“Though America really doesn’t need a tax cut — demographic pressures alone suggest the need for more, not less, future revenues — President Trump and the Republican majority want one. But they don’t want to pay for it, which means the budget deficit is going to rise. Based on what we’ve seen so far, the increase in the deficit could be at least $1.5 trillion over 10 years.
Perhaps this surprises you, as you’ve long heard Republicans cry about deficits and debt. But any such tears are of the crocodile variety. When it comes to increasing the budget deficit, the impact of this tax plan is no different from any of their others.Back in 2015, I testified at a hearing on these issues before the House Budget Committee. One after another, Republican members on the committee denounced rising debt levels. Why then, I asked, do you want to cut taxes? Their answer: It’s spending, not tax cuts, that increases the deficit.
That, of course, is crazy. I don’t mean it’s bad economics, or lousy fiscal policy. I mean it’s disconnected from reality, or more precisely, from arithmetic. You can, and they do, make arguments about how growth effects will make up the difference, despite the complete lack of empirical evidence to support such claims. Indeed, rumor is that Mr. Trump has his economics team ginning up a “dynamic growth model” that will spit out phony growth effects offsetting much of the cost of their tax cut.”