We spoke at a town hall in Boone this past January after the Republican tax cut passed, and agreed that the proof of its value would be whether it would produce increased revenue – whether it “pays” for itself.
The figures are in for fiscal year 2018: the deficit was up by 17 percent to $779 billion over the previous fiscal year. The Congressional Budget Office reports that tax receipts rose by only $14 billion dollars or just four tenths of a percent. The Committee for a Responsible Federal Budget reports that that is the eighth lowest growth rate in the last 50 years; the other seven years coincided with a recession or tax cuts/expiring tax increases enacted shortly after a recession.
And those numbers would have been even worse because the fiscal year included three months of revenue before the tax cuts went into effect. The tax cut was by far the largest factor in the deficit increase at $164 billion, enough to cover the entire $113 billion increase in the deficit.
Everyone knew this would happen. The CBO said it would, but Republicans chose to ignore those figures; they didn’t care that it would cause massive debt. The cut has NOT paid for itself; such cuts NEVER have. And now after blowing a hole in the budget, Republicans suddenly care about the deficit and the majority leader has raised the possibility of cutting Medicare, Medicaid and Social Security.
I imagine you will assert that the .4 percent increase shows there was growth in tax receipts but it didn’t keep up with increase in federal spending – which rose about 3 percent. But both revenue and spending normally grow every year and during President Obama’s second term revenue grew by more than 7 PERCENT PER YEAR. The deviation from normal growth is all due to the tax cut.
Are you prepared to admit that the tax cut, in the midst of a strong economy that didn’t need significant stimulus, was the wrong move? Do you concur with Majority Leader Mitch McConnell that entitlements must be cut, either for present and near beneficiaries or the generation now entering the workforce?
by Thomas O’Donnell