Senate Fiscal Hawks Could Strangle Tax Reform in its Crib

James Lankford's "I am a no" makes at least three GOP senators who worry that the debt/deficit math doesn't add up

United States Senate

Most of the tax-reform legislative war-gaming articles until now haven't featured the name of Oklahoma's junior senator, Republican James Lankford. That's now likely to change after Lankford's appearance on Sunday's Meet the Press, where he said "I am a no" if the final cut/reform package increases the debt too much. Here's the whole exchange with Chuck Todd:

Todd: […] [D]o you have a red line? You've been a big deficit hawk in the past. If this increases the debt, is that something you're comfortable with supporting even if the debt is increased given that you've been a pretty tough critic of increasing the debt in the past?

Lankford: I'm actually not comfortable with increasing the debt. This is something that's been a behind-the-scenes conversation for a long time. It's one thing to be able to cut taxes, it's another thing to be able to say, 'how are going to deal with our debt and deficit?' So my main focus has been whatever economic growth model we put in place has to be reasonable to be able to do it. So if we cut taxes right now, we're expecting a .4 percent growth in the economy to be able to offset that. That's a pretty conservative estimate of economic growth. Our economy for the past ten years has not grown above two percent, or about three percent a single year. We are stuck in a rut. We're going to have to bump the record player to get something going on the economy again and that we want to be reasonable on our assumptions to do it.

Todd: So if this tax bill increases the debt too much, you're a no?

Lankford: I am a no. I want to make sure we have reasonable assumptions in the process for growth estimates.

You don't need a microscope to see the wiggle room there—"reasonable assumptions," "too much," a desire to "bump the record player," etc. But "I am a no" is a pretty stark opening bid on negotiations, particularly when combined with other reluctant fiscal hawks, such as the officially off-the-reservation Sen. Bob Corker (R-Tenn.). "[If] we're adding one penny to the deficit, I am not going to be for it, OK?" Corker told Todd five weeks ago.

Then there's Corker's fellow Trump-refusenik and debt-worrier, Sen. Jeff Flake (R-Ariz.). "If we are going to do 'cuts, cuts, cuts,' we have got to do wholesale reform," Flake said after the reform package was introduced. "With the national debt exceeding $20 trillion, we have got to take this seriously.…We cannot simply rely on rosy economic assumptions, rosy growth rates, to fill in the gap. We've got to make tough decisions. We cannot have cuts today that assume that we'll grow a backbone in the out years."

And it's important to recognize, as I point out in today's L.A. Times, that the final bill, if one ever comes, is almost certain to generate even more debt than this week's model, due to legislators' unwillingness to take away the cookie tray:

[G]oing after any tax deductions and loopholes requires some political courage to face down outraged recipients and their organized lobbies. So ask yourself this: When's the last time this Congress has exhibited anything approaching bravery?

This is a legislature that hasn't passed a proper budget in 20 years, that can't fulfill promises large (replacing Obamacare) or small (killing off the Export-Import Bank), that hasn't even been able to muster changes to the century-old Jones Act in the wake of Hurricane Maria. A body that can't bear to jeopardize all of 1,500 shipping jobs in the course of helping 3.4 million devastated Americans is not likely to hold the line on killing the State and Local Taxes (SALT) deduction. […]

SALT and the mortgage-interest deduction cut are the two biggest fillers of the $4-trillion hole, so caving on that could blow whatever slim chance there is for passage in the Senate.

Read the whole thing here. Then watch Nick Gillespie explain how "The Trump Tax Plan Is Government as Usual":

Comments

[Don't look at me.]

Every single elected government official is corrupt. Bar none.

[mattcid]

Do conservative senators who vote against tax cuts get re-elected? YOU HAD ONE JOB

[This Machine Chips Fascists]

"worry that the debt/deficit math doesn't add up"

That should be a given.

[Fuck =><= sevo]

I really haven't heard as much about austerity and budget balancing from these people as I'd like. Unfortunately, these don't feel like principled objections.

[Domestic Dissident]

The good senator should pay no attention to the CBO, whose static analyses have never been right once in living memory.

The only way to balance the budget is by cutting spending, and the CBO never once warned us that Mofobama was going to increase the debt by $9 trillion in eight years.

[Red Tony]

So, plus: you used a different insult for Obama.

Minus: the new insult still makes you look like an idiot.

[Palin's Buttplug]

GOP strategy since 1980:

Increase spending
Cut taxes
Deficit expands
US Dollar weakens
Energy prices explode
Economy hits the shit-can
Lose to Democrats

[loveconstitution1789]

Democrat strategy since FDR:

Expand socialism
increase spending
raise taxes
deficit expansion
weaken US Dollar
cause energy shortages
cause economy to implode
constantly lose to Republicans and Libertarians
lose so many state Legislatures that the Republicans are 1 state away from having enough votes to successfully conduct an Article V constitutional amendment process.

and fall apart as a major force in politics from 2016 and on.

[CE]

Libertarian strategy from 1980 to 2012:

Run unqualified candidates
Campaign on unrealistic or unpopular issues
Jump out the Overton window

Libertarian strategy in 2016:

Run qualified candidate
Praise the Democrat
Try to appeal to lefty voters who never vote Libertarian

[Tony]

I'd like to give props to Oklahoma, while it does produce its share of fucking nutbags, it also manages to send Republicans to DC who possess some amount of rational capacity, even if in the service of a stupid ideology. For every industry puppet dotard like Inhofe there's a genuine guy like Coburn or Firecrotch here.

[Scarecrow Repair & Chippering]

How could you recognize rationality?

Seriously. This isn't like a doctor who has never had cancer can't recognize cancer. How can an irrational statist (but I repeat myself) recognize rationality?

Can't be done.

[Tony]

Rationality is believing what a handful of marginal philosophers who disdain empirical approaches declare from their armchairs, right?

[Red Tony]

Marxists aren't the topic of discussion here.

[TW]

I like that they're trying to rollback SALT and the mortgage interest deductions and that they're trying to bring the corporate tax rates more in line with our economic competitors but I'm not comfortable increasing the deficit or continuing to rely on unrealistic economic assumptions. There has to be a way to enact tax reform that's deficit-neutral and more conducive to promoting real economic growth in the private sector.

[Tony]

Yeah, tax rich people more and give the proceeds to poor people. The most efficient way of sparking economic growth. But you have to have your priorities in order.

[Rhywun]

So, create more poor people? Gosh, why haven't we thought of that before.

[loveconstitution1789]

So everyone's poor!

Genius leftist rationale never surprises anyone.

[Tony]

Wow two people came up with the same retarded response. It's like you actually believe I mean taxing rich people into poverty.

[loveconstitution1789]

It's what socialists do.

Do you know how many rich non-government people there are in communist countries? None. Zero.

The only sort-of rich people in communist countries are the communist party members. They hold the power.

[CE]

If you cut spending, you don't have to worry about your tax cuts growing the deficit.

[Let freedom ring]

This debate is completely right opportunist, as Rothbard would say. Unfortunately, the libertarian/conservative establishment is completely clueless and usually responds with the same, or else with left sectarian pie in the sky alternatives (Return to the Articles of Confederation! Repeal the 16th Amendment!).
The US INDIVIDUAL INCOME TAX is the American version of the classical liberal public office duty.
It is not how much money you made, but how you made the money. Did you exploit a federal privilege for profit, then you owe the tax. If you made it by engaging in an occupation of common right, that is not paid from the US Treasury, you do not owe the tax.
Simply rebut the income tax information returns using the IRS own forms and you will receive a full refund of all withheld income tax, federal, state and payroll. Only the standard deduction need be claimed. See my latest blogpost:
http://www.nontaxpayersforronpaul.blogspot.com . Or go to the source: http://www.losthorizons.com

[CE]

Good luck with that. Hope you can afford a good tax lawyer.

[chipper me timbers]

all together now: "Fuck you, cut spending"

[Ken Shultz]

The belief that the government will someday grow so flush with cash that it decides to cut spending is the dumbest thing a committed capitalist can believe.

The best way to stop out of control spending is to cut off their revenue. They spend every penny they get, so give them as little as possible.

You don't even have to go to the federal government to see the principle at work. If California repealed Prop 13, that would not be the solution to their pension problems. If there were no Prop 13, California would spend all that money, too--and still have out of control spending. The only reason California hasn't spent more money than they have is because they can't get their hands on more.

Same thing with the federal government. The suggestion that we shouldn't cut taxes because of the deficit is ludicrous in every way--but most ludicrous of all is the suggestion that if the government had more money to spend, it wouldn't spend it. That idea has no basis in reality. It's unhinged.

Meanwhile, cutting government revenue encourages less spending in all sorts of ways--from making it more expensive to borrow than it would be otherwise on down.

[CE]

Yeah, that's one strategy -- defer the cost and hope the federal government's credit rating goes in the tank. The problem is the productivity of the host and the relative strength of the US government compared to other governments around the globe.

[Mickey Rat]

So these Senators are definitely not voting for any spending bills that incur a deficit, right?

[Bubba Jones]

I am conflicted. This tax bill seems to reduce distortions to our economy while also failing to reduce the deficit.

But is it better than the status quo?

[CE]

This "tax cut" is mostly a shell game, exchanging lower rates and higher standard deductions for eliminating or capping major itemized deductions so most people won't itemize. People with more than 3 kids or high state and local taxes or high medical bills could well see their taxes go up. Couples earning between 260K and 417K will even see a rate hike, from 33 to 35 pct, to go with their loss of itemized deductions. But businesses will see a huge tax reduction, so the plan isn't all bad.

[BikeRider]

On the radio this morning I heard Herman Cain's comments on the tax plan. I looked them up. Here's the link: http://canadafreepress.com/art.....-from-35-p

"The corporate tax cut will free up approximately $200 billion in capital every year to be reinvested into the economy."

If the tax plan is revenue neutral then this is nonsense. It won't "free up" any money. It will just change who pays the $200 billion.

"The transfer of this wealth from control of politicians to business people will ensure that capital fuels real, profit-driven productivity rather than simply being transferred to politically favored constituencies."

Again, utter nonsense with a revenue neutral plan. The politicians will still have this money. They'll just get it from someone else.

Cain is implying that there's some sort of universal tax cut coming. However, it's not a universal cut. It's revenue neutral tax REFORM. Some people (and corporations) will get a cut but others will have to pay more.

There are many ideological reasons to dislike SALT, charitable giving, and mortgage interest deductions but wiping those out doesn't go after "the rich". Those are tax breaks for upper middle class families. The truly rich:
1) don't have mortgages,
2) can change their official residence to any low-tax state they want, and
3) can convert their favorite charities into for-profit corporations that lose money and offsets income from other sources.