Tax reform boosts America’s confidence in Trump but trade, spending remain challenges

It is a great day in America, despite the Schumer-Pelosi progressive litany that tax reform aids only the wealthy.  

Working families across the country are experiencing lower taxes, higher bonuses, wage increases and retirement-plan growth — confirming studies that reveal 70 to 90 cents out of every corporate tax dollar paid is borne by workers in lower wages and fewer jobs. We must aggressively tell this story, every day, through November — and beyond.  

{mosads}We are telling it right now in the special election in Pennsylvania’s 18th Congressional District (the Pittsburgh area) as Democratic candidate Conor Lamb mimics the progressive line on tax reform. He won’t budge, despite marked polling improvements nationally on the issue.

The only thing Lamb and the left have neglected is the history of economic growth and tax revenue increases every time we cut tax rates during the 20th century:

• Under President Coolidge, a tax rate reduction from a maximum of 70 percent to a maximum of 25 percent caused the economic growth rate to soar from 0.8 percent to 4.8 percent and led to a 35 percent increase in federal tax revenue.
• Under President Kennedy, a tax rate reduction from a maximum of 90 percent to a maximum of 70 percent led to an economic growth rate from 3.5 percent to 4.9 percent and a 75 percent increase in tax revenue.
• And under President Reagan, a tax rate reduction from a maximum of 70 percent to a maximum of 28 percent led to an economic growth rate from 1.8 percent to 4.4 percent and a 70 percent tax revenue increase.

Meanwhile, trade issues and the federal budget and its spending are taking center stage. Trade and tariffs will work themselves out, in terms of President Trump’s leadership, popularity and negotiating skills with his fellow Republicans. Budget and spending issues may be a different matter.

The left claims that Republicans have proposed budgets that increase annual deficits and the national debt as far as the eye can see. The Trump/Republican $4.4 trillion 2019 budget proposal calls for just over $1.3 trillion for so-called discretionary spending — the spending that Congress can control — while the rest is “mandatory” or “safety net” (i.e., Social Security, Medicare and interest that is on autopilot because of federal law).

The left has complained that the Trump/Republican budget increases “discretionary” spending by more than $300 billion because of an expanded military budget, which we believe our nation needs. Whether its arithmetic is correct or not, we have the answer to restoring order to discretionary spending while we consider controlling “safety net” (mandatory) spending that President Obama drove to record levels: Use the budget rules already available to members of the House.

There is a sure-fire way to offset the $300 billion discretionary spending increase. Get rid of the $300-plus billion in discretionary spending that does not have a current authorization, as required by House rules.  

House Rule XXI states: “An appropriation may not be reported in a general appropriation bill and may not be in order as an amendment thereto, for an expenditure not previously authorized by law, except to continue appropriations for public works and objects that are already in progress.” This rule is now the centerpiece of House Republican Conference chair Cathy McMorris Rodgers’ legislation, the “Unauthorized Spending Accountability (USA) Act.”

The $300-plus billion in unauthorized federal spending in violation of that rule (per Congressional Budget Office’s biennial calculations) includes appropriations that long have been the most controversial among fiscal conservatives: the Legal Services Corporation, Public Television, National Public Radio, the National Endowment for the Humanities, National Endowment for the Arts, and “crony capitalist” subsidies paid through the departments of Commerce, Agriculture and other programs that can be cut under the rule.  

None of that spending can be countenanced when the nation is $20 trillion in debt and running annual deficits approaching a trillion a year.

A House Rule XXI point-of-order does not require Senate complicity; when it is raised on the House floor and voted on favorably, the appropriation dies right there. The rule must be enforced by House leadership and would be a powerful tool for the Freedom Caucus and other House conservatives to utilize.  

Enforcing House Rule XXI and eliminating $300-plus billion in spending that conservatives “love to hate” would be a clear indication Republicans are ready to “drain the swamp.” It is time for that kind of test.

Lewis Uhler is founder and chairman of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He was a contemporary and collaborator with Ronald Reagan and economist Milton Friedman.  

Peter Ferrara, a senior fellow with the Heartland Institute and the NTLF, teaches economics at King’s College in New York. He served in the White House Office of Policy Development under President Reagan and was associate deputy U.S. attorney general under President George H.W. Bush.