Before the tax reform debate has even begun in earnest, it has moved into a realm of pure fable and fantasy. Absurd claims are already being made by the administration that corporate tax cuts will give each worker a $9,000 raise. Other administration voices claim this tax cut “will not only pay for itself, but it will pay down debt.” If such specious claims weren’t potentially so damaging to our country, they would be easy to dismiss as the ravings of fringe economists or bought-and-paid for position papers.
But they aren’t. These quotes come from the highest levels of our government, those entrusted with the health of our economy, the strength of our credit, and the long-term best interest of all of our nation.
{mosads}Already the context in which these tax cuts are proposed requires the addition of a vast sum – nearly $1.5 trillion dollars – to our $20 trillion national debt. Imagine what good our nation could do with that incredible resource: invest in our failing roads and bridges, bring broadband internet throughout rural America, prepare our communities for the next natural disaster, strengthen our children’s education, shore up our healthcare system to ensure better care. In fact, no one ever visits my office asking for less. Daily I’m visited by those asking for more.
How times change. It wasn’t that long ago that my Republican colleagues were warning of the calamitous effect of the burden of the nation’s debt. Speaker Paul Ryan (R-Wis.), as chairman of the House Budget Committee, constantly warned about “a looming fiscal crisis.” Pardon my surprise at his sudden nonchalance.
It’s true that this cavalier attitude happens to line up with what is projected to be a massive cut to high net worth individuals, international corporations, wealthy estates, and investment partnerships, among others. Taxpayers with incomes above $730,000 get about 50 percent of the total tax benefit, and in fact, taxpayers making above $3.43 million would get an average tax break of $722,510. Do corporate chieftains, rich bankers, and entertainment stars need a break?
What’s even more appalling, if you find the proposition reasonable that corporate profits largely benefit corporate shareholders (even the Treasury Department’s economists believe this, a politically awkward finding that the Treasury Secretary had removed from the Treasury website), is that those foreigners holding US corporate securities will benefit substantially more than the middle class. Nonpartisan economists estimate that “a lower corporate income tax rate would benefit foreign investors by $70 billion in the first year alone [while] all the individual and business tax cuts in the Big Six tax plan, as currently described, would benefit middle-income U.S. households . . . by only $23 billion in the first year.” Count me as hardly surprised to find the Trump administration paying more to his rich friends than to the middle class and working families.
But, Republicans argue, that’s merely the freight we must pay to unlock economic growth. This risible claim is utter fantasy. No economist today says with a straight face that tax cuts pay for themselves. It’s one of the most pernicious myths in politics, unsupported by history or even common sense. Cutting services while piling on a mountain of debt has serious consequences for both our economy and every American’s quality of life.
Just because Republican leaders, in their desperation to pass any tax cut, have forgotten their earlier concerns about the debt doesn’t mean we should let them off the hook. If, as most economists believe, this program creates ever larger deficits and, at most, modest economic growth, we should not continue mindlessly down this path. Instead, we should include safeguards to protect our fiscal health. A mechanism to suspend their massive tax cuts if their rosy assumptions fail to materialize should be implemented as part of their legislation. This safeguard would require that if deficits continue to increase, the tax cuts would be immediately suspended. This circuit breaker should be non-controversial, relatively simple, and broadly supported.
I plan on introducing this mechanism as part of Congress’s consideration of this ill-conceived bill. Republican leadership, if they believe their own plan, should not just allow a vote on the deficit protection circuit breaker, they should heartily support it. America’s future deserves at least this protection.
Blumenauer represents Oregon’s 3rd District and is a senior Ways and Means Committee member.