WASHINGTON — The Concord Coalition said today that fiscal policy has taken a very negative turn with adoption of the 2018 congressional budget resolution explicitly calling for deficit-financed tax cuts.
“In the face of a debt burden higher than at any time since the end of World War II and with annual deficits already projected to rise in the coming decades as retirement and health care spending steadily mounts with the long-foreseen aging of the population, President Trump and Republican congressional leaders are placing a huge bet that we can borrow our way to prosperity,” said Robert L. Bixby, Concord’s executive director. “Their enthusiastic embrace of a $1.5 trillion deficit-financed tax cut is risky business and deeply disappointing.”
The main purpose of any budget should be to set priorities and make the necessary trade-offs. This budget, which the House approved today, fails that test. Its main purpose is to cut taxes, not to make hard choices and cut the deficit.
If Republican leaders had wanted to cut the deficit while cutting taxes in a more responsible way they could have adopted the approach taken earlier by the House, which called for deficit-neutral tax reform and $200 billion of enforceable spending cuts. The Senate, however, removed these two provisions. What’s left is a combination of enforceable tax cuts, phantom spending cuts and an unrealistically rosy economic scenario.
“While justified by some as a way to grow the economy, the long-term effect of deficit-financed tax cuts would likely be to slow economic growth and make a bad long-term fiscal outlook even worse,” Bixby said.
There is still time, however, for elected officials to chart a more responsible path. The budget resolution is simply a blueprint. It is not legislation. As Congress and President Trump now begin to write a tax reform bill, The Concord Coalition urges them not to base their plan on the unlikely proposition that large tax cuts will pay for themselves.