Beware the tax plan bearing gifts

House Speaker Paul Ryan, a confident, smooth-talking Washington veteran, presented his chamber’s tax-cut plan in a way that could make the naive observer wonder why the speaker was making his presentation on the floor of his chamber and not bringing the plans down from the Mount carved in stone.

And President Trump and breathless GOP leaders from the Senate are talking up both chambers’ plans, which will be reconciled by leaders of the party in a conference that will emerge with the final plan, whereupon Trump will proclaim, again, his brilliance as a leader and tactician.

The problems with the plans, however, are beyond just the additional $1.5 trillion added to the national debt by Republicans who once viewed any Democratic spending on social programs as inflationary and ruinous with regard to running up debt.

Some nonpartisan analysts think that in the long term, middle-class Americans might actually be paying more in taxes, while the super rich pay less and less. And indeed, it’s a fact that in exchange for the millions and millions of dollars lost to the proposed abolition of the estate tax – it affects a ridiculously small number of people in that super-rich category – there appear to be few sources of any additional revenue.

What that could mean, The New York Times reported, is that with more debt and excessive cuts, the economy could slow down in terms of growth. That might translate to more debt (to finance the tax cuts) and that would mean high interest rates for the country to pay when it borrows money.

The Times also notes that with some tax cuts labeled “temporary” and with expiration dates for them set for 2025, Republican figuring on the debt increase might be more than a little deceptive. For if those “temporary” cuts are made permanent – and how often are tax cuts “taken back” by the politicians who award them? – then the debt from the tax cuts actually would be beyond that $1.5 trillion.

Republicans are trying to sell Americans on their tax-cut plan with the old “let the good times roll” philosophy, and Democrats who dare to say otherwise are labeled party poopers.

But more debt can be like an anchor on the economy, and over time, can slow things down to the point of recession. When that happens, it is the middle class – which isn’t going to benefit as much from the tax cuts anyway – that suffers the most in terms of retirement security diminished as 401Ks drop in value, for one example.

Republicans are headed for a tax-cut plan because they promised it to their big donors and because President Trump, who has accomplished virtually nothing as he passes the first anniversary of his election, wants something to brag about so he can launch another victory tour with campaign-like rallies.

These are not good reasons upon which to base economic policy.

This story was originally published November 20, 2017 at 10:40 AM with the headline "Beware the tax plan bearing gifts."