This week, House Republicans unveiled the centerpiece of their domestic agenda, which is, unsurprisingly, an enormous regressive tax cut. If enacted into law, this proposal would significantly increase the budget deficit. You would think the anti-deficit lobby would therefore oppose it. But no. Maya MacGuineas, head of the Campaign to Fix the Debt, has an official statement cautiously welcoming the Republican plan. Here is MacGuineas’s statement in its entirety:
We are pleased that House Republicans have made tax reform a key part of their “Better Way” agenda. Reforming our broken tax code is critical to promoting economic growth and making American businesses competitive.
We are concerned that the policies in the plan may not add up, in that the plan appears to rely on optimistic estimates of economic growth and changes in the baseline to achieve deficit neutrality.
But we welcome this blueprint and continue to believe that tax reform is an important economic priority, and look forward to working with members of both parties to make sure that tax reform can simplify the tax code, be appropriately financed, and promote economic growth.
Pleased but concerned while welcoming the proposal is a plausible response to a plan that might reduce the debt, depending on its details. The House Republican tax-cut plan does not fall into that category. It is true that the Republican plan is so lacking in detail that its budgetary impact can’t be measured. But the overall impact is clear enough. First, the plan creates a massive tax cut for high-earners. Its reductions in the top marginal tax rate and capital-gains and dividends taxes and complete elimination of the estate tax mean that even if it also eliminated every possible deduction for the rich (which of course Republicans would never do in a million years), the rich would still get a big tax cut.
Now, Republicans could make up the revenue loss caused by cutting taxes for the rich by raising taxes on the middle class or the poor, but they insist they won’t do so. (The Wall Street Journal: “A senior House GOP leadership aide said the final version of the plan when it is converted into a bill wouldn’t raise taxes for any income group, but the plan could alter the distribution of the tax burden.” Translation: Rich people will get a huge tax cut, and non-rich people will probably get a small tax cut or nothing, but not a tax increase.)
So this is a plan to increase the debt. A lobbying group dedicated to reducing the debt should oppose it. But it doesn’t, because the political mission of the anti-deficit lobby is predicated on imagining away the reality that the Republican Party is philosophically committed to reducing taxes on the rich above everything else.