Forget the snows of yesteryear. Where are the deficit hawks of yesterday?
Back when Barack Obama was president, the yearly federal budget deficit, as well as the cumulative national debt, weighed regularly and heavily on conservative minds. That was so even though the big deficits under Barack Obama were caused in large part by the Great Recession, which depressed revenues.
“Our annual deficit [is] completely out of control,” then-minority leader Mitch McConnell declared in January 2011. McConnell was even more alarmed in 2013, declaring the deficit and debt not just a “huge, huge problem,” but “the most important issue confronting the future of our country.”
“We face a crushing burden of debt,” Representative Paul Ryan, the House Republicans’ putative policy polymath, declared in 2011. “The debt will soon eclipse our entire economy and grow to catastrophic levels in the years ahead.”
Many were the battles ostensibly aimed at reducing the budgetary imbalances, even at a time when economists said the weak economy could use the stimulus of deficit spending. Nor was Ryan willing to ease up on the alarm when a recovering economy brought the deficit down substantially. “It seems like they’re just trying to sweep our fiscal problems under the rug and call it a day,” he said in 2013.
But now, the former conservative deficit hawks are lifting the corner of the rug in preparation for some fiscal-problem-sweeping of their own: They are contemplating a tax cut with an official 10-year price tag of $1.5 trillion. A tax cut that the well-regarded, nonpartisan Tax Policy Center projects would actually swell the national debt by $2.4 trillion over the next 10 years, and by $3.4 trillion over the following decade.
So what about conservative deficit concerns? Well, Republicans are taking rhetorical refuge in the notion that, by stimulating the economy, those tax cuts will generate enough new tax revenue to fully or nearly offset their cost. Let’s call that what it is: a discredited
supply-side pipe dream.
“I don’t know any reputable economist who will tell you this is going to pay for itself,” says Stan Collender, a noted federal fiscal expert.
Leading conservative economist Douglas Holtz-Eakin thinks the middle class needs a tax cut, but warns that “tax cuts don’t pay for themselves.” At best, says Holtz-Eakin, who served as director of the Congressional Budget Office from 2003 to 2005, a well-designed tax cut might catalyze enough economic growth to replace a quarter to a third of the revenue it loses.
Which is not to say that this tax-cut package, whose benefits would accrue largely to top earners, would recoup even that fraction of the lost revenue. Not at a time when the economy is no longer laggardly but rather is growing at a 3 percent rate, with the unemployment rate at 4.4 percent.
“It’s hard to see where that growth is going to come from,” notes Collender.
Robert Reischauer, who served as the CBO’s director from 1989 to 1995, says the Republican assumptions that a tax cut package will largely pay for itself are “highly unlikely” to be borne out, and thus something citizens should “reject out of hand.”
The nation faces very serious fiscal challenges even without a deficit-
swelling tax cut, he notes.
“We are going to have to make some very fundamental sacrifices over the next couple of decades if people want their Social Security and Medicare benefits and other public services,” Reischauer notes. “We should be thinking about ways to increase taxes in an equitable way, not betting on the tooth fairy.”
And yet, Republicans in Washington are preparing to mortgage your future to place that bet.
Buyer — no, citizens — beware.