Donald Trump

Tax Reform Was Easy, Spending Cuts Are Un-possible

President Trump and the GOP leadership has already reneged on promises to tackle entitlements.

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With the stroke of President Trump's pen, long-promised tax reform is now the law of land. With it comes more than a few excellent developments—a major, overdue reduction in the corporate rates, a shift to a territorial system of collection, caps on tax expenditures such as deductions for state and local taxes and mortgage interest, the end of the individual mandate for Obamacare—and a whole new set of concerns, none more pressing that a certain reduction in revenue even as government spending increases.

Like Obamacare, this tax-reform legislation was purely a partisan affair, which is rarely the best way forward for major legislation, leaving it open to quick revision, repeal, or slow death (see: Obamacare). Still, precisely because one party could muscle through something, regardless of how controversial and unpopular (tax reform, like Obamacare at its passage, is polling terribly with the public), it's relatively easy. It just takes the determination of the majority party. President Obama and the Democrats had to pull out all the stops and pour "sweeteners" down the throats of recalcitrant party members, many of whom choked to political death (where have you gone, Sen. Ben Nelson of Nebraska?).

So here's the thing: What are Republicans going to do on spending? Cutting taxes is the frosting, not the cake, when it comes to actually making America great again. Our $20 trillion national debt (this figure includes both debt with investors and what various parts of the government owe each other and is the most accurate measure) is undoubtedly retarding economic growth for a variety of reasons:

Balancing budgets and reducing the size, scope, and spending of the federal government is not simply a puritanical accounting fetish. Economists on every point of the political spectrum agree that debt-to-GDP ratios of ov—er 100 percent are a drag on the economy because everyone knows that a major restructuring is coming eventually. Taxes will need to go up, services will need to be cut, and inflation will rise—or most likely, some combination of all three.

Insidegov.com

As it happens, the modern Republican Party, at least since the Reagan era, has defined itself as the party of low taxes and low spending. That ideological commitment has been purely rhetorical of course, with George W. Bush and his GOP majority in particular blowing out the federal budget in then-unprecedented ways. But that was then, right? And this is…now?

More precisely: This was now. Earlier in December and almost certainly as a way to disarm budget hawks, Speaker Paul Ryan pledged that right after tax cuts, the GOP would start work on cutting spending, especially on entitlements. Here his on December 6:

"We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit," Ryan said during an appearance on Ross Kaminsky's talk radio show. ". . . Frankly, it's the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements—because that's really where the problem lies, fiscally speaking."

Republican tax-cut activist Grover Norquist told me the same thing in a pre-passage interview:

Norquist: …April 2018, we're going to do welfare reform. Welfare, TANF is a very small number. We're going to add food stamps, a very small number, well 75 billion or so. It's not too small. And we're going to add in Medicaid which is a quarter of all state and local budgets. And take those together and probably also what's left of Obamacare in terms of spending and block rent those to the states and limit their growth to below the way it's growing now. So that you out 10 years or whatever, ask Peter [Ferrara] what the numbers are. He says in a matter of 20 years it's trillions of dollars that you get just from taking the rate, bringing it down a little bit.

Gillespie: By the same token, Medicare and Social Security spending are going to go up. They're already effectively running deficits so we're going to need more taxes if we don't change their benefit forecasts.

Norquist: How do you eat an elephant? One bite at a time. If you do this and make it work, I believe you can. We did it with welfare reform with Clinton. This is what we're going to shove down the Democrat's throat.

Norquist, of course, isn't Speaker of the House. So here's Paul Ryan now, on December 20:

House Speaker Paul Ryan ruled out cuts to Medicare in 2018 to beneficiaries despite previously calling for reforming healthcare entitlements.

Ryan said on ABC's "Good Morning America" Wednesday there could be some Medicare provider issues the Republican Congress could address in 2018.

"Some providers in the Medicare field are getting overpaid," he said. "As far as you talk about beneficiaries, we are not focused on that."

So you see Ryan already walking away from the single-biggest driver on automatic increases in government spending. And give Ryan at least some fake street-cred for even bothering to bullshit about tackling expensive entitlements. His counterpart in the Senate, Majority Leader Mitch McConnell, has even taken welfare reform off the table for the coming year. As summarized by Axios:

Senate Majority Leader Mitch McConnell threw cold water Thursday on the idea of doing welfare and entitlement reform on a partisan basis next year. He told Axios' Mike Allen that he "would not expect to see" welfare reform on the agenda in 2018.

"We have to have Democratic involvement. So things like infrastructure…to do something in that area we're going to have to have Democratic participation."

While signing the tax bill into law, Trump himself eschewed talk about cutting spending, choosing instead to talk excitedly about getting back to infrastructure spending, which kept calling an "easy" sell. Suddenly, we've gone from headlines either trumpeting or darkly warning that tax cuts pave the way for spending cuts to ones like this Fox Business beaut:

Trump's tax reform win paves way for infrastructure spending and higher stock prices

The most-common number bandied about is "$1 trillion," though it's anyone's guess what that means or how many years it's spread over. But assuming the 10-year budget figures that are typical, that's still $100 billion a year, or a pledge to spend more than even Norquist at his most excited calculated annual savings from welfare cuts (that again, are off the table anyway).

US Government Spending

Back in the Reagan years and the first year or two of George H.W. Bush's one term, fiscal hawks routinely complained that Republicans always got rolled whenever they agreed to tax cuts NOW in exchange for spending cuts LATER. In the early 1980s, for instance, Reagan agreed to hike business and excise taxes in exchanged for promised cuts down the road: "The tax increase is the price we have to pay to get the budget cuts," he wrote. H.W. Bush did something similar in 1990. We're still waiting on those year-over-year cuts. (Ironically, as can be seen in the graph to the right, the one exception came after the historic uptick at the end of the George W. Bush years, when Obama managed to elect a Republican Congress and neither side even pretended to actually pass budgets, relying instead on continuing resolutions.)

But because history presents itself first as tragedy and then as farce, we've gotten a Benny Hill version of the old shakedown: Republicans have promised to cut taxes now and reduce spending later. And have already reneged on that, before the ink on President Trump's signature dried. Or, if we're being strictly accurate, before the legislation even landed on his desk.

Enjoy the tax cuts, which will put extra money in most of our pockets. I think I'm going to save most of mine for that rainy day that's out there on the horizon.

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  1. What are Republicans going to do on spending?

    Even if they wanted to – which they don’t – I could just see the headlines. No, we need to get back to that sweet, wholesome bipartisan legislation like the Clinton era Violent Crime Control and Law Enforcement Act or the USA Patriot Act. Those are things that last because their crafters foresaw all possible consequences.

    1. Consequence: various levels of government will enjoy having the legal power to do whatever the fuck they want to whomever they decide needs fuckin’ with.
      Status: FORESEEN

      1. Yo, yo mentioned in the other thread that The Last Kingdom is a good show. So I figure, ok, let me check it out. 5 seconds into the first episode, and I am already fuming. A Harris’ Hawk in 9th Century England?

    2. Just get back to Clinton-era spending levels. 2 trillion per year sounds really good about now.

    3. You broke my Sarcasm-O-Meter!! I just got it fixed!!

    1. Reason Squirrels — all the crashes with none of the AI capable of weeding out the most obvious spam.

  2. Libertarians: “I want a hamburger”
    Republicans: “One hambuger, coming up”
    Libertarians: (thows hamburger on floor) “Now I want a cheese burger, you suck”
    Republicans: “but”
    Democrats: GIVE THEM SOYBURGERS AND FORCE THEM TO EAT IT NOM NOM YUMMY YOU LOVE IT DONT YOU GIVE HIM 10 NOW
    Libertarians: “Democrats at least don’t lie to me” (eats soyburger)

    1. Picture of Gary Johnson: “Soy is actually very libertarian, you see. Vote for me, i’ll give you more choices on the flavor of soy you get. Plus we can force the meat-makers to serve it.”

      1. Robby Soave article:

        “To be sure, meat eaters are complicit in a expansive system of murder and oppression”

        1. Koch Industries releases new lines of Soy-based fuel and toilet-paper

        2. While ENB discusses the sexual rights of cattle.

          1. (tweets furiously)
            The Dairy Industry is literally a system of ritualized sexual abuse

            1. The Dairy Industry is literally a system of ritualized sexual abuse

              …Then pens article defending Kobe beef producers*.

              *Kobe beef producers being late-term abortionists, actually insane women who murder their toddler children, or pedophiles in their early twenties knowingly seeking sex from kids too young to drive, take your pick.

          2. Gillespie frets that whether it’s soyburgers, hamburgers, or cheeseburgers, Christians may be in part or in whole responsible for production and service and may be charging for it; proposes UBI for basement-dwelling millennial gamers to avoid the holy burger catastrophe.

            1. Zach Weissmuller: “Racists eat meat! Libertarians aren’t racists, so fuck meat.”

          3. Hey, you should be able to marry whoever you want, because otherwise how will you get all the state benefits you are entitled to. MooYa…

      2. No one needs more than one choice of flavor in soy burgers.

        – Bernie

    2. Is this in reference to the tax bill?

      Why does no one understand that a deficit financed tax cut isn’t truly a tax cut, and that it’s ultimately destined to be a tax by another name, inflation, future taxes, crowding out, etc. it’s entirely appropriate to criticize them for failing to cut spending to fund tax cuts.

      1. Why does no one understand that a deficit financed tax cut isn’t truly a tax cut

        (insert stereotypical “AKSHULLAY….” guy)

        you’re going to have a hard time explaining that to people’s 401Ks after another year like this one.

        1. Ah, I see, so now you agree with Krugman et al. that infinite deficits are just swell and crowding out isn’t really a thing. When did you become such a radical Keynesian? Kind of convenient how some people’s understanding of economics does a 180 every election cycle.

          1. so now you agree with Krugman et al. that infinite deficits are just swell

            Straw men are fun.

            my point had absolutely nothing to do with keynsianism and everything to do with mocking your pie-in-the-sky pretenses that this tax bill’s effects should be evaluated in a hermetically-sealed academic environment where you presume absolutely nothing else changes for the next 25 years, and use that as the basis for its political merits right now, which is why it was passed.

            its a case-study in why libertarians are so politically useless. everything must be just-so, right now, in perfected form. that has never and will never be the way political progress functions, which is incremental and involves perpetual political tradeoffs.

            a hamburger is not a cheeseburger, no. but its closer than the soy you’re going to be otherwise served.

            infinite deficits have been the state of affairs for the last near-20 years. this bill wasn’t aiming to end them, and pretending it as tho it was supposed to is obtuse.

            it was a step in a better direction, imperfect and riddled with crony-tastic political garbage. which is how it will always be.

            libertarians need to be more realistic about how to achieve goals in whichever political environment we’re living in. Of course, that will require abandoning this self-satisfied holier-than-thou posturing that gets you nowhere.

    3. What you describe isn’t real libertarians, it’s only the professional fake libertarians (really liberals) who have hijacked Reason.

  3. Mr. Gillespie,

    With all respect, the establishment GOP already voted to cut entitlement spending by $1.022 trillion dollars. Peter Suderman and others, here at Reason, led the charge against that bill.

    Here it is:

    https://www.cbo.gov/publication/52849

    It cut $1.022 trillion from entitlements in total, $772 billion from Medicaid, and it cut $321 billion from the deficit.

    It’s really hard to hear about how hard it is for the GOP to pass spending cuts–when the House actually passed that bill, Donald Trump promised to sign it, and the reason it didn’t pass in the Senate was mostly because Rand Paul and five foolish senators from deep red states voted against it.

    Why pretend this didn’t happen?

    Get Rand Paul on the phone and ask him if he knew the bill I linked above cut $1.022 trillion in spending when he voted against it. Get Peter Suderman to explain why he was against cutting $772 billion from medicaid again. Was his opposition in the name of libertarianism?

    How could it be?

    Yes, it’s hard for the GOP to cut entitlements–especially when libertarian senators oppose the cuts, and especially when libertarians publications are cheering against the cuts.

    1. Too late for that one. Rand Paul actually wanted to get rid of Obamacare, unlike the rest of the Senate, so he voted against a half-measure (more like a tenth-measure.)

      1. There was only one thing that bill didn’t get away with–which preexisting conditions exclusion.

        There wasn’t anything in that bill for a libertarian to oppose, and opposing a bill that cuts $1.022 trillion from entitlements because it didn’t also do something more is asinine from a libertarian perspective.

        Full repeal never had any chance of passing. The alternative to the bill above wasn’t repeal. The alternative was ObamaCare. Rand Paul voted with Bernie Sanders, Al Franken, and Liz Warren to save ObamaCare.

        1. “There was only one thing that bill didn’t [do] away with–which [was the] preexisting conditions exclusion.”

          You knew what I meant!

        2. The solution to bills that don’t solve everything in one bill? Passing a second bill later that takes care of it!

          Or maybe we get back to not doing everything in giant Katamari omnibus bills that are literally too big to bind together?

        3. Yeah I found that whole episode really irritating. Reason was claiming it was “worse than Obamacare” because despite being an improvement in actual measurable ways like say fiscally, it might have… like… emotional effects on future reforms or something. Ergo worse.

          1. They’re liars, they’re liars, I’ll say it a million more times, they’re liars.

            The only big part of our government that Welch, Gillespie, MacAdoodle, and the rest of the gang of con artists truly supports cutting is defense. That’s it. They want MORE welfare, not less! They’re Western European style social democratic liberals pretending to be libertarians, except that they do support free trade.

      2. he voted against a half-measure

        *CHEESE*BURGER OR NOTHING

        1. You got something against bacon? You a Muslim terrorist?

      3. Are you saying that you oppose cutting $1.022 trillion in entitlement spending if it doesn’t also get rid of the preexisting conditions exclusion?

        Do you oppose cutting $1.022 trillion in social security spending if it doesn’t also get rid of the preexisting conditions exclusion, too?

    2. “Why pretend this didn’t happen?”

      Doesn’t fit the Trump Hating Narrative.

      TDS, Now and Forever!

    3. Sort of like how reason praises Bill Clinton’s presidency, forgetting how he tried to socialize medicine. or how he banned assault weapons. Or how he pushed for higher deficits than the republican congress would pass.

    4. These are all great questions you’re asking, Ken. But Nick Gillespie can never begin to give serious answers to any of them. Because he’s a complete assclown; a thoroughly dishonest con artist.

  4. Cut spending back to Clinton-era levels — it was less than 20 years ago the feds were spending 2 trillion per year instead of 4 trillion.

    How about a 10 percent across the board cut in all federal agencies? Then freeze spending for 3 years.

    How about permanently laying off any position labeled as non-essential in the last government shutdown? If it’s non-essential, why do we need to pay for it?

  5. But infrastructure spending grows the economy by transnuberative multiplier effects – the more you spend, the more you save! We’ll all be wiping our asses with hundred-dollar bills by the time this is all over!

    1. I believe it is spelled “transnuperative”.

  6. When we set taxes to $0 and make entitlement spending 599% GDP, we’ll all live for free.

  7. “Enjoy the tax cuts, which will put extra money in most of our pockets. I think I’m going to save most of mine for that rainy day that’s out there on the horizon.”

    Letting people save their money for their rainy days instead of relying on government is now a bad thing at Reason.

    This “Libertarian Moment” brought to you by TDS.

    1. Good news honey, I saved us a ton of money this month by putting all our household expenses on our VISA, so now we can afford to go to the Bahamas for Christmas!

  8. Department of Education
    Department of the Interior
    Department of Agriculture
    Department of Labor
    Department of Commerce
    Department of Energy
    Department of Transportation
    Department of Homeland Security
    Department of Health and Human services
    Department of Housing and Urban Develpment
    Cut all of those, cut taxes bunch more, and see where we stand on the deficit and on the debt.

    1. Department of Energy

      So you want to unilaterally eliminate all of our nuclear weapons? That certainly is a bold stance.

      1. Fire off all of our nuclear weapons! Then not only don’t we have to stockpile them any longer, but there’s all sorts of other stuff that we usually spend money on that simply won’t be around any longer to cost us money!

      2. The department of defense did just fine managing are stockpile into the 70s. Yours is a bullshit argument. It’s like implying schools didn’t exist until the dept. of education was founded during the Carter admin.

      3. Yes he also clearly means to literally eliminate the practice of providing education, and performing labor or commerce in the US. And physically liquidate the employed of those agencies, converting them into liquid.

        Because there’s no other interpretation possible for what he might mean to do with anything controlled or included in those agencies.

  9. How about an across the board freeze on all non-entitlement spending.

    A complete freeze. Not a progressive “freeze” where the budget is automatically upped 5% per year.

    Once that’s been done, then start working on reforming the entitlement categories.

  10. the one exception came […] when […] neither side even pretended to actually pass budgets, relying instead on continuing resolutions

    That’s the ticket, then: no stinkin’ budgets, continuing resolutions all the way down.

    1. Or pass an amendment that any year in which the ‘real’ budget process is not followed, by the deadline, cannot count as a year of seniority for either house, and is the equivalent of a resignation from all members of the senate and house.

  11. Here’s a better analogy:

    Libertarian: I’d like a steak.
    Democrat: No, you can’t have a steak. Your steak would be an abomination to the environment. Think of those poor cows that would suffer so that you, a privileged American, could enjoy a steak! Going to steakfacts.org I can compute to you, down to the last decimal, how much your steak would contribute to climate change, poverty in Africa, and water pollution in each small village in East Bangladesh. In addition, having a steak is just one more example of the white male patriarchy imposing its racism, sexism, homophobia and transphobia on the planet, and we don’t need more of that. No instead you will have a reasonable soy-based substitute which is completely organic, fair-trade, free-range, and 100% natural. Oh and the price of your steak depends on your income. The more income you have, the more your steak will cost, no matter which type of steak that you order. If you have a problem with your steak, you may go down to the Bureau of Steak-Substitute Affairs and fill out a form with the Vice-Under-Assistant-Secretary for Steak Substitute Complaints and fill out the appropriate forms in triplicate. Expect a response within 6-8 months. But make sure your complaint avoids any problematic words that could be interpreted as hate speech, such as “complaint” and “the”. You wouldn’t want to lose your job now because of your free speech, would you?

    1. Libertarian: I’d like a steak.
      Republican: Sure, you can have a steak! But first, you must listen to our daily devotional. Today’s sermon is entitled “How Jesus Tamed The Dinosaurs To Fight The Communists, Write the Second Amendment, and Bless America”. Your steak will be prepared exactly according to your instructions! It will be the best steak ever! You will enjoy your steak so much, you will get tired of steak! Oh and your steak will be prepared only by American cooks with American beef transported on American trucks and served on an American plate. None of that Japanese steak crap. Because Americans are the only people on the planet who really matter; all the rest of the world can go to hell. And the best part of the deal, is that your steak will be completely FREE! And by “free”, I mean that I will hand the bill to your grandchildren who will not only have to pay for their own steaks, but yours as well, plus interest. Of course, you will have to share your table with a bunch of assorted bigots, cranks, conspiracy theorists, and TV/radio/Internet grifters who are more interested in selling fear and making money than in promoting any principled vision of anything. But they are True Patriots(tm) and Real Heroes(tm) and don’t you dare say anything bad about them, otherwise we will pitch a fit and demand our safe space free from anti-American scum like yourself.

      1. Republicans: We want to cut $1.022 trillion in spending on entitlements, $772 billion from Medicaid, and $321 billion from the deficit.

        Rand Paul and Peter Suderman: No because libertarianism.

      2. Never mind the steak, can I have a straw man sandwich, with extra straw, a hyperbole salad and a side of irrelevant?

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