I, for one, welcome our new debt-concerned Democrats.
As the tax reform debate wages in Washington, those on the left are assailing GOP plans from an unusual vantage: our national debt. Some estimates indicate the reform proposals will add $1.5 trillion to the national debt over 10 years. That is why some Democrats claim they oppose the reforms.
It is a reasonable, responsible rationale. So, of course, in this political environment, it comes into question. When President Barack Obama took office in 2009 the national debt was about $11 trillion. When he left in 2017, it was flirting with $20 trillion. Thus, in some world, goosing up America’s burden was acceptable — even admirable — when it was driven by direct government spending under a Democratic president. You can see why it is hard not to raise an eyebrow at the left’s newfound concern for the finances of future generations.
Of course, Republicans don’t fare particularly well, either. They held the purse strings from 2010 onward, feeding their insatiable spending appetite along with the president. They were fine blaming the White House as America accelerated toward a debt cliff, as long as they were able to avoid hard choices about taxes and spending.
Ladies and gentlemen, time is up.
Yes, the GOP tax reform proposal (under some analyses) may add about $150 billion to the annual deficit — the difference between what is collected and what is spent. But what do you think the deficit is today? If Republicans are unsuccessful in changing the tax code, how much debt are American taxpayers taking on in 2017?
By 2027, assuming no changes in the tax code and continued spending growth, the annual deficit will be nearly $1.5 trillion in that single year. Or, put another way, the entire estimated cost of the tax reform proposal pending in Congress.
If Americans are truly concerned about our ever-increasing debt, it is time to confront it head on. If we are going to fix this, we need to deal with the profligate spending in Washington. That includes acknowledging that we can’t have everything we want and some good ideas will go wanting. On its current trajectory, Social Security will become insolvent in the next 17 years, unable to pay the full amount of its scheduled benefits.
Tax reform is integral to this effort. Lobbyists have adeptly hidden what would normally be government spending behind layers of tax provisions. Billions of dollars are “spent” annually in the tax credit racket for affordable housing, with fewer units being built annually than in 1998.
“Carried interest” is a scam from Wall Street, with high-powered hedge fund managers pretending to be 18th century captains of merchant vessels, paid from the proceeds of their wares carried across the sea. For all the “risk” they take, braving the dangers of Uber drivers and burnt coffee, they are taxed as if their earnings were gains on capital.
And the third rail of reform, the mortgage interest deduction, is not limited to your home. The interest charged by a bank on a mortgage secured by a second house — up to $1.1 million — can be written off your taxes.
There are countless other provisions that are in dire need of attention. And, fortunately, the Republican Congress is on the right path, attempting to reduce the complexity of the code and to remove perverse results — like small businesses paying higher rates than large corporations.
Additionally, they are focused on eliminating the incentive for American companies to stash earnings overseas. If those dollars come back onshore, they will likely find their way into the hands of institutional investors like public employee pension funds, or spent chasing new business opportunities. Both options will work to decrease the deficit, the former by reducing the costs required of government, the latter by increasing tax revenue from economic growth.
But, no matter what happens with tax reform, we will still be faced with a spending problem. It is time for our elected officials to lead, treat Americans like adults, and say “no, we can’t afford” whatever good idea people come up with.
Hopefully debt-concerned Democrats will hear that message, too.