inflicted on the federal government by the states.

            The federal government isn't about to cut their own spending, so the best we can do is limit their access to our funds.

            1. It's not analogous, because the feds spend in addition to the pennies they get. The states have constraints that limit their ability to do that.

              If the feds don't cut spending, even if they "limit their access to our funds," we will still pay for it at some point. Well, people who die before that day comes might not, but that's not very fair to those left with the bill. Spending is the real measure of the government's burden on the populace and how much they take out of the economy, not taxes. Taxes just get felt in a more direct, immediate way to people, so they focus primarily on that.

          2. It's going to get fun if interest rates ever hit 5% again- More than the first trillion dollars go to "debt service".

    2. We have two choices. Republicans who spend without paying for it, and Democrats who pay for their spending.

      1. Is that why the national debt doubled while the Democrats controlled the purse strings? Because they pay for their spending?

        1. Because of the great recession, federal incomes were less than usual over Obama's entire time in office. Bush's tax cuts and unpaid-for wars continued contributing to the debt as well. I find it hard to believe that you're criticizing Obama for not raising taxes more. Actually I don't, you'll criticize him for anything.

          If you look back at the last few presidents a clear pattern emerges. Republicans increase the national debt by about double the percentage that Democratic presidents do.

          1. I'm not criticizing anyone but you for your moronic assertion that Democrats pay for their spending, when the debt ballooned under their rule. Of course you blame BOOSH, but that is no surprise.

          2. I agree that Republicans have historically grown the debt more than Democrats, but to say that Democrats pay for their spending is a bad joke. That's like saying person A who has $10K in credit card debt pays their own way because person B has $20K in credit card debt.

            1. The best recent comparison is Obamacare vs. Medicare part D, one of which actually raised revenues.

              1. Obamacare? The Unaffordable Care Act that literally doubled my out of pocket expenses for basic medical care? Fuck that. Fuck it up the ass with a stalactite.

              2. Both are drains on the economy and taxpayers and should be repealed.

          3. What recent Democratic president paid for their spending? Even if we grant Clinton, that's one example, and it was with a Republican congress. I agree with you that the Republicans are bad about paying for their spending. That doesn't mean the Democrats do a good job of it.

          4. Because of the great recession, federal incomes were less than usual over Obama's entire time in office. Bush's tax cuts and unpaid-for wars continued contributing to the debt as well.

            So the Democrats didn't pay for their spending because revenues did not match expected revenues? Yeah, you just lied.

            Then you blame what happened in Boosh's term for a Democratic control of Congress and the presidency? Yeah, you're just full of shit, liar.

            Both parties increase the debt. The Democrats don't want taxes nor spending to go down and will borrow their children's future for pork now. Some Republicans want spending and taxes to go down and some RINOs don't while they still okay borrowing their children's future for pork now.

        2. Revenues ($M) Expenditures ($M)
          1995 1,351,790 1,515,742
          1996 1,453,053 1,560,484
          1997 1,579,232 1,601,116
          1998 1,721,728 1,652,458
          1999 1,827,452 1,701,842
          2000 2,025,191 1,788,950
          2001 1,991,082 1,862,846
          2002 1,853,136 2,010,894
          2003 1,782,314 2,159,899
          2004 1,880,114 2,292,841
          2005 2,153,611 2,471,957
          2006 2,406,869 2,655,050
          2007 2,567,985 2,728,686
          2008 2,523,991 2,982,544
          2009 2,104,989 3,517,677
          2010 2,162,706 3,457,079
          2011 2,303,466 3,603,065
          2012 2,449,990 3,536,945
          2013 2,775,105 3,454,647
          2014 3,021,491 3,506,091
          2015 3,249,887 3,688,383
          2016 3,267,961 3,852,612
          2017 estimate 3,459,708 4,062,223

          1. Bush pres. 2000-2008

            Bush tax cuts, 2003.

            Great Recession 2008-2009.

            Obama pres. 2009-2016.

            Dems control both houses in Congress 2008-2012.

            Split Congress (Dems Control Senate, Republicans Control House) 2012-2014.

            Republicans hold both houses 2014-

          2. 2018 Federal budget, starts Oct 1, 2017


            69% Social Services $2819 Billion
            14% Defense of the Nation $595 Billion
            11% General Government $457 Billion
            06% Interest on the Debt $241 Billion

            Spending: 4.1 Trillion Dollars
            Revenue: 3.5 Trillion
            deficit will be $653 Billion.

      2. Democrats have never once paid for their spending. Ever. A simple graph of the deficit should make that obvious even to you.

        1. And to the point, neither have Republicans.

  3. Citizens! In all times, two political systems have been in existence, and each may be maintained by good reasons. According to one of them, Government ought to do much, but then it ought to take much. According to the other, this two-fold activity ought to be little felt. We have to choose between these two systems. But as regards the third system, which partakes of both the others, and which consists in exacting everything from Government, without giving it anything, it is chimerical, absurd, childish, contradictory, and dangerous. Those who parade it, for the sake of the pleasure of accusing all governments of weakness, and thus exposing them to your attacks, are only flattering and deceiving you, while they are deceiving themselves.


  4. So the Republicans are are going to get us to the cliff a bit later than the Democrats. Isn't that comforting?

    1. That's been really the only reason to vote for them--a slower ride to destruction. Only it ain't that slow, especially now.

      1. At least on a slow ride, you get to look out the windows and watch the collapse!

  5. No, the Republicans' spending policies show they never cared about the deficit. The fact that they are willing to cut taxes doesn't say much of anything about their view of the deficit because the government has a spending problem, not a tax problem.

    1. Not caring about the deficit as much as the national debt makes sense.

      Stimulating growth trough tax cuts can make tons of sense on the national debt over the long--even if the deficit takes a hit in the short run.

      Meanwhile, like I said above, the idea that the government would raise trillions in taxes to reduce deficit spending is ridiculous in practice.

      In theory, even Keynes knew we could rely on the government to spend every penny they get--that's why he saw government spending as a way around the liquidity trap.

      There are only two real checks on government spending. One is the voters' unwillingness to accept taxes and the other is interest rate the markets require becoming prohibitively expensive on our debt.

      Think of it this way: If it weren't for Prop 13, California wouldn't have raised property taxes to pay down its debt. They would have spent that money on government employee benefits and bullet trains. The only reason they haven't spent even more money is because they couldn't get their hands on it.

      The Republicans have shut down the government over raising the debt ceiling. I don't think it's fair or accurate to say they don't care about the national debt--and the deficit is only important insofar as it impacts the national debt.

      1. This.

        May as well try to grow out of the debt because we'll never cut our way out.

        1. In a world where everyone operates in deficit it simply a matter of not being the one who defaults first.

      2. Generally agree, but the over-hyped "government shutdown" was really one of the few truly bipartisan Congressional accomplishments in recent memory.

      3. Plus, the debt is the important number. "Deficit" refers only to the current shortfall of income v. spending, and in today's budgeting games that number is at best phantasmic.

  6. P.S. There's this thing called the Laffer Curve.

    Yes, really!

      1. "Lord Ken", I like the sound of that!

        You want to explain how higher taxes don't suppress economic activity or the taxes generated by such activity--or are you just whistling for Shrike to come say something stupid about Reagan?

        1. Funny isn't it? People deride the Laffer Curve as some sort of economic unicorn yet are all-in on their being a vanguard of the proletariat.

          1. their/there

            Works either way.

  7. Hey, at least Ryan cut the crap with the funding by Continuing Resolution and went back to actual budget debates over each separate chunk of the Federal budget. So that's nice that we're actually debating budget priorities instead of constantly threatening government shutdowns over debt ceilings and just rolling the spending can down the hog trough. Good thing we got rid of that Boehner shitweasel.

  8. Neither should libertarians

    The problem is not state deficit, it is state expenses. We should reduce public spending, and reducing public revenue is the fast and forward way to this objective.

    I prefer a budget deficit of 5% GDP, with 15% taxes and 20% public expenses, rather than "benefit" with 55% taxes and 60% expense

  9. This has been "proven" many times before. This is more like confirmation of an already proven fact.

    1. "The Reality of Obamacare Proves Democrats Never Cared About the Health Care"

  10. In other news: water is wet.

  11. Obama increased the debt anywhere from $6 trillion to $10 trillion, depending on how it is calculated. That was fine with the Democrats. Only an issue now that the GOP is in charge. Any vice versa, of course.

    1. Still smaller in relative terms than for St. Ronald - and the preceding recession for Obama was worse.

  12. "The only way we're going to solve our long-term debt and deficit issue to allow the federal government to have the revenue it's going to need to fund all these promises made is with strong ? and I mean strong ? economic growth," said Senator Ron Johnson, told The New York Times.

    "Like, ludicrously strong. One might say improbably strong."

  13. The baby's too big to drown in the bathtub now. We'll have to take him out to the pool, and then we can - whoa! It looks like we're heading to Seaworld! This fuckin baby's huge!

  14. You don't cut taxes to reduce the deficit; you cut taxes because taxation is theft ("fuck off slaver!"). You cut SPENDING to reduct the deficit. Of course, an Obama-worshipping, big government loving, professional fake libertarian like Pete MacAdoodle Suderweigel could never understand this if he lived to be a thousand years old.

    In any event, no tax reform bill is going to be passed. Nobody in the world is better at pretending to do something while not doing anything at all than the hapless republican leaders Paul Rino and Bitch McConnell.

    1. Are all taxes theft, or just the ones that pay for programs you don't like?

      If the people want to keep Medicare, do you believe we should pay for it until you convince them via the political process to get rid of it, or is the idea to bankrupt it so in theory they are forced to do so against their will?

      1. "Like" has nothing to do with anything. Libertarians operate on principle, not "like." So when we support certain uses of force by government, like force in response to the initiation of force, that is based upon principle, not "like."

        Of course you cannot comprehend this because you've been told a million times, but still insist we base our preferences on "like" instead of principle.

        And yes, all taxes are theft. Taxation is money taken under threat of violence. That is theft.

        1. Or you could just be slapping a bumper sticker with the word "principle" on it on your policy preferences. As I've explained a million times, it doesn't quite make sense to say you oppose government because it is violent, but then endorse only those government actions that involve actual violence.

          The only "principle" that seems to be at play is that rights are bad and so you want to minimize the number of them.

          If taxes are theft, therefore by definition legitimate, then they can't even pay for the few things you want government to do, legitimately, and you have to endorse anarchy. Either you endorse anarchy, or taxation isn't theft. Pick one.

          1. it doesn't quite make sense to say you oppose government because it is violent

            As I've explained a million times, there is a difference between the initiation of force, and the use of force in response to the initiation of force.

            For example if I beat you with a lead pipe and then take your wallet, that is an initiation of force. If you call the cops and they use violence to subdue me and take me to jail, that is a response to the initiation of force.

            Yet you still don't get it.

            1. But you're willing to stretch the definition of force beyond recognition to include things like stepping on someone else's lawn. Is that really force? If so, isn't it just because you say so? Because I think it's at least as plausibly described as "walking."

              What you want is a convenient escape hatch from the sad contradiction I'm pointing out. The word "initiate" doesn't really do away with it. Your objection remains that government is violence, and you still want it to do things that are violent.

              1. *strums Steve Miller on the guiter*

                Go on, take the goalposts and run...

                1. Say there's a war happening in two alternate universes. Millions die. Cities are destroyed. Liberties, it goes without saying, are trod upon. In one universe Team A fires first. In another Team B fires first. Is the war legitimate for Team B but not Team A in universe 1, and vice versa in universe 2? As in 100% legitimate vs. 100% illegitimate? Exact same outcomes.

                  Your problem is you stopped reading once you got to an answer you liked. It's sadly insufficient for the real world and real humans.

          2. I don't endorse either taxation or anarchy. I accept that taxation is unavoidable. As Ben Franklin said "in this world nothing can be said to be certain, except death and taxes."

            So as long as there is going to be government, and taxation to pay for it, it should be limited to principally justified uses of force.

            1. Meaning shooting and imprisoning people, but definitely not administering healthcare. That would be too much violence.

              1. Rachel Maddow is that you? I'm flattered!

          3. What truly "doesn't quite make sense" is why you feel it necessary to infect this site with your liberal trolling. If you aren't interested in libertarian ideas, why be here? Oh, I know. Because being onsite allows you to interrupt while the adults are talking.

            1. Tony's purpose is to give us practice in honing our arguments for when we encounter people who feel as he does but actually have a brain.

            2. Because I don't always like to talk to people I agree with about everything, and the only other right-wingers on the Internet I can find are frightening racist psychos.

      2. How about the people who want to keep Medicare can pay for it themsevles and leave the rest of us out of it.

        1. What about people who oppose Medicare and then have a sudden change of heart at age 65?

          1. Free shit is nice. People like it. And why not take advantage of it? I do. I take advantage of every bit of free shit I can get from Uncle Sam. To not do so is stupid. That's cutting off your nose to spite your face.

            1. And no, that doesn't make me a hypocrite. It makes me pragmatic in my personal affairs.

              1. If that doesn't make you a hypocrite then there is no such thing as hypocrisy.

                You think it's stealing. Yet you steal "pragmatically."

          2. MediCare is an inefficient system that people have been forced to pay into their entire working lives. You really cannot complain about th em using the system when you gave them no choice when they were being fleeced to pay for it.

            1. If there's some private-sector alternative that's so superior, sure I can.

    2. Paul Rino and Bitch McConnell.

      Everyone, just shut the fuck up for a second and savor this offering from God's own prototype.

      1. X, I did that instantaneously upon reading. Getting me to chuckle is a big thumbs up.

      2. I didn't make it past Pete MacAdoodle Suderweigel.

  15. So you don't believe that people respond to incentives? That changes in the tax code have no effect on people's behavior? That's an interesting position for a supposed libertarian. And now you're relying on a 7-year-old National Review (National Review!) article for economic analysis?

    What a worthless article. I expected better from Reason.

    1. "What a worthless article. I expected better from Reason."

      Really? I've learned that its about par for the course.

  16. Because they are cowardly retards.

  17. Since there's neither the ability nor the any actual intention to repay the Federal Debt, why not keep interest rates at zero, borrow enough to fund the forever wars, bail out all the public pension funds, fund Social Security and healthcare, and fund all government activities? Eliminate the IRS and all Federal taxation. In the age of pushbutton money taxes are an anachronism.

    Sure there ought to be a limit on future increases in the money supply, say 3% of GDP, but we know the professional politicians will cheat. Is now the time to impose term limits, say after a wholesale sweep with the voters' big broom in November 2018? Elect people who have worked in the voluntary sector and actually understand something about the real world economy, at least what's needed to meet payroll.

    If the FED and banks refuse to lend at zero interest, cease government borrowing entirely, drop the charade, and print what's needed to restart the US economic system. Print and pay all outstanding debt with non-interest bearing paper. The threat of debt repayment has failed to constrain government borrowing anyway.

    Banks and Pension Funds ought to be able to earn interest by funding the private, voluntary sector.

    The least this path accomplishes is to start the velocity of money on an upward trajectory.

  18. Just like when Gene Siskel said to Steven Spielberg, "thank you for making Schindler's List", I want to the thank the author for pointing out the most decidedly UNconservative nature of the budget-nihilist Republican Party. OY!

  19. Why is this a problem? What needs to be cut to keep deficits down is spending. I don't mind at all the breaking of a promise to keep taxes up to hold deficits down!

    For those who favor smaller government, this should be good news. If it turned out that tax cuts always resulted in a corresponding and equal increase in government revenue thanks to economic growth, then cutting taxes would simply be a recipe for maintaining government at its current size.

    But for libertarians like me, for whom small gov't is not the object (though it may be a frequent byproduct of gains in freedom), reduction in tax rates would be a boon even if gov't raked in the same total amount.

    Also, why should I care that certain details have yet to be fleshed out? Like it matters to me what order the job is accomplished in? You're just like some parent nagging their children that they haven't finished their homework at a certain hour, when it's not due yet.

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