Our federal budget deficit was over $400 billion last year. Yet after months of legislative defeat, it looks like the Republicans in Congress are poised to push through the biggest tax cut in a generation, making the massive cuts in rates forced through by George W. Bush's team in spring 2001 look like small change. Those 2001 cuts, we should all remember, turned a hard-won balanced federal budget back into deficits just after we had started to pay down $6 trillion (six thousand billion dollars) in debt accumulated since Reagan's giant tax cuts in the early 1980s. Without these utterly foolish 2001 tax cuts, our federal debt would have been entirely paid off before Bush's second term ended. This especially holds if a modest surtax had been added to pay for the two wars.
As in the last two rounds, it looks like the Democrats do not mean to put up much of a fight this time either, fearing that any opposition to tax cuts is too dangerous. One sees hardly any Democratic leaders on TV speaking against the Trump tax gutting. It was almost impossible in 1993 for Bill Clinton to get Democrats to vote for the tax increases on top and middle rates that finally led to a balanced budget by 1999, but Clinton made the moral case for it: we have no right to mortgage our children's future more and more to allow ourselves present luxuries. It is utterly shameful and dangerous that we, the American people, have collectively allowed the federal debt to top $20 trillion -- 20 million million dollars! -- by handing ourselves tax cuts rather than paying for our wars. Every day our nation looks more like a pyramid scheme designed to steal from our children and grandchildren. Projections were already for the debt to increase under current law and the Trump cuts will make this far worse. Of course we should cut spending too: the bipartisan Simpson-Bowles commission on fiscal reform sensibly recommended a plan that closed the deficit half through spending cuts and half through tax increases.
But our Treasury Secretary Steve Mnuchin and his Wall St. friends assure us that the tax cuts will "pay for themselves"! After this insult to our intelligence, why aren't we pelting these people with rotten eggs and rioting in the streets? Do friends still invite them for coffee or send them cards? Why aren't Democratic leaders jamming every possible forum to cry foul and call Trump's tax plan advocates bald-faced liars? We were told by Reagan that his tax cuts would grow the economy enough that the lower rates would actually net more revenue; famously, that supply side theory proved false (and he was starting from much higher top rates). We were told again by G.W. Bush that his tax cuts would pay for themselves -- and again that did not happen: instead massive annual deficits returned, recharging the federal debt. Are we going to be fooled by this deception yet a third time, with another massive giveaway introduced (like the 2001 cuts) when the nation already has a low unemployment rate and we are ramping up our deployments in Afghanistan, with other conflicts looming on the horizon?
If Americans fall for this deadly deception a third time in 35 years, it will balloon the $220 billion we already spend each year just on national debt interest payments -- almost 8 times what we spend on federal Pell grants for college education. Worse, Trump’s revenue-buster may well make federal default inevitable. I could not honestly advise anyone's children to remain in the US if this tax cut passes. It will probably prove to be the final nail in America's decline. Nor is the Trump plan likely to help the 10% of American adults who have given up on looking for full-time employment due to no physical disability nor to financial fortune (including comfortable retirement). For 5% of the cost of Trump’s proposed tax cut (a.k.a. Goldman Giveaway), we could fund the best set of adult education pathways into growth industries since the G.I. Bill.
I'm not opposed to lowering the nominal corporate tax rate and creating incentives to keep jobs in the US -- as long as enough loopholes are closed to ensure that more corporations actually pay something on their profits (at least 10%), so that the reform is at least revenue-neutral. I'm not against simplifying the code for small pass-through businesses and for individuals. But there should at least be offsetting increases in the top rates; in particular, the capital gains rate should be more steeply graduated to place a higher rate on gains over $1 million per annum, and the estate tax should also be graduated with higher rates on the largest estates. Smart tax reform could improve the business environment, keep more jobs at home, and increase total revenue to reduce the deficit. But this is not what Trump and Co. are trying to do. Instead, they hope to pay for tax cuts for the richest Americans by eliminating deductions for state taxes and property taxes needed by the middle class. This massive hit will slam states that are already struggling and reward some red states.
I am not opposed to all deficit spending. Such spending is justified when necessary to pull the economy out of a deep nosedive and prevent a depression -- as it was in spring 2009. Yet at that time, libertarian fanatics like Grover Norquist howled that Democrats were increasing the deficit -- as if there were any other responsible option. Opposition to Obama's stimulus was a rallying cry of the early Tea Party. Amazingly, these hypocrites now support a tax cut that will massively expand the deficit and debt when the economy needs no stimulus -- just as in 2001. In fact, in addition to piling on yet more debt, this tax cut might well fuel the next major speculative bubble. When it bursts, we may find that this time we really cannot borrow even more to stimulate our way out of it again.
One thing is clear. Every American high school student needs to learn at least a little Economics 101 and the history of federal tax rates, deficits, and debt, including our spending on social programs and defense. State laws should require this. Without this minimum of Civics and Economics, we have become a people ensnared and manipulated by charlatans selling fiscal snake oil. The sophists peddling these lies will be long gone to their offshore island bank accounts when the country finally faces austerity like nothing seen since the Great Depression. If the “unborn” could sue, they should go to the Supreme Court to block this disaster.With $20 trillion in debt, Trump's tax cut is literally an obscenity, a rape of our collective the future.