Breaking: A Republican accidentally told the truth about tax cuts.
They promised that the tax cuts would help the middle class more than the rich (false). At one point, they even promised that the rich wouldn’t benefit at all (hilariously false). And they promised the Tax Cuts and Jobs Act, as it was known, would permanently turbocharge economic and wage growth, through turbocharged capital investment (so far, also apparently false).
Finally, there was the promise that, thanks to all that turbocharging, the tax overhaul wouldn’t cost Uncle Sam a dime. Some, including Brady, even sometimes claimed the law would increase tax revenue and reduce deficits.
Never mind that every independent forecaster — including the Penn-Wharton Budget Model, Tax Policy Center, Tax Foundation and Wall Street economic analysts — said no, the law would definitely increase deficits. Congress’s own neutral internal scorekeeper, the Congressional Budget Office, estimated that even after accounting for macroeconomic effects, the tax overhaul would add $1.9 trillion in red ink.
Republicans still swore up and down that their tax plan would be fully paid for.
“If I thought that this would exacerbate the deficit, I would not support it,” declared the supposed budget hawk Jeb Hensarling, then a Republican congressman from Texas, as the bill was being jammed through in late 2017.
“We think we can pay for the entire tax cut through growth over the cycle,” echoed Gary Cohn, then Trump’s National Economic Council director.
“The tax cut has paid for itself already barely through the first calendar year,” Cohn’s successor, Larry Kudlow, incorrectly claimed the following year.
Here we are, about a year and a half post-TCJA, and deficits are ballooning. In fact, the deficit is up nearly 40 percent so far in fiscal 2019 relative to the same period a year earlier.
This is striking precisely because the economy is still expanding, as it has for the past decade. For most of the postwar era, when the economy has grown, deficits have shrunk or even converted into surpluses. That’s because a growing economy usually brings in higher tax revenue and a reduced need for safety-net programs such as food stamps and unemployment benefits. Except in times of war, it’s highly unusual for a growing economy to be met with a growing deficit.
At the Peter G. Peterson Foundation’s annual Fiscal Summit this week, my colleague Heather Long asked Brady about this departure from trend.
“What percent [of the tax cuts] do you think is paid for?” she asked.
Rather than repeating his one-time promise of deficit neutrality, he said that it was “hard to know” how much of the cost of the tax cut would ever be recouped.
“There’s going to be a hundred estimates,” he said when asked specifically about the CBO’s dismal forecasts. He did not acknowledge, of course, that however many independent estimates have been published thus far, not one of them supports the promises his party had made when it passed this law.
He also assured the audience: “I don’t think anything could have been worse for the deficit than to stick with the old economy and stick with the tax code that was so outdated.”
Which is funny, because we know there’s at least one tax system “worse for the deficit” than the tax system we had before: the one Brady helped usher into place.
None of this should be surprising.
We knew Republicans were lying about whether tax cuts would pay for themselves in 2017. Just as they lied about whether they paid for themselves under President Ronald Reagan during the 1980s, or under President George W. Bush during the 2000s, or in Kansas just a few years ago.
Faced with inconvenient budget estimates from independent analysts, Republicans recycle the same playbook: attack the referees, credulously cite the inflated forecasts of their own hacks-for-hire, then act surprised when reality comes up short. Even the same always-wrong “experts” recur. One, Arthur Laffer, has proved so useful over the past 40 years of budgetary baiting-and-switching that Trump just awarded him the Presidential Medal of Freedom.
Maybe Brady realizes he kinda-sorta spoke out of turn. But maybe he also knows that his party has yet to face consequences for any of its fiscal failures.
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