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Thanks to Rising Debt, Republican Tax Policy Is Now Anti-Growth

In the long term, deficit-financed tax cuts would be a drag on the economy.

Aaron Bernstein/REUTERS/NewscomAaron Bernstein/REUTERS/NewscomAt the beginning of 2017, Speaker of the House Paul Ryan (R–Wisc.) teased the GOP's tax cut legislation by promising that the eventual bill would be "revenue neutral" and not add to the deficit. When the bill came out later in the year, however, every single independent analysis, including those generally favorable to the overall goals of the legislation, found that it would raise the deficit, with most estimating an increase of more than $1 trillion over a decade.

Many estimates noted that the bill employed a number of gimmicks—in particular the expiration, in 2025, of all of the individual rate reductions—that artificially lowered the apparent deficit impact. In reality, the deficit increase would be far higher.

Republican leaders, however, dismissed these estimates, saying that economic growth spurred by the tax cuts would make up the difference. Nevermind that Republicans had made similar claims about the likely deficit effects of the tax cuts passed under George W. Bush, and those claims had proven wrong. This time would be different. As Ryan said last year while the tax plan was moving through Congress, "We believe that...with economic growth that gives us more revenue with where we need to be." The tax bill passed. The deficit increased, and is now on track to hit $1 trillion years earlier than previously expected.

Last week, congressional Republicans provided a strong signal that the analysts who warned of the tax law's deficit increase were probably right. The House GOP passed a follow-up bill making the individual rate cuts permanent. On paper, the bill scored as a $631 billion increase in the deficit. But that figure, too, is somewhat misleading, because it only accounts for the three years at the end of the 10-year budget window, after the 2025 expiration. Making the tax cuts permanent would raise the deficit by more than $3.1 trillion in the following decade, according to the Tax Policy Center.

Republicans in the Senate have signaled that the House tax bill probably won't become law this year. But it is reasonably likely that the individual rate reductions from last year's tax law will be extended before they expire, because neither Democrats nor Republicans want to be seen as allowing tax rates to increase for middle class families.

That has been the GOP's intention from the beginning. Last December, at an event promoting the tax law, Speaker Ryan made this explicit: Republicans did not want or expect those cuts to expire. "Those are sunsets that will never occur, we don't believe will ever occur, we don't intend to ever occur," he said.

And Republicans have once again dismissed concerns about the impact on the deficit while insisting that a second round of tax cuts would promote economic growth. Ways and Means Committee Chair Kevin Brady (R–Texas), a key figure in crafting GOP tax cut legislation, said making the tax cuts permanent was "important for growth and certainty." Larry Kudlow, the top White House economic adviser, has similarly defended tax cuts on the basis of promoting economic growth.

Once again, there is scant evidence to support the notion that economic growth would compensate for the deficit effects of a second round of tax cuts. On the contrary, there is reason to believe the opposite. Although the Joint Committee on Taxation (JCT) projects that making those tax cuts law would produce a modest growth bump in the next decade, it would not come close to offsetting the total deficit increase. Even accounting for that growth, it would still leave a deficit impact of about $545 billion by 2028. That is in addition to the impact of last year's tax law.

More importantly, the JCT projects that adding to the debt would likely raise interest rates, especially in the following decade, resulting in adverse effects on the economy. According to the JCT, after 2028, under a second round of tax cuts, "while employment will continue to be somewhat higher than projected under present law, investment and GDP will be lower than under present law, and the budgetary feedback from this effect will become negative." This is in line with a Penn-Wharton Budget Model analysis published earlier this year that found extending the individual tax cuts from last year's bill would add $5 trillion to the debt by 2040 "and actually reduces GDP during the first 10 years and beyond." Under the GOP's preferred tax plan, in other words, the economy ends up smaller than it would be otherwise.

Over and over again, Republicans have claimed that their tax plans will reduce the deficit by increasing economic growth. But the promised deficit reductions have never materialized, thanks in part to the fact that the GOP has repeatedly paired revenue-reducing tax cuts with federal spending increases. Just last week, in addition to the tax bill, the House GOP passed an $853 billion spending bill. Under Republican control, Congress added $2.4 trillion to the national debt during the 2018 fiscal year.

Going forward, rising debt and deficits are likely to become a significant burden on the economy, and should a further round of deficit-financed tax cuts occur, it will only increase the drag. Yet that is what Republicans say they want. The available evidence suggests that in the long term, Republican tax policy is now anti-growth.

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  • damikesc||

    Reason coming out for higher taxes.

    LIBERTARIAN MOMENT!!!

  • Weigel's Cock Ring||

    Left-liberal scumbags like MacAdoodle were telling us that 2% economic growth was the "new normal" when his hero Block Yomomma was president.

    Now that Trump has proven that to be wrong, he laughably calls his policies "anti-growth".

  • John||

    Obamacare is not perfect but it is better then what we have and we have to do something to bend the cost curve of healthcare.

    Remember when he and his dingbat wife were claiming that? Good times

  • Sebastian Cremmington||

    Obamacare, the Medicaid expansion to be specific, will help Democrats win several key governorships. Ironically the individual mandate was supposed to help Obama and Democrats appeal to Republicans but it fueled the Tea Party wave but now it is gone so Republicans can no longer use the issue to pound Democrats.

  • JesseAz||

    It's not gone... What the fuck. Parts are gone, but it as a subsidy is not.

  • Sebastian Cremmington||

    The individual mandate is gone which was the most unpopular aspect. The free health care for over 10 million is the most popular aspect! NC and Louisiana and Virginia already have Democrat governors thanks to the Medicaid expansion and Florida is about to get a Democrat governor because the residents want to expand Medicaid.

  • Migrant Log Chipper||

    How much you want to bet on Florida, skippy?

  • buybuydandavis||

    Reason is a Progressitarian rag.

    Reason is only libertarian in the comments section.

  • Nardz||

    Truth

  • JunkScienceIsJunk||

    Reason is only republican in the comments section.

    FIFY

  • JesseAz||

    I don't even know what a deficit financed tax break is. Tax revenue is up. If spending was the same as last year then the deficit would have decreased. What the fuck reason? Stop denying reality.

  • mpercy||

    ^^^^ This. A thousand times this.

  • JunkScienceIsJunk||

    A deficit financed tax break occurs when borrowing is required to make up for revenue that doesn't cover spending. Revenue may be "up", but it's not (and won't be) up enough to cover the increase in spending that the republicans pushed through.

  • RPGuy16||

    That would be deficit financed spending, not a deficit financed tax break.

  • Ellis Wyatt||

    Reason coming out for higher taxes.

    Liar.. Spending cuts. duh,
    TRUMPTARD MOMENT!

    Trump has ALREADY added more 8-year debt, in less than 2 years, than Obama added AFTER 8 years. And treated more/

    Trumps is the ONLY President to EVER increase the deficit ... over 50% ... in a single year .. in a booming economy! (OMG)

    Obama inherited the second worst recession since the Depression ... handed Trump the LONGEST recovery EVER for an incoming President ..... Obama's debt combines the severe recession and all the money he wasted on stilmulus ... but he STILL added LESS debt than Trump!

    Welcome to the Republican New Deal.

    The NEXT recession -- virtually inevitable from a Trade War ... could be a TOTAL disaster, with annual deficits already well over $1 trillion.

    Anything else?

  • Migrant Log Chipper||

    Piss off, you lying, dead thread-fucking moron.

  • JesseAz||

    The budget votes in the Senate we're above the veto threshold dumbfuck. Learn how our government works dumbass.

  • JunkScienceIsJunk||

    I don't get the sense that this is advocating for higher taxes. It's demonstrating that Republican excuses for adhering to high spending amidst tax cuts are bogus. The true target here (as usual) is high spending. And the obvious danger high spending introduces when the money must be borrowed.

  • John||

    If cutting taxes really does depress revenue in this case, then federal reciepts should be going down in both real terms and as a percentage of the economy, right? Except they are not. Revenues are at an all time high. Federal revenue is slated to be 3.34 trillion this year up from 3.32 trillion last year and is expected to be 3.42 trillion next year.

    http://www.usgovernmentrevenue.com/total_revenue

    The deficit is not going up because of the tax cuts. It is going up because Congress is spending more than it has. The claim that lowering taxes raises the deficit is just a flat out lie. If Suderman were capable of doing anything but repeating warmed over beltway talking points, he would know that.

  • ||

    Yeah - it's hard to suss out what "deficit-financed tax cuts" means when the tax cuts have increased Federal revenue.

  • Ellis Wyatt||

    Yeah - it's hard to suss out what "deficit-financed tax cuts" means when the tax cuts have increased Federal revenue.They have NOT.

    Umm, revenues are now increasing much more slowly than expenditures, Should be self-evident.
    And revenues ALWAYS increase unless a recession, so useless.

    This is the first administration to EVER increase the deficit by OVER 50% ... in ONE year ... with a growing economy ... a MONUMENTAL FAIL.

    And it's John, so he's blowing smoke . The latest CBO revenue forecast
    + 3,338 2018 estimate
    - 3,316 2017 actual
    = 22 billion (chuimp change)

    Expenditures
    + 4,143 2018 esrtimate
    - 3,982 2017 actual
    = 161 billion

    Do the math.(This is from their detailed forecast in April. Their revised for 2018 ONLY was $150 billion higher deficit, unclear how that change affects revenue and/or expenditures)

    The deficit ir forecast to increase from $665 B (2017) to at least $1,004 B a 51% increase in a single year!

    Source (tables 4-1 and 4-4) www.cbo.gov/publication/53651

    Any questions?

  • JesseAz||

    "Umm, revenues are now increasing much more slowly than expenditures"

    You're so close to putting it all together. Now explain why government should increase expenditures by 5% every year.

  • ChuckNorrisBeardFist||

    I know math and comprehension is hard for you.

    "Yeah - it's hard to suss out what "deficit-financed tax cuts" means when the tax cuts have increased Federal revenue.They have NOT."

    Have revenue increased this year? Yes or no? By your own data they have. Shouldn't tax cuts if they were horrible decrease the revenue? Why didn't that happen genius?

    "Umm, revenues are now increasing much more slowly than expenditures, Should be self-evident.
    And revenues ALWAYS increase unless a recession, so useless."

    So if we made taxes zero would revenue go up? How does the government get it's revenue. You can't even understand your sentence - Revenues are increasing with the tax cut. But the government spends more.

    Geez your team is thick

  • JunkScienceIsJunk||

    Please demonstrate causation to support your statement.

  • Gracchus||

    If cutting taxes really does depress revenue in this case, then federal reciepts should be going down in both real terms and as a percentage of the economy, right?

    Is that necessarily the case? It could just be that tax receipts continue to go up but the rate of increase is lower than it would have been without the tax cut.

  • John||

    Since we can't live the counter factual, that is at best specuation and at worst wishful thinking. It also assumes that the tax cuts have nothing to do with the economy growing and increasing revenue as a result. Yeah, if the economy grew the same regardless of the tax rate, then yes you could say that. But that is not true. Taxes really do depress growth. There once was a time when Libertarians understood that. But that was before reason hired Mr. McArdle to deal out warmed over conventional beltway fart bubbles.

  • Sebastian Cremmington||

    The Bush Tax Cuts cut revenues but I agree these Trump Tax Cuts are relatively innocuous. Keep in mind that the government has other revenue streams such as payroll tax. But back to the Bush Tax Cuts that unfortunately cut government revenue during a period of weak investment opportunities which had the effect of pushing more money into the Housing Bubble. The current Obama economy has many good investment opportunities so I believe the tax cuts are responsible.

  • Ellis Wyatt||

    John, your fairy tales are PROVEN false jusr above

  • JunkScienceIsJunk||

    Taxes really do depress growth. There once was a time when Libertarians understood that.

    There isn't a single person who disagrees with this. Even John Maynard Keynes acknowledged this. So this part of your argument is quite frankly a straw man.

    The question is whether the drain on the economy that the old tax rate introduced (relative to the new tax rate) is greater than or less than the drain on the economy that increased borrowing will introduce. This isn't a political question, it's an economic one. You have to raise $X to pay for shit. What percentage of X should come from taxation and what percentage of X should come from borrowing? (and this ignores the third "source" of revenue, which is inflation)

  • RPGuy16||

    GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

    But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

    OBAMA: Right.

    GIBSON: And George Bush has taken it down to 15 percent.

    OBAMA: Right.

    GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

    So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

    OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

  • Azathoth!!||

    Tax cuts don't create deficits.

    Excessive spending creates deficits.

    A tax cut isn't 'spending'. It's 'not taking'.

    Thinking that a tax cut is spending means thinking that wealth--of any kind-- belongs to government.

    It doesn't.

    It is much better that our wealth be left in our hands than taken from us and put into the hands of people who will spend it as if they have three times the amount they've taken.

    It the writers at reason have lost the ability to understand this perhaps the magazine should change it's name to

    'Emotional Immaturity
    Free Stuff, For the People'

  • TLBD||

    This. Sudertard is under the impression that that money is better off in the hands of government. Why the fuck he works for Reason is beyond me.

  • ||

    Yeah - I don't dislike Suderman as a person, but he's arguably the least libertarian person writing here. And by "least libertarian" I mean "not really libertarian at all."

  • ThomasD||

    "... the least libertarian person writing here..."

    A few others seem Hell bent on giving him a run for his money.

  • Ellis Wyatt||

    HEY, TRUMPTARDS ,... YOU NEVER HEARD OF SPENDING CUTS, EITHER???? total Brainwashing
    (lol)

    Trump already has increased 8-year debt more than Obama did AFTER 8 years. FAIL
    It's not just proggies being bamboozled by the political elites

    he Authoritarian Right wants government out of your wallet and into your bedroom.
    The Authoritarian Left wants government out of your bedroom and into your wallet.
    ONLY libertarians DEFY government intrusion into BOTH economic and personal issues.

    Democrats borrow trillions to provide free stuff.
    Republicans and faux libertarians borrow trillions to provide free tax cuts.
    Libertarians know CUT SPENDING is the only way to shrink government. (Grade-school arithmetic, duh!)

    A growing majority of Americans agree, and now SELF-define as fiscally conservative and socially liberal.
    Left and right are now less than 40% of Americans combined and shrinking. Their time has expired.

    Left - Right = Zero

  • Migrant Log Chipper||

    Fuck off, Hihnfection.

  • Azathoth!!||


    Democrats borrow trillions to provide free stuff.
    Republicans and faux libertarians borrow trillions to provide free tax cuts.

    Let me fix this for you, Michael.


    Democrats spend trillions to provide free stuff. They don't care where the money is going to come from
    Republicans and faux libertarians provide tax cuts so people can keep what they earn.

    No one cuts spending

    There.

    And, just for the record, without spending on things that are not in the Constitution, spending on things that ARE in the Constitution would not be in the red.

  • JFree||

    It is much better that our wealth be left in our hands than taken from us and put into the hands of people who will spend it as if they have three times the amount they've taken.

    Then perhaps we should reallocate voting power and/or legislative majorities in this country. It is very obvious now that all the DeRps - and ALL - 100% - of their voters are responsible for spending someone else's money. Neither are remotely serious about changing that - and neither have the courage to do so. And that means YOU. YOU are the fucking problem.

    So - since we spend $4 trillion and tax $3.3 trillion - only 3.3/4 (or 82.5%) of our legislature should be filled via election. The remainder should be 'set aside' for the future. That remainder portion would go up or down depending on the deficit each year. That remainder would be voted automatically - no to all tax cuts or spending increases when there is a deficit (ie whenever that remainder exists). The bigger the remainder (deficit spending as % of total spending), the more the legislature would need a supermajority to pass either tax cuts or spending increases. The smaller the remainder, the more voters/parties can be trusted to deal with basic arithmetic re both tax cuts and/or spending increases.

  • CE||

    Not a bad idea. Give people 1 vote for each net thousand dollars they pay to the government. If they don't want to vote, they don't have to pay taxes. If they are supported by the government (the poor, retirees, govt employees), they shouldn't have a say in how other peoples' tax money is spent.

  • Wanderer||

    It's called censitory suffrage

  • MoreFreedom||

    Whatever happened to starving the beast? I agree, we've deficits because the Democrats and RINOs want to spend all they can. I'd rather have an anti-growth recession from increased deficits due to tax cuts, then from increased deficits due to increase taxes and even more spending.

    Seems the way it works is the few responsible politicians cut spending and deficits sometimes to the point of a rainy day surplus, which is then spent by politicians who can't resist spending it and who get elected for that purpose. Ultimately it's greedy people who want to use government to get stuff from others that vote in the politicians who promise exactly that (and who usually just deliver more government that puts more money into their pockets).

  • ||

    Ultimately it's greedy people who want to use government to get stuff from others that vote in the politicians who promise exactly that

    To paraphrase Carlin, people act like politicians came from another planet, but they didn't. They came from the American Public, who voted them in. It's not politicians who suck, it's the American Public.

  • Ellis Wyatt||

    They came from the American Public, who voted them in. It's not politicians who suck, it's the American Public.

    Including the vast majority of commenters on this page!

  • Ellis Wyatt||

    I'd rather have an anti-growth recession from increased deficits due to tax cuts, then from increased deficits due to increase taxes and even more spending.

    THAT is why Trump increased 8-year debt more than Obama did AFTER his 8 years. Fiscal conservatism is as dead as conservatism.

    I note that spending cuts NEVER appear in your false options.

    Democrats borrow trillions to provide free stuff.
    Republicans and faux libertarians borrow trillions to provide free tax cuts.
    Libertarians know CUT SPENDING is the only way to shrink government. (Grade-school arithmetic, duh!)

    Ultimately it's greedy people who want to use government to get stuff from others that vote in the politicians who promise exactly that

    They suckered your own greed, eh?

  • JunkScienceIsJunk||

    Tax cuts don't create deficits. Excessive spending creates deficits.

    Actually, neither creates deficits by itself. A deficit is created when revenue doesn't cover spending. It's that simple. So to say that taxes don't play a role here is pretzel logic.

    Not a single person here (including Reason) is suggesting that the government SHOULDN'T decrease spending. That's not the issue here. The issue is: considering that spending has already been decided on (unfortunately), how do you pay for it? Do you borrow or do you tax?

  • TuIpa||

    Probably, likely, probably, estimate, likely, Trump, so bad.

    So when do I start Reason?

  • Jerryskids||

    But it is reasonably likely that the individual rate reductions from last year's tax law will be extended before they expire, because neither Democrats nor Republicans want to be seen as allowing tax rates to increase for middle class families.

    Bipartisanship! After all the partisan rancor, it's nice to see politicians of all stripes coming together in a spirit of comity, united in their faith in fiscal irresponsibility.

  • ||

    united in their faith in fiscal irresponsibility

    I'm not a huge fan of their faith in fiscal responsibility either.

  • TuIpa||

    Credible!

  • Colossal Douchebag||

    +1

  • esteve7||

    Seriously why do we need to explain this on a god damned libertarian site to you people? The federal government had record revenues this year. The problem is not the tax cuts, it is spending.

    Just rebrand as Vox already. Your articles are becoming insufferable.

  • Derp-o-Matic 6000||

    Yeah, but it's not about actual numbers and statistics. Suderman has bad feelz about the situation and therefore it must be Trump and Republicans' fault. If we're going to keep spending like this, taxes should be higher!

  • Ellis Wyatt||

    Why do NONE of you EVER mention spending cuts? Welcome to a REPUBLICAN New Deal!

  • mpercy||

    Perhaps because the topic of the article was deficit increases being blamed on tax cuts.

    But, here, I'll go ahead.

    The only real solution to deficits is to cut spending. Revenues, even all-time record revenues, have NOT been able to keep up with spending.

    The next-best thing is to not increase spending--hold spending constant--for 4-5 years and hope that revenues will "catch up".

    Increasing taxes to the levels necessary to cover the "anything goes" spending levels of Congress (certainly over the last 20 years or so) appears to be a non-starter with the American public. There's not enough "other people" to tax.

    I also know that Congress spends money, Presidents don't, so Trump and Obama didn't increase deficits. Congress did. Sure, Trump could have vetoed the recent budget deal, but it was originally passed with veto-proof margins, so that would almost certainly have been an exercise in futility albeit one with perhaps at least the optics of "Hey, I tried to stop them from spending more."

  • Ellis Wyatt||

    You've been TOTALLY brainwashed, esteve7 Documented proof.

    How in HELL did you swallow that only spending increases deficit??
    For FY 2O18, this administration has increased the deficit by over 50% ... in one year. Has ALREADY increase 8-year denbt more than Obama did AFTER 8 years.

  • CE||

    Um, because tax revenues are up?

  • mpercy||

    Because if you spend more than you take in, you have a deficit?

  • JunkScienceIsJunk||

    The problem is not the tax cuts, it is spending.

    Given that spending already has bipartisan support to be approximately $X, what do you do with this information? Do you continue to sweep revenue questions under the rug while complaining about spending which will literally be impossible to curb?

    This article tackles an uncomfortable question head on: the republicans and democrats have fucked this country by adopting an unsustainable spending policy and there is no end in sight - what do we do now?

  • Red Tony||

    Suderman points out that passing tax cuts and spending increases at the same time is bad for the national debt. That's decent.

    Suderman then proceeds to say that tax cuts are a bad thing. That's where he dons the statist garb and proves himself a moron. Less taxation is good; less spending is better. Not pegging the problem as being spending is a huge mistake.

  • John||

    The government only collects 3.34 trillion dollars in taxes this year. How can you expect the government to live within its means when you refuse to fund it?

    This apparently is what Suderman actually believes

  • JFree||

    And it spends $4 billion. The FACT is that we are funding 82% of today's spending by today's taxes - and 18% of today's spending by tomorrow's taxes. And the higher that deficit the more we today are funding spending that benefits us today by taxing tomorrow.

    I know you DeRps deliberately don't want to understand that. You want to pretend that spending just kind of happens by alien coercion whereas tax revenues are very specific choices that we make. When in fact the ACTUAL decisions are that actual spending is our choice - and only tax RATES (not revenues) are our choice.

  • John||

    We have a spending problem. No one with any sense denies that.

  • Tony||

    Spending on what is the question. The party you spend every day fellating spends billions of taxpayer dollars on shit the Pentagon doesn't even want.

  • DesigNate||

    Newsflash dipshit: The party you spend every day fellating spends billions of dollars on shit for the Pentagon too.

    And they fucking suck on civil liberties (the one thing they're supposed to be good at) to boot.

  • Tony||

    No they don't. Republicans are the torture and indefinite detention and pro-cop and concentration camp people. Keep up.

    Oh, did some kid on Youtube make a scene about safe spaces once? Is that what you're whining about?

  • mpercy||

    But if they spent the same money to buy the same shit but instead called it a "jobs program" lots of people would support it.

  • JFree||

    Actually every pol you've personally voted for (if you've ever voted for anyone who's won) denies that. Which means effectively that you deny it by your actions.

  • TuIpa||

    "Actually every pol you've personally voted for (if you've ever voted for anyone who's won) denies that"

    No, actually many of them don't. They may only give lip-service to it, but only an idiot would say they deny it.

    All of them I mean. Like you did.

    "Which means effectively that you deny it by your actions."

    Sorry I forgot that you're an idiot.

  • John||

    So voting for the ones who at least try and pretend there is a problem or try to solve it but lack the authority to do so makes me somehow responsible for it but you not voting are not? Because I guess if no one voted they would feel bad and stop spending?

    Did you suffer some kind of traumatic brain injury or something?

  • Red Tony||

    Yes. It's called "being a moron."

  • JFree||

    Yes - words are irrelevant when the actions are always the same and contrary to the words. Do you give Marxists a pass when they assert - after every failure - that they had good intentions? No you don't. Nor should you.

    You pretending that those words are an important determinant of some 'acceptable' lesser evil are nothing but attempts to delude YOURSELF about what you are actually doing by voting for them.

  • Ellis Wyatt||

    Why do YOU, Jfree, give Republicans a free pass ... for increasing the 8-year debt ALREADY, by more than Obama did AFTER 8 years .. and threatening MUCH MORE ... Plus, the first to EVER increase the deficit by over 50%, in a single year, IN A BOOMING ECONOMY! (OMFG)

    Do you whimper that Trump has good intentions ... when he promised to PAY OFF the debt in 8 years ... but has FAILED, tragically, by ADDING more debt than ANY administration EVER -- more than even Obama..

    On the debt, the folks YOU call Marxists are kicking your ass totally.

  • Ellis Wyatt||

    We have a spending problem. No one with any sense denies that.

    YOU have denied if five times on this page (just what I've seen personally)

  • TLBD||

    The Republicans should be taken to task for not reducing spending.

    Even Suderman should be smart enough to know that complaining about tax cuts on a libertarian website is idiotic.

    Actually, it is something worse than idiotitc, it is repellant.

  • John||

    The federal government will collect around 3.34 trillion dollars in taxes this year. And Superman is claiming we have a deficit partially because we are not taxed enough. Repellent is a good word for it.

  • TLBD||

    Repellent not repellant. Easy mistake :).

  • John||

    Good catch

  • TLBD||

    Ha more research says you can spell it both ways.

    Confused me for a sec.

  • DesigNate||

    I have to know John, was Superman a deliberate flub, or just a "johnism"?

  • Ellis Wyatt||

    You are SO full of shit, John,

    The federal government will collect around 3.34 trillion dollars in taxes this year. And Superman is claiming we have a deficit partially because we are not taxed enough. Repellent is a good word for it.

    Bullshit PROVEN above

    Trumptards have never heard of spending cuts!!!!! ,... so they LIE about what Suderman wrote ... shamefully

    Democrats borrow trillions to provide free stuff.
    Republicans and faux libertarians borrow trillions to provide free tax cuts.
    Libertarians know CUT SPENDING is the only way to shrink government. (Grade-school arithmetic, duh!)

    A growing majority of Americans agree, and now SELF-define as fiscally conservative and socially liberal.
    Left and right are now less than 40% of Americans combined, and shrinking. Their time has expired.

  • Colossal Douchebag||

    Going forward, rising debt and deficits are likely to become a significant burden on the economy, and should a further round of deficit-financed tax cuts occur, it will only increase the drag. Yet that is what Republicans say they want. The available evidence suggests that in the long term, Republican tax policy is now anti-growth.

    Yep, I remember, that's exactly what happened in the '80s. Brutal.

  • John||

    Letting people spend more of their own money just leads to them wasting it. Better to give to the top men in Washington who know how to properly use it for the common good.

    Signed

    MR McArdle

  • Derp-o-Matic 6000||

    Wait, is Suderman advocating higher taxes, then? Has TDS rotted his brain that severely?

  • I am the 0.000000013%||

    I'm pretty sure this is the first time ever a politician has lied to seduce a constituency. Maybe bolding the headline would be in order.

  • Leo Kovalensky II||

    Alright, I'm usually not one to jump on the anti-Reason band-wagon, but this is just madness. You buried the lede by mentioning the spending bill in the second to last paragraph?

    Here's some advice Reason... Libertarian-leaning Republicans are likely the demographic that you're going to appeal most to, especially on economic issues. If you want to persuade them to come over to your side go after this most recent spending bill. Every conservative Republican should feel betrayed by the spending bill, and it's got, what, 1 or 2 articles?

    Articles bemoaning tax cuts, on a libertarian website, just make you look stupid.

  • John||

    I don't see how you have to be a Republican leaning libertarian to object to taxes and see them as a serious inpetiment to freedom.

  • Migrant Log Chipper||

    Agree, party shouldn't have anything to do with it. Basic math skills should do the trick.

  • blondrealist||

    The economy is growing, but tax receipts have fallen on a relative basis because federal spending has increased. There are reasons to be concerned, mostly regarding inflation. In more "normal' times, we'd expect federal deficit spending to remain flat or go down when the economy is growing a a decent rate. Trump is clearly not normal. I don't care about balancing the budget, but I am concerned about harmful inflation. A case can be made for deficit spending when the economy isn't growing, but when the economy is growing at good rate - more federal deficit spending is a lot like stepping on the gas and driving too fast. Tax cuts have produced increased tax revenues in the past. Maybe that will happen this cycle too - but it's too soon to be confident that the growth fairy will deliver.

  • CE||

    Fallen on a "relative basis"? Relative to what? Tax receipts are up, relative to last year.

  • ThomasD||

    A LACK OF HIGHER TAXES IS FAILING TO MASK OUR SPENDING PROBLEMS!!!!!!

    Because the Feds sure don't have a revenue problem...

  • Uncle Jay||

    A trillion here, and a trillion there, and the next thing you know, America's economy implodes like the USSR's did.

  • ThomasD||

    So long as the dollar remains the world's reserve currency inflation will allow the U.S. to tax the entire world to support our profligacy.

    Right up until it doesnt.

  • Migrant Log Chipper||

    Exactly and it won't stop until that changes, yet most of the world is in worse shape so who knows.

  • DrZ||

    It wasn't that long ago that it was a billion here and a billion there. Now it's a trillion here and a trillion there soon to be a quadrillion here and a quadrillion there.

    It's the spending stupid.
    - Bill Clinton paraphrase.

  • Fairbanks||

    It's an axiom of economic theory that for any given level of spending it doesn't matter for overall economic health how that spending is financed. (Who ends up paying for the spending is another matter). As others have mentioned here, it's spending that matters.

  • A-A-Ron||

    Articles like this remind of when Ron Paul used to say that Congress would reduce a proposed spending increase and call that a "spending cut".

    Look! We were going to spend 1 billion MORE on our pet project, but now we will only spend 800 million. We cut spending by 200 million! Let's go pat ourselves on the back.

  • CE||

    And the Democrats and media would wail about how the irresponsible spending "cuts" were killing children by the millions.

  • livelikearefugee||

    "We are all Keynesians now." -- Richard Nixon.

    But, Keynesian doctrine calls for deficit spending during recessions and government surpluses to pay back the deficits during times of expansion.

    Deficit spending during times of expansion isn't a economic model, it's economic suicide.

    "Giving politicians money is like giving whiskey and car keys to teenage boys." -- PJ O'Rourke

  • Sebastian Cremmington||

    The reason the Obama stimulus failed was because of how large our ongoing government spending is. So Keynesian stimulus is no longer a tool we have if we fall into recession...but that won't stop Democrats.

  • JunkScienceIsJunk||

    ^ This

    Even Keynes is against the absurdity we see today. We can't blame him for the pro-spending crowd intentionally distorting his message.

  • livelikearefugee||

    Make America Greece Again!

  • Don Pettengill||

    Another article proof certain that Reason is infested with big government lefties, who have not a libertarian bone in their bodies. What a worthless, unprincipled rag it is.

    I first became aware of this when a Reason article reported employee poll results for an Obama presidential election. It was clear as noon that Obama was a far left ideologue; but no worries! He was heartily endorsed by far too many. A majority, I think - it's been a long time and I did not save the article.

    The rot continues, with ongoing vitriol on Trump the daily fare at Reason, while Democrats by and large escape unscathed.

    I rarely bother with Reason. I can read plenty of guff on why tax cuts are "bad", why Trump is "Hitler", and why Kavanaugh is a sex predator, in mainstream media - if I so choose to waste my time.

  • Charles Barr||

    The DEBT is not the DEFICIT. And the DEFICIT is not the DEBT. They are separate problems.

    Government BORROWING drives up the debt, not government SPENDING.

    The solution to our debt problem is simple: STOP ISSUING DEBT-BASED MONEY! Begin issuing pure "unbacked" fiat money to fund the deficit, rather than going further into debt. The inflationary impact of unbacked dollars is no worse than the inflationary impact of the same amount of debt-backed dollars. Issuing unbacked dollars will halt the increase in the national debt and its crushing $430 billion in annual interest. Paying off part of the maturing debt each year and rolling over the rest will eventually bring the national debt (and its taxpayer-financed interest payments) down to zero. See www.fixourmoney.com .

  • vek||

    Cut. The. Spending.

    Only correct answer. Personally, I am of the mind that in the world as it exists today, we will always spend more than we bring in. Therefore the lower the revenue, the lower the spending will be compared to what it might have been. Until something super messed up happens to the US economy, we will likely never deal with the debt. If we don't fully crash and burn, we can at least expect 70s style inflation as a result of our currency being devalued when foreigners realize they've been idiots to take our BS fiat currency.

    Whatever the case, since we're probably fucked either way... I'm okay with minor tax cuts. If we ever have adults running the FedGov again and it looks like we can actually balance the budget and avoid the kind of nonsense I mention above, then I will consider skipping cuts in favor of actually having a balanced budget... But until then it's all just arguing about a bucket or two more or less of water pouring into the Titanic as it's sinking... It's going down either way, so what dif does it make?

  • JunkScienceIsJunk||

    Cut. The. Spending. Only correct answer.

    Yeah, but it wasn't the question.

  • tlapp||

    Calling it deficit financed tax cuts is false. Tax revenues have increased. It is spending caused deficits 100%.
    Sad to see such a stupid premise put forth from Reason.

  • Chris Paige||

    I think Reason is getting DC disease. Spending causes problem; paying for spending with taxes or with debt has NO ECONOMIC consequences -- either way, it's taxes stupid. There's simply no credible theory or evidence to explain how government debts matter; spending causes all of the alleged harms attributed to debts. Stop being a tax collector for the welfare state!

  • JunkScienceIsJunk||

    paying for spending with taxes or with debt has NO ECONOMIC consequences -- either way, it's taxes stupid.

    I was with you until this line. If we've unfortunately resigned ourselves to the fact that spending is going to be high, then the question naturally arises: do you pay for it with taxes or pay for it with debt? The notion that there's no difference between these options is wrong. Increased taxation is a drain on the economy and increased debt is a drain on the economy (but for different reasons). I would argue that in our current financial situation, increasing debt is a bigger drain on the economy. But others have argued that increasing taxation is a bigger drain on the economy. Both sides make valid points. The only INVALID point is the notion that it's all the same thing. It isn't.

  • Charles Barr||

    The notion that taxes and debt are the only two options is also wrong. Issuing pure (debt-free) fiat money to fund the deficit would be less of a drain on the economy than either higher taxes or more debt. See www.fixourmoney.com .

  • vek||

    I just read your site. Most of the ideas I was already familiar with.

    If we're going to have a fiat currency, I don't have a huge problem with debt-free fiat money. The one biggest "problem" with that method is one you don't really address directly, but perhaps elude to, and one I don't think is much of a problem anyway.

    If you issue new money to fund the whole deficit every year, it will increase inflation above what we have now. By convincing already extant dollars to buy bonds, this reduces inflation versus issuing all new currency every year. Some people don't like this idea.

    Compared to having a massive national debt though, I don't know that it is that horrible. If the government overspends too much, you will have an almost immediate pick up in inflation. This hits all people in the nation equally in percentage terms, whether high or low income. That's pretty fair. It also hits them NOW, vs screwing future generations. Both pros IMO. I don't know that it's inherently more stable than debt money, but I don't know that it's less so either... It could be argued either way.

    It's not a bad idea overall, especially as a way of getting out of our current situation. Transitioning out of the bonds slowly would be key though.

  • JunkScienceIsJunk||

    Yes, I pointed this out in another post, and you are correct that inflation is another option. What is the right combination to pay for all this shit? I don't have a good answer for that. And everyone who posts "who cares? just cut spending!" is implying that they don't have an answer either.

  • vek||

    Late reply, but in case anybody ever reads it... The fact is we could very easily deal with the debt.

    Balance the budget through spending cuts, and MAYBE small tax increases god forbid. Then just cap it at inflation rate, or less than inflation.

    Give it a decade, and even at normal rates of inflation the debt in real terms will be reduced 30-40%, give or take. 2 decades and it's a nothing burger. It's quite simple really for right now.

    Of course future spending is mostly driven by SS and Medicare. So those would need to be rejiggered too. But even minor changes could put them on track to be on the level.

    None of it is hard to do, and frankly people wouldn't even notice the difference. A few percent here or there in growth of spending won't even be noticed, but that's all it takes to balance things out. Which is why it is such a joke it never gets done. :(

  • PG23COLO||

    Peter Suderman thinks he can predict the future of economic change. He ought to run for Congress, where everyone can do that. Or seek appointment to the Federal Reserve Board, which magically controls the economy.

    Seriously, even Reason thinks it has a crystal ball?

  • CE||

    Tax cuts aren't "financed" by deficits. Deficits are financed by debt. Deficits are caused by overspending (check the history -- tax revenues almost always go up after tax cuts, despite the widespread mocking of Laffer.)

    Tax cuts are a reduction in organized crime, and always good for those who are having less stolen from them.

  • DrZ||

    Do we need higher taxes or less spending? Hmmmm....

  • JunkScienceIsJunk||

    This article isn't a defense of high taxation. It's a rebuttal to the republicans outright assertion that they can CONTINUE TO INCREASE SPENDING because their tax cuts will pay for it. This is what they've claimed, and they are dead wrong. The reality, as pointed out by this article, is that their increase in spending must be paid for by borrowing more money.

  • RPGuy16||

    There is no such thing as financing tax cuts. The only think being financed and creating a drag on the economy is the wasteful government spending.

  • ThomasD||

    At this point can't we all just agree that the appropriate response, upon seeing a Suderman byline at Reason, is to point and laugh?

  • Freddie||

    Ok, if revenue has steady, you can argue that tax cuts paid for themselves with growth. But the same Republicans who pat themselves on the back over the tax cut have been complacent and culpable over increasing spending. Republican made a deal with Democrats to increase unnecessary domestic spending in return for increasing unnecessary defense spending.

  • ThomasD||

    Unnecessary defense spending is real. It's also rather missing the point when you consider that very soon service on debt will exceed all defense spending.

    Entitlements are the number one (through number 8,144th) problem.

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