Maya MacGuineas: Standing Strong Against Increasing the National Debt
Maya MacGuineas is president of the nonpartisan Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt. She recently wrote an op-ed for The Daily Reflector. It is reposted here.
Congress is on the verge of passing major tax legislation. Sadly, in the rush to get it done many lawmakers are ignoring how the bill will affect the growing national debt.
Fortunately, Congressman Walter Jones is one of the few exceptions in Washington. He has long opposed government spending that adds to the debt and, consistent with his principles, is now calling for fiscally responsible tax reform.
More lawmakers should follow his example. Fiscal conservatism cannot apply to just one side of the federal ledger.
Yes, we must definitely reduce government spending, but regrettably, the federal budget resolution passed by Congress earlier this year offered no real plan to control spending or tackle the debt. Instead, it opened the door for tax cuts to add $1.5 trillion to deficits over a decade.
We need responsible stewardship of the nation’s finances now more than ever. This is not the time to explode the debt and hope that it magically fixes itself.
Not only is the gross debt is now over $20 trillion, but it is on course to grow by some $10 trillion more over the next decade and continue rising thereafter. National debt at such levels poses a serious threat to our economy and way of life. Unpaid for tax cuts will only worsen this already dire state of affairs, with the legislation before Congress potentially adding an additional $2 trillion once you factor in gimmicks that hide its true cost, as well as the added interest payments.
This is unfortunate, for we have a rare opportunity to transform the outmoded and convoluted U.S. tax system to make it simpler and fairer, as well as more efficient and globally competitive. Doing it the right way can unleash economic growth and provide more jobs and a better quality of life for all Americans. But digging the debt hole even deeper will nullify the economic benefits of tax reform, especially in the long term.
That is why a key pillar of tax reform must be that it not add to the national debt. Fortunately, eliminating or limiting the numerous loopholes in the tax code could more than pay for reducing tax rates. Such tax breaks total about $1.6 trillion in 2017 alone. The current tax legislation makes some moves in the right direction by addressing a few of these tax expenditures, but some of the largest ones remain virtually untouched.
While some claim that the additional economic growth generated from deficit-financed tax cuts will pay for their cost, the mounting evidence says otherwise. All the reasonable analyses of the tax legislation that account for the effects of stronger economic growth still show the tax cuts adding to the debt.
Although there may be a slight burst of growth in the short term, in the longer run the increased debt from the tax cuts will actually drag down growth. In the end, we will leave our children and grandchildren a massive bill for our tax cuts in the form of higher debt.
Instead of wishful thinking, we need real leadership that reaffirms the constitutional obligation of Congress to earnestly and wisely manage public funds. Lawmakers should be creating a blueprint for getting our nation’s finances in order, not passing tax cuts that add even more to an already unsustainable situation.
There is just no getting around the fact that growing the economy in a profound and lasting way will require getting the national debt under control. Congress and President Trump must make this a priority by tackling spending in all areas of the federal budget and creating a tax code that meets our needs.
Washington still has time to enact real, responsible tax reform. But lawmakers need to listen to leaders like Representative Jones.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the Committee.