Republicans in Congress are trying to sort out a budget plan that would implement Trump’s tax cuts to reduce the deficit without cutting social programs. But something isn’t adding up, Jim VandeHei and Mike Allen write at Axios.
“Most politicians agree on three truths: We have a spending problem (too much), a tax problem (too high or too low), and a debt problem (way too much). Yet the typical response is: Make all three worse,” they write.
“This truism sits at the very heart of Republicans' fight over a grand budget deal. They're trying to convince their members, and the American public, that you can take in less money (taxes), spend more on defense — and somehow reduce deficits without touching the programs that cost the most,” they continue.
Trump has promised not to cut Medicare, Medicaid, and Social Security. Implementing his plan without “gutting” these programs is a “mathematical impossibility,” according to the authors. A possible fix would be higher taxes, but that idea is popular among Democrats, not Republicans. “No shot of that in this Congress. But it's an option!” they write.
The Republican plan would be to cut taxes by $4.5 trillion over 10 years. This would be an extension of Trump’s 2017 tax cuts, which cut, among other things, the corporate income tax rate. VandeHei and Allen point out that some tax cuts can grow the economy, but others not so much.
“Trump wants to exempt tip income and overtime pay from taxation, and loosen a cap on the deductibility of state and local taxes. Those provisions, Axios chief economic correspondent Neil Irwinwrites, would shift the tax burden away from specific classes of people (servers, people who put in a lot of overtime, and residents of high-tax states) and leave less room for pro-growth tax cuts,” they write.
Trump also wants tariffs, which would slow economic growth by making products more expensive.
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This kind of logic is not unique to the Trump era; past presidents have failed to fix the deficit. “Washington is a city of magical thinking — both parties practice it,” they write. “Hence, insane deficits under Presidents Biden, Trump, Obama and Bush. We'll grow our way of it! Even if we never do. Washington is not a city of math thinking. It's too inconvenient to apply common-sense arithmetic. Instead, you get wonky ‘dynamic scoring,’ ‘budget windows’ and ‘future growth.’"
“The solution is always in a future that never comes,” they add.