Cokie and Steven V. Roberts: Magic bullets and fairy dust
By Cokie Roberts and Steven V. Roberts
At the core of the Republican tax measures now rushing through Congress is a big, fat falsehood: Tax cuts, goes the fantasy, generate so much economic activity and government revenue that they pay for themselves and don’t increase the deficit.
This claim, made repeatedly by President Trump and his allies, is resoundingly rejected by virtually every independent economist. The nonpartisan Committee for a Responsible Federal Budget says the theory relies on “magic bullets and fairy dust.”
The University of Chicago surveyed 38 academic economists and asked whether the Republican approach would produce “substantially higher” economic growth a decade from now. Exactly one economist said yes.
Tax cuts can stimulate modest growth, especially if the cost is balanced out by revenue-raisers like closed loopholes, but the key word is “modest.” One evaluation from the nonpartisan Tax Policy Center: The House Republican bill would cost $1.44 trillion in lost revenue while generating $169 billion in fresh tax payments — about 11 percent of the shortfall — for a net loss of $1.27 trillion.
Denying this reality is typical of the Trump White House, which lives in a universe of “alternative facts” and rejects any expert opinion that contradicts its prejudices. Take the ongoing effort to purge the State Department of career diplomats whose training and ethics require them to analyze problems through an impartial lens. One ousted official, Linda Thomas-Greenfield, told The New York Times: “I don’t feel targeted as an African-American; I feel targeted as a professional.”
That statement could be echoed by countless civil servants across the government today, and as a result, many Trump policies are based on flawed assumptions. “It’s dangerous to democracy,” Republican Sen. Jeff Flake, a frequent Trump critic, told the Times. “You’ve got to have shared facts.”
The White House doesn’t worry about facts because the tax bill is inherently a political document, not an economic one. It has two main purposes, and the first is simply to pass something — anything — that can be labeled a legislative victory and used as a campaign weapon by Republicans in next year’s elections.
The second purpose is also very short-term: to lower marginal tax rates quickly, even though the reductions are temporary and would expire after nine years.
We covered Ronald Reagan’s tax-cutting crusade in the early 1980s, and he advanced a simple, yet brilliant, slogan: “We’re going to put more money in your pocket.” Trump and Speaker Paul Ryan use almost identical language today, but the larger point is left unstated. The long-term consequence, the tax bill’s devastating impact on future deficits, will be someone else’s problem at some other time.
That’s why the Republicans are rushing the bill through with no public hearings, no chance for critics to expose their myths and falsehoods, and no input from congressional Democrats. Democrats, of course, made a similar mistake when they passed Obamacare with no Republican support. They owned the program, with all of its flaws, just as Republicans will own the tax bill — for better and worse.
Interestingly, the public is not buying the Trumpian myth-making. In a recent Quinnipiac University poll, 52 percent disapproved of the GOP tax plan and only 25 percent were favorable. Sixty-one percent said it would mainly benefit the wealthy and only 36 percent — Trump’s core base of support — accepted the president’s argument that tax cuts would lead to growth and jobs.
Even some Republican officeholders are not buying the myth. Take Kansas, where Gov. Sam Brownback set out to prove in 2014 that tax cuts pay for themselves by generating an economic boom. He failed miserably, triggering a budget gap of almost $900 million. Last June, the Republican-controlled state legislature overrode Brownback’s veto and enacted a tax increase to bridge the shortfall.
Republican Sen. James Lankford of Oklahoma said, “It’s important that we learn some of those lessons that we’ve seen in states” and base policy on “realistic numbers.” He and other deficit hawks are demanding some sort of “trigger” or “backstop” that would automatically raise taxes if Trump’s totally unrealistic projections are not met. And they won’t be.
But that’s a face-saving gimmick. A trigger can always be canceled, and in some cases should be; automatically raising taxes in the midst of a recession is never a good idea.
Republicans who say they care about deficits — who profess to believe policy should be based on “realistic numbers” and not magical thinking, who reject Trump’s world of “alternative facts” — have only one honorable option: Kill the bill. But don’t bet on it.
Steve and Cokie Roberts can be contacted at email@example.com.