If I were to tell you that the loudest deficit hawks of today are Democrats, you’d probably snort your coffee. Yet that’s the bizarro-world reversal of talking points that has ensued from the passage of the Tax Cuts and Jobs Act. Yes, it remains that a number of Republican deficit hawks voiced their concerns over the forecast “cost” of $1.5T over 10 years, but the headlines are being grabbed by the opposition. This is an opposition that made no noise whatsoever regarding the nearly $8T increase in the national debt under Obama, other than when complaining about the “rich” not being taxed hard enough. In this, the GOP and Democratic deficit hawks voice their concerns from the same side, i.e. revenues. It is the rare Republican bird and the nonexistent Democratic one that warbles any lament over spending.
The Democrats’ motives are obvious. Not only do they like spending, but they want to deny the GOP any victories ahead of the mid-term election (and their shrill opposition makes it pretty clear that they see this tax bill as a win for Trump and the Republicans). The GOP and deficit hawks, on the other hand? They’ve too little focus on spending.
Indeed, even the Trump White House has made little noise about overall spending, other than to note that its not a priority. While headlines are being made by individual cuts (e.g. UN funding, hear hear!), the broader picture is being mostly ignored. Yes, there was a brief grumble about looking to tackle entitlements from the Paul Ryan camp, but that got quashed by the McConnell camp. Entitlements remain the third rail of American politics, despite the fact that entitlements will be what destroys the nation’s finances and economy.
But, even if we set aside entitlement reform as political kryptonite, we still see remarkable indifference to excessive spending. It recently came to light that then-Senator Harry Reid saw to it that $22M of taxpayers’ money was spent on a friend’s UFO research. A drop in the bucket, relatively speaking, but there are MANY such drops, and way too few politicians who challenge these absurdities.
Then there’s the matter of money poorly spent. It’s estimated that the Pentagon loses $25B a year in duplication alone, that Medicare makes $60B a year in improper payments, that Social Security makes $10B a year in improper payments, and that $25B a year simply cannot be accounted for. Beyond that, inefficiency, poor money management, useless programs, duplicate programs, idle properties, bad budgeting, practices that would cost any private-sector CFO his job, and a list of pointless programs too long to imagine swirl untold billions in taxpayer and borrowed money down the drain.
But, talk of letting people keep more of their money via tax cuts – THAT is what spawns moral outrage and doomsday predictions. Worse, many people legitimately concerned about the spiraling debt are lured into that line of thought.
The “cost” of the new tax bill, $150B (4% of the 2017 budget) a year over the next decade, is probably overstated (and, yes, the scare quotes around “cost” are deliberate. It is offensive to claim that letting people keep more of what they earned “costs” the government. It is their money, not the government’s), given that the rules by which the figure is calculated assume static rather than adaptive behavior. But, even if true, it could be offset and then some by better money management.
Unfortunately, no one gives a [bleep] about managing money better, or about cutting spending. Politics is about other people’s money and how to use it in order to get re-elected, so most politicians battle to bring home the bacon, not trim the fat. Those few that try to blow the whistle on waste get ignored or drowned out by the others, and by ridiculous assertions like Nancy Pelosi’s “The cupboard is bare. There’s no more cuts to make. It’s really important that people understand that.”
Deficits are a spending problem, not a revenue problem. Even those golden, untouchable entitlement programs are bankrupt because of spending, not because of revenue. And, yet, people are FAR too quick to squawk about tax cuts, and FAR too complacent about waste, inefficiency and fraud, when the matter of the deficit and the debt are brought up. This is reinforced by cynical politicians and bureaucrats, who’ll engage in blatant but effective gimmicks (aka Washinton Monument Syndrome) whenever talks of cutting spending arise. And by numbers-game stunts like quoting the 10 year “cost” of the tax cut package, while talking about budgets and deficits in annual terms
How should those who worry about deficits and the debt respond? Not by opposing tax cuts on “fiscal responsibility” grounds. I embrace the Milton Friedman view: “I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible,” as I think everyone else should. It should be pretty obvious that we’re not going to tax our way to wiping out the deficit or the debt, so we shouldn’t freak out about cutting tax rates either. In fact, government tax revenues have held remarkably steady as a percentage of GDP, no matter the rates or provisions of the tax code. This tells us that the tax code should be structured to maximize economic growth, because X% of a faster-growing pie is more than X% of a stagnating pie. Lower taxes are economically stimulative, and I’d love to see the government cut taxes even more a couple years from now.
Deficit hawks should properly turn their focus to spending. Heck, everyone should demand that government better manage our money. Even if you’re a strong believer in big government and social programs, you should want better money management. Clearly, the fraudsters and those milking the government for their useless programs and pointless paychecks will object, and they’re not going to go away without a fight, but no one should simply accept the mind-boggling waste and fraud as an unavoidable cost of doing government.
As many have paraphrased an infamous James Carville sound bite, “It’s the spending, stupid!”
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Excellent points. It’s difficult to get Democrats to see it isn’t their money.