I wrote most of this Saturday morning but have let it set for a few days so that I could cool off and read more sober opinions of the GOP “tax cut”. Reflection has not changed my opinion much so the post now goes, largely unaltered except for the paragraph slamming the Democrats.
On Friday night, the GOP engaged in act of legislative chicanery that makes Obamacare look like the Magna Carta. Early in the morning, they passed a half-baked, half-assed “tax reform” bill that literally had hand-written corrections on it. This bill had no hearings, had not been read and rewrites a massive section of the US economy.
What we do know about it makes it one of the most irresponsible pieces of legislation I can remember. It purports to be “tax reform” but it doesn’t actually reform taxes very much. It doesn’t eliminate any rules — in fact, it expands them. It has some good changes — faster expensing and depreciation, better child tax credit, putting some Obama Admin regs into writing. But mostly it simply cuts tax rates and uses various pieces of gimmickry to get the hole it blows in the budget down to $1.5 trillion. And that topline number is largely garbage. It is unlikely that future Congresses — Republican or Democrat — will allow the planned tax hikes on the middle class to occur. I would estimate the cost of this tax cut as “more many than you can shake a stick at”. And this is when we are already facing trillions of dollars in future deficits. As I have said many times, a tax cut that runs up debt is not a tax cut. It’s simply a shell game, moving the burden from current taxpayers to future ones.
That’s apart from the other things that the bill does. Reconciliation may change things but the current iteration would hit higher education with taxes, hit high-tax states and hit students loan debtors. It repeals the Obamacare mandate, which will result in millions of people losing in insurance and probably tip insurance markets into a death spiral (since community rating and pre-existing protections are still in place, people can now wait until they’re sick to buy insurance).
You can see, in the smoldering wreckage, the vision of real tax reform. One that eliminated loopholes and cut the rate down to its actual effective rate of 25%. One that had the Rubio-Lee Amendment to give more money to families with children (our fertility rate has now plunged below replacement level). But in their rush to pass anything, the GOP put together this Frankensteinian monstrosity.
The defenders of this bill are citing all kinds of debunked horse manure to try to pretend that it’s not that bad. Just to address a few of these:
- Tax cuts do not pay for themselves. In theory, this might work when marginal rates are very high. But in practice, we are well on the downslope of the Laffer Curve. Reagan’s tax cuts did not pay for themselves, which is why he had to raise taxes multiple times. Bush’s did not, which is how we ended up with the nation’s first trillion dollar deficit.
- A lot of people are dragging out the “starve the beast” line, that decreased revenues will force spending cuts. This idea is pure garbage. It doesn’t work in theory. It doesn’t work in practice. If anything, starve the beast encourages more spending because the public gets the idea that government spending is free.
- The stimulating effects of this tax cut on the economy are, at best, unclear. While tax cuts can stimulate the economy, broad rate cuts are a less than ideal way to do so. And this bill does nothing to eliminate the deadweight loss of the tax system since it doesn’t actually simplify the tax system.
We are on a dangerous fiscal course right now. Trump and his policies will eventually bring Democrats back to power. Democrats, being nearly as useless as Republicans, will not only not reverse the tax cuts, they will massively increase spending. As the debt soars out of control, the economy will be hurt and we will find ourselves facing down a financial crisis the likes of which we have never seen. If the trip to bankruptcy started with Bush and continued through Obama, it has now been given a jolt of gas from the GOP. After years of holding Obama to flat spending and cutting the deficit by two-thirds, they’ve thrown everything out the window. This year’s debt alone is slated to be around $800 billion.
The thing that I realized Friday night is that the GOP I knew and was a part of for so long is dead. This is now the party of Trump. Trump is financially irresponsible, amoral, filled with imagined resentments and doesn’t give a damn about anyone other than himself. That is the GOP now. They’ve blown another hole in the debt, are about to elect a child molester in Alabama, spend their time raging against “liberal elites” and no longer care about the debt as long as they get their damn tax cut.
I’m done with them. All the real conservatives are leaving the party. I’ve long been on the other side of the road, but this is where I burn the bridge.
I won’t vote Democrat, since they are almost as bad. One need only see the response to the GOP tax cut to realize that. Cries that it is a “war on America” or that “millions” will die as a result of it are not the statements of a sane party. And their alternative to GOP fiscal recklessness is … more fiscal recklessness.
There is no longer a conservative party in the United States. There’s the dumbass liberal party and the dumbass populist party. I will not be part of either of those.