The main argument against the Tax Cuts and Jobs Act, or TCJA, was always the legislation’s deficit impact. Tax cuts, we were told, would blow up the deficit, forcing painful cuts to popular entitlement programs like Social Security and Medicare down the line. So when Senate Democrats proposed rolling back approximately $1 trillion worth of the TCJA’s tax cuts, certainly they proposed putting that money back towards the national debt, right?
Of course not.
Senate Democrats proposed a massive, $1 trillion tax hike in order to pay for an infrastructure plan. Apparently #NotOnePenny refers to the amount of money they plan to put towards paying down the debt if they manage to repeal the TCJA.
Of course, arguments about the danger the TCJA posed to the deficit were always misleading to begin with. The National Taxpayers Union Foundation calculated a more complete post-TCJA budgetary baseline by reasonable assumptions about policies that were sunset under the TCJA to comply with the Byrd Rule being extended for longer periods of time. Using this updated baseline, NTUF estimated that, by 2027, the nation’s debt-to-GDP ratio would increase from 111.2 percent to 114.2 percent as a result of the TCJA. The TCJA represents a moderate increase to the nation’s debt — while the law was certainly a substantial increase to the deficit, it was hardly the fiscal “armageddon” it was derided as.
What the Senate Democrats’ plan does do is highlight the truth about our national debt — Americans are not undertaxed. Washington overspends. Legislators pay lip service toward addressing the debt, but generally prefer to increase spending wherever possible.
The passage of the Bipartisan Budget Act embodies this consistent failure of Congress to impose fiscal restraint upon itself. The BBA repealed the discretionary spending caps put in place by the Budget Control Act of 2011, the only major serious congressional effort to address out of control spending in recent years. Prior to repeal, the BCA had saved taxpayers $7,400 per household — if allowed to remain in place, it would have saved taxpayers $16,000 per household by 2021.
Yet instead, the BBA will cost taxpayers well more than $300 billion over the next two years. Assuming that the caps are not put back in place once these two years are up, the ten-year deficit impact of the BBA will far exceed that of the TCJA. Yet the outcry over the impact of the BBA on the debt was relatively muted compared to the response to the TCJA on both sides of the aisle.
Congress’ difficulty in limiting discretionary spending is particularly concerning given the relative ease in cutting it compared to cutting entitlement spending. If Congress cannot rein in discretionary spending, how can it hope to right the fiscal ship by reforming Social Security and Medicare? Growth in entitlement spending needed to be addressed even prior to the passage of the TCJA and the BBA. Entitlement spending is on track to comprise 80 percent of the growth in spending over the next decade, and by 2038 entitlement spending and paying down interest on the debt will consume all federal revenues.
Senate Democrats’ infrastructure proposal demonstrates both the hollowness of their complaints about the TCJA’s impact on the debt, and the unseriousness of their commitment to addressing the national debt. While both parties have displayed hypocrisy on the debt, Republicans at least cut taxes. Congress needs to be cutting spending, not adding to it.
Andrew Wilford (@PolicyWilford) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is an associate policy analyst at the National Taxpayers Union.
