We spoke at a town hall in Boone this past January after the Republican tax cut passed, and agreed that the proof of its value would be whether it would produce increased revenue – whether it “pays” for itself.
The figures are in for fiscal year 2018: the deficit was up by 17 percent to $779 billion over the previous fiscal year. The Congressional Budget Office reports that tax receipts rose by only $14 billion dollars or just four tenths of a percent. The Committee for a Responsible Federal Budget reports that that is the eighth lowest growth rate in the last 50 years; the other seven years coincided with a recession or tax cuts/expiring tax increases enacted shortly after a recession.
And those numbers would have been even worse because the fiscal year included three months of revenue before the tax cuts went into effect. The tax cut was by far the largest factor in the deficit increase at $164 billion, enough to cover the entire $113 billion increase in the deficit.
Everyone knew this would happen. The CBO said it would, but Republicans chose to ignore those figures; they didn’t care that it would cause massive debt. The cut has NOT paid for itself; such cuts NEVER have. And now after blowing a hole in the budget, Republicans suddenly care about the deficit and the majority leader has raised the possibility of cutting Medicare, Medicaid and Social Security.
I imagine you will assert that the .4 percent increase shows there was growth in tax receipts but it didn’t keep up with increase in federal spending – which rose about 3 percent. But both revenue and spending normally grow every year and during President Obama’s second term revenue grew by more than 7 PERCENT PER YEAR. The deviation from normal growth is all due to the tax cut.
Are you prepared to admit that the tax cut, in the midst of a strong economy that didn’t need significant stimulus, was the wrong move? Do you concur with Majority Leader Mitch McConnell that entitlements must be cut, either for present and near beneficiaries or the generation now entering the workforce?
by Thomas O’Donnell
Posted 11/28/18
6 Comments on "An Open Letter To Joni Ernst On Tax Cuts And Deficits"
I really appreciate receiving the news as delivered in this report on the tax program and its negative results and the other information you send out. Thank you very much.
Please stop using the term “entitlements” – especially using the meaning that Right has “assigned” to the term. Using it, without clarification at least, lets them continue to set the narrative. Try using “earned benefits” instead. That’s a lot closer to the truth, and hasn’t been co-opted by the Right, yet.
And cutting SS, Medicaid and Medicare? I’ll wager that was the idea, all along. They HAD to know that the deficit would balloon. And look at one the major architects of the tax cuts – Paul Ryan, who is on record as wanting to gut those benefits, Especially Social Security.
Joni Ernst, along with the rest of her wrecking crew, have a LOT to answer for. That is a great “letter”, Thomas. Would that she might actually read it and take it to heart.
Cutting taxes and vilifying the government are not “Making America Great Again.” Ronald Reagan, and Herbert Hoover both subscribed to Herbert Spencer’s 1870 theory of Survival of the Fittest, both physically and economically. We have heard the Hoover mantra of “Rugged Individualism,” and Reagan’s mantra of “Trickle Down Economics.” Hoover’s theory involves Spencer’s misguided idea that government should not provide public education, but rather the European model of the wealthy paying tuition for their children and the poor not receiving education for their children, no matter how much potential they might have. “Trickle Down Economics” was first used as an argument against Theodore Roosevelt’s trust busting in the early 1900’s. These were ideas that were strongly embraced by John Rockefeller, Andrew Carnegie, and Thomas Edison; some of the wealthiest citizens of that time period. Spencer was a citizen of England. His opposition to any form of public assistance was predicated upon his opposition to England establishing a more social driven approach to caring for the poor and unhealthy members of its society. Trump is taking us back to the mentality of Spencer’s time, claiming this will make America Great Again, while it ultimately decimates our economy by creating an even greater economic divide between the top .1% of our society and the lower 99.9%. We see this evolving as his wrong notion-ed tariffs on steel and his blustery threats to undermine businesses in this country that have to make critical adjustments due to the president’s economic incompetence and malfeasance.
I should note that this dismal fiscal performance comes during a strong economy, when the treasury should be raking it in and paying DOWN the debt. Deficits must be run in recessions to keep the economy going. In good times revenue should increase to cover expenses. Except that Republicans keep cutting taxes. For them, there’s never a bad time to cut taxes. In a recession? Gotta give the rich a cut to stimulate things. In a boom? Gotta cut taxes because there’s lots of money around! And when the deficit rise, well, it’s always because of spending.
Are you prepared to admit that the tax cut, in the midst of a strong economy that didn’t need significant stimulus, was the wrong move? Do you concur with Majority Leader Mitch McConnell that entitlements must be cut, either for present and near beneficiaries or the generation now entering the workforce? You made a BIG mistake and we, The American People, are going to pay for it. How are you going to make it right for us?
Continuing the lies that federal spending is funding by taxes, and that the “national debt” (i.e. the money supply) will be a burden on future generations. the “deficit” is a boogeyman term to keep the people at each others throat, when they should be throttling the corporations and their media and political mongrels.
People need to wake up and learn about Modern Monetary theory. YouTube is a good place to start. https://www.youtube.com/results?search_query=modern+monetary+theory+explained