
Renew the Tax Cuts Now!
Incredulously, Congress is deliberating whether we should allow $4.5 trillion to be sucked out of the American people’s pockets during high-interest/hot-inflation times.
A few months ago, I wrote that our conservative politicians would be better off if they stopped passing massive tax cuts each time Republicans take Congress. In what was an impassioned piece, I argued that these tax cuts were not only politically disastrous but also imprudent given the explosion of our national debt. However, this week, I write this column having just called one of my senators in a fit of rage induced by the apathy our Republican lawmakers have shown toward making sure the American people don’t face a massive tax increase that would make the Trump economy look a lot like the Biden one.
What changed between then and now? Witnessing how Democrats will inevitably dub a budget that preserves current tax rates as a “massive tax cut for the rich.” Even just maintaining the status quo is somehow deemed a giveaway to the wealthy, even though reverting to the pre-Tax Cuts and Jobs Act (TCJA) landscape would raise taxes on the 65% of Americans who saw their tax bill decrease following the passage of the 2017 tax bill. The question our Congress is deliberating is whether or not we should allow $4.5 trillion to be sucked out of the American people’s pockets during a time when interest rates are still elevated and inflation is still hot.
In fact, cutting taxes further than that done by the TCJA may be the necessary policy prescription for our current economic moment. Ensuring that businesses can deduct capital investments and cutting the tax on companies that manufacture in America would provide the supply-side stimulus to expand production and drive down prices.
Unfortunately, opposition to supply-side tax policy comes from both left-wing and conservative politicians. The current battle between the House and the Senate threatens our economy — and, ultimately, Republican performance in the next midterm election. Central to this dispute are concerns over whether passing a collection of smaller, more focused bills would be advantageous to passing one “big beautiful bill” that combines many distinct parts of Trump’s agenda into a single piece of legislation.
Now, I sympathize with those who have qualms with stuffing a bunch of unrelated policy proposals into one bill and then demanding Republicans fall in line and vote for it. The existence of massive reconciliation bills that contain both funding for fighting illegal immigration as well as spending and tax cuts is evidence that America’s political system is broken. Even worse, these budget reconciliation bills get filled with indefensible small spending items for politicians’ districts that only get passed when tied to desirable outlays like building a wall on our southern border. Overall, the sheer amount of handwringing that would have to be done (and has been done in the House) by Republican leadership to ensure passage of one bill will neatly set up accusations from the Left that it was passed in a manner inconsistent with our democratic norms.
That said, given the current constraints of Congress, not passing a bill by the start of spring that at a minimum continues the TCJA tax cuts and guts spending — instead punting it to next December — would be a disaster. Not only would giving businesses and individuals the certainty that their taxes won’t increase next year create a springtime supply-side boom, but waiting until next winter puts continuing the tax cuts at risk altogether. After all, by next December, Trump and the current Republican Congress could lose their political capital thanks to the media, who will predictably spin smart proposals like adding work requirements to Medicaid into headlines reading, “Republicans slash your healthcare!”
Beyond the debate over whether “one big beautiful bill” should be passed is the reality that even with a three-vote margin in the Senate, the Squish Squad can be counted on to make passage of any truly conservative reform a nightmare. While it is usually Alaska’s Lisa Murkowski and Maine’s Susan Collins who pose problems for passing conservative legislation in the Senate, even self-proclaimed conservatives like Tennessee’s Marsha Blackburn (call her) cannot be counted on. Last week, Blackburn, along with 28 other Republican senators, voted against Senator Rand Paul’s amendment that would add the House’s spending cuts to the Senate’s budget bill. This amendment’s failure illustrates just how tough it will be over the next year to accomplish substantive conservative reforms despite Republican control of Congress.
The obvious necessity of these supply-side reforms invites inquiry into whether or not the pundits at CNN or the Democrats in Congress actually know that raising taxes would stall the American economy. I suspect they are fully aware that if they had their way, American workers and businesses would be crushed. But maybe that is the point. Let’s just hope Senate Republicans can wake up and defend the American people’s hard-earned money before it is too late.
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