Senate Budget Should Pursue Fiscally Responsible Tax Reform, Not Unpaid-for Tax Cuts
For Immediate Release
Reports suggest that the Senate Budget Committee is considering a budget resolution that allows for $1.5 trillion dollars in deficit-financed tax cuts.
Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, released the following statement:
The President and Members of Congress have spent years warning of our large and growing national debt and have said their goal was to pursue tax reform that doesn’t make that debt worse. It is extremely disheartening that the Senate budget may be abandoning that commitment.
With our debt at record levels and set to rise for the foreseeable future, adding another $1.5 trillion tax cut to the debt would be remarkably irresponsible. $1.5 trillion in tax cuts could result in debt as large as the economy in just over a decade and take us into uncharted waters after that. This debt-dependent approach to tax reform flies in the face of the fiscal discipline so many members of the Budget Committee have voiced concern about in the past and violates pay-as-you-go principles and law.
Tax reform should be a major national priority and a key to promoting economic growth. But tax reform that blows up the debt could actually slow the economy and reduce wages, undermining the very goal of tax reform. There are many options for offsetting the costs including broadening the tax base, trading rate reductions for a new revenue stream, and cutting spending. None of these choices are easy, but paying for things rarely is – that doesn’t mean you shouldn’t. Tax cuts don’t pay for themselves; math still matters; and you can’t click your heels and wish for tax cuts to be free.
Moreover, the arguments being made to allow for $1.5 trillion of tax cuts – dynamic scoring and current policy adjustments – are disingenuous and at best can help explain a small fraction of this massive tax cut.
For a better approach, the Senate should look no further than the budget resolution passed by the House Budget Committee in July, which called for tax reform to be revenue neutral relative to current law and proposed at least $200 billion in spending cuts on top of that through reconciliation. Budgets that call for reducing deficits should facilitate such deficit reduction; the rumored Senate budget would make a bad situation worse.
Importantly, the Senate Budget Committee has not released its budget yet, and there is still time to be fiscally responsible. Senators should ask themselves whether they are going to take the easy road and pursue unpaid-for tax cuts that worsen our dangerous national debt, or use this once in a generation opportunity to pass fiscally responsible, pro-growth tax reform.
For more information contact Matt Bylis at firstname.lastname@example.org.
For comprehensive information on tax reform, check out CRFB’s Resources for Tax Reform.