President Trump offered a simple justification for tax reform: “priming the pump.” That phrase has invited bored writers to consider the etymology of ‘priming the pump’ (The New York Times has a guide). But here as he so often does, Trump has distracted the media, which has gone onto etymology and history.
But math is the real story here.
In his interview, Trump explained that “It’s okay” if tax reform raises the deficit, “because it won’t increase [the deficit] for long.” Supporting his boss, Trump’s Treasury Secretary Steve Mnuchin claimed: “economic growth … could increase revenues as much as $2 trillion over the ten-year period of time.”
It’s the perfect feel-good message: cut taxes while raising revenue!
Unfortunately, it’s also a prime example of the Washington unseriousness Trump once lamented. The facts, fundamentally, do not support Trump’s thesis.
As Brookings scholar Robert Pozen notes, factoring in greater economic growth, most studies suggest Trump’s plan would increase the deficit by at least $4 trillion – and more likely around $8 trillion – over the next ten years. Assuming those studies are even remotely accurate, to actually add $2 trillion in revenue, as Mnuchin asserts, would require economic growth at unprecedented – and unbelievable – rates. And accounting for Trump’s increased defense spending and reluctance to reform entitlements, his proposed spending cuts cannot balance the equation.
That makes Trump’s pump-prime-plan a platitude. It veils deep economic issues with the veil of feel-good mathematical falsities. Valid defenses exist for Trump’s tax plan. Reducing the deficit is not one.
Though some say otherwise, the deficit and the debt matter. For one, as interest rates increase in the years ahead (and they will), paying off the debt interest will become its own crisis. As I noted last year, “the CBO believes that net interest payments on the debt will rise from 1.4 percent of GDP today to 5.8 percent of GDP in 2046. To put that in perspective, had the U.S. spent an extra 4.4 percent GDP on debt service in 2015, it would have added $790 billion to the federal budget deficit.” Our children will have to pay these bills.
Yet it’s not just about the money.
To truly prime the pump; to lay the long-term foundation for economic growth, America must confront our deeper economic ills. And that requires Trump to match his regulatory reforms to bold education and welfare reforms.
Tough choices will be needed. Entitlement reform, for example, is politically challenging but eminently possible. Passing bi-partisan legislation is complicated but necessary. Tax simplification is preferable but requires true courage (we should eliminate all deductions, including those that pertain to mortgage interest and charitable donations, and tax employer-provided health care).
Absent bold action, Trump’s efforts at priming the pump will be for nothing. Sure, it will keep voters happy in the short term. But over time, America’s economic pump will sputter.
Tom Rogan (@TomRtweets) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a foreign policy columnist for National Review, a domestic policy columnist for Opportunity Lives, a former panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute.
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