The next time someone says that the tax cuts Republicans in Congress are pushing for will benefit the middle class, show them this.
While Republican deficit hawks have remained remarkably quiet about the sizable $1.7 trillion increase in the deficit if the tax cuts become law, Treasury Secretary Steven Mnuchin — one of the architects of the plan — has consistently argued that the tax cuts will simply pay for themselves with economic growth that he predicts will happen when the tax cuts become fully implemented.
However, the data shows that simply hoping for growth to occur after the fact isn’t a reasonable argument. Politifact’s John Kruzel pointed out that this school of thinking was called “voodoo economics” by former President George H.W. Bush. The Committee for a Responsible Federal Budget estimated that the U.S. economy would need to grow at a rate of 4.5 percent each year for the next ten years for the tax cuts to pay for themselves.
As the chart below shows, GDP growth has only surpassed the 4.5 percent mark once over the last decade:
Since it’s obvious that the Republican tax cuts are unable to pay for themselves, the money will have to come from somewhere. An underreported story from September showed that the Republican budget proposal for 2018 will aim to slash exactly $1.7 trillion from both Medicare ($473 billion) and Medicaid ($1.3 trillion) over the next ten years to make room in the federal budget for the lack of revenue resulting from the Trump tax cuts.
To put that in perspective, Republicans are on the record proposing cuts to a program that 49 million Americans depend on, with nearly one in four Medicare recipients living below the poverty level, according to the AARP. This is all to fund a tax cut package that even Fox Business says would overwhelmingly benefit the rich, at a time when America’s three wealthiest billionaires own more wealth than the poorest 160,000,000 Americans combined.
The Tax Policy Center estimates that the average American household will get a tax cut of $1,200 in 2018 if the bill becomes law. However, that $1,200 (which doesn’t even cover an average month’s rent) is peanuts compared to the vast reductions in funding for Medicaid and Medicare, which are essential for middle class and low-income families to cover healthcare costs.
Friday morning, Bruce Bartlett — an adviser to former Presidents Ronald Reagan and George H.W. Bush — predicted that should the tax cut bill be signed into law by President Trump, the White House’s Office of Management and Budget (OMB) will issue dire warnings about the federal deficit, prompting calls from conservative groups to cut Social Security and Medicare:
Prediction–the second the tax cut is signed, OMB will issue new projections showing the deficit is far worse than imagined. Bond market & Pete Peterson-funded groups will demand that entitlements be slashed.
— Bruce Bartlett (@BruceBartlett) November 10, 2017
Lawmakers are now fully aware that their tax cuts will break the federal budget. If the tax cuts do indeed become law, Americans should brace for an all-out assault on programs once deemed political third rails to fund the mess they deliberately created.
Carl Gibson is the publisher of Grit Post. His work has previously appeared in The Guardian, Al Jazeera-America, NPR, The Washington Post, and others. Follow him on Twitter @crgibs or email him at carl AT gritpost DOT com.