Teh One Who Knocks
11-14-2017, 08:55 PM
Investor's Business Daily
Budgets: After eight years of silence during President Obama eight years in office, which saw deficits average $910 billion a year and the national debt explode by $9.3 trillion, Democrats are suddenly fretting about deficits. If only their concern were genuine and not a cynical attempt to derail much-needed tax reform.
The Republican plan is a "deficit-busting tax cut to benefit the wealthiest Republicans," says Senate Minority Leader Charles Schumer. House Minority Leader Nancy Pelosi warns that it would "take us so deeply into debt … it will necessitate a trillion dollars being cut out of Medicaid."
Various other Democrats say the tax cuts would "blow a massive hole" in the budget, while chastising Republicans for suddenly not caring about deficits.
Let's leave aside the fact that Democrats didn't raise a peep of protest during the Obama years, when deficits topped $1 trillion four years in a row, nor did they complain about the near doubling of the nation's debt.
The fact is that critics of the GOP tax plan are just plain wrong to pin the blame for future deficits on tax cuts.
First, some context.
https://i.imgur.com/fNLzaZw.png
According to the Congressional Budget Office, the House tax bill would boost deficits over the next 10 years by a total of $1.4 trillion. The added interest on the debt would kick that up to $1.7 trillion.
That looks like a lot of money. Except that equals just a 17% increase in total deficits projected over the next decade.
And that increase is a wild exaggeration, since it doesn't allow for any extra economic growth from the GOP's pro-growth tax cuts — a premise that even some honest liberal economists don't believe. The actual deficit boost, if there is any, will be far smaller than what the CBO says.
But let's accept the CBO's numbers as gospel truth.
Look more closely at the data and you see that what's driving deficits ever upward isn't the Republican tax cuts. It is out-of-control spending.
Over the past 50 years, despite all the myriad changes in tax laws, revenues as a share of GDP have remained remarkably close to the average: 17.4%. In fiscal year 2017, which ended in September, the share was 17.3%. In Bush's last in office, it was 17.1%. When Bill Clinton took office in 1991, it was 17.3%.
What happens if the Republican tax plan goes into effect? According to the CBO, taxes as a share of the economy in 2027 will be … 17.9%.
That's right. Even with an allegedly budget-busting tax cut, the federal government will claim a greater share of the nation's economy in 2027 than it does today, and that share will be above the average for the previous 50 years.
The only reason deficits continue to climb over the next decade is because federal spending is going up at an unsustainable rate.
This year, federal outlays will equal 20.8% of the nation's GDP. That's up from 20.5% in 2015, which was up from 20.2% in 2008 — President Bush's last year in office
Over the previous five decades, spending averaged 20.3% of GDP.
Look what happens over the next decade if the federal government is left on autopilot: Spending as share of GDP climbs to 23.6% by year 2027 — and goes up from there.
Keep in mind that outlays have only topped that level once in the past 50 years — and that was in 2009 to finance President Obama's failed stimulus programs.
What's propelling this spending increase is almost entirely entitlement programs — mainly Medicare, Medicaid, Social Security, and now ObamaCare.
The problem is that any reasonable attempt to rein in any of these programs is met by fierce and unrelenting opposition from all those Democrats who now claim to worry about deficits. They will viciously demagogue any Republican who dares to propose real reforms of these programs, and then brag about any resulting election victories.
So, the next time you hear Democrats pretend to be deficit hawks, ask them what their plan is to bring entitlement spending under control.
Budgets: After eight years of silence during President Obama eight years in office, which saw deficits average $910 billion a year and the national debt explode by $9.3 trillion, Democrats are suddenly fretting about deficits. If only their concern were genuine and not a cynical attempt to derail much-needed tax reform.
The Republican plan is a "deficit-busting tax cut to benefit the wealthiest Republicans," says Senate Minority Leader Charles Schumer. House Minority Leader Nancy Pelosi warns that it would "take us so deeply into debt … it will necessitate a trillion dollars being cut out of Medicaid."
Various other Democrats say the tax cuts would "blow a massive hole" in the budget, while chastising Republicans for suddenly not caring about deficits.
Let's leave aside the fact that Democrats didn't raise a peep of protest during the Obama years, when deficits topped $1 trillion four years in a row, nor did they complain about the near doubling of the nation's debt.
The fact is that critics of the GOP tax plan are just plain wrong to pin the blame for future deficits on tax cuts.
First, some context.
https://i.imgur.com/fNLzaZw.png
According to the Congressional Budget Office, the House tax bill would boost deficits over the next 10 years by a total of $1.4 trillion. The added interest on the debt would kick that up to $1.7 trillion.
That looks like a lot of money. Except that equals just a 17% increase in total deficits projected over the next decade.
And that increase is a wild exaggeration, since it doesn't allow for any extra economic growth from the GOP's pro-growth tax cuts — a premise that even some honest liberal economists don't believe. The actual deficit boost, if there is any, will be far smaller than what the CBO says.
But let's accept the CBO's numbers as gospel truth.
Look more closely at the data and you see that what's driving deficits ever upward isn't the Republican tax cuts. It is out-of-control spending.
Over the past 50 years, despite all the myriad changes in tax laws, revenues as a share of GDP have remained remarkably close to the average: 17.4%. In fiscal year 2017, which ended in September, the share was 17.3%. In Bush's last in office, it was 17.1%. When Bill Clinton took office in 1991, it was 17.3%.
What happens if the Republican tax plan goes into effect? According to the CBO, taxes as a share of the economy in 2027 will be … 17.9%.
That's right. Even with an allegedly budget-busting tax cut, the federal government will claim a greater share of the nation's economy in 2027 than it does today, and that share will be above the average for the previous 50 years.
The only reason deficits continue to climb over the next decade is because federal spending is going up at an unsustainable rate.
This year, federal outlays will equal 20.8% of the nation's GDP. That's up from 20.5% in 2015, which was up from 20.2% in 2008 — President Bush's last year in office
Over the previous five decades, spending averaged 20.3% of GDP.
Look what happens over the next decade if the federal government is left on autopilot: Spending as share of GDP climbs to 23.6% by year 2027 — and goes up from there.
Keep in mind that outlays have only topped that level once in the past 50 years — and that was in 2009 to finance President Obama's failed stimulus programs.
What's propelling this spending increase is almost entirely entitlement programs — mainly Medicare, Medicaid, Social Security, and now ObamaCare.
The problem is that any reasonable attempt to rein in any of these programs is met by fierce and unrelenting opposition from all those Democrats who now claim to worry about deficits. They will viciously demagogue any Republican who dares to propose real reforms of these programs, and then brag about any resulting election victories.
So, the next time you hear Democrats pretend to be deficit hawks, ask them what their plan is to bring entitlement spending under control.