The US has plenty of experience with irresponsible tax cuts. Yet its leaders seem not to have learned their lesson.
Far from pursuing careful deliberation and smart compromise, US Republicans today are pretending that the cuts for which they are striving will carry no costs. If they get their way, these self-professed fiscal conservatives will blow up the budget deficit, just as they did in 1981 under Reagan, and just as they did again in 2001 and 2003, thanks to the massive tax cuts enacted under President George W. Bush...
Of course, today’s Republicans do not admit that their plan isn’t revenue-neutral. Like their counterparts in 1981, not to mention during the Bush era, they claim that the cuts will stimulate the economy so much that overall tax receipts will stay the same or even rise. Yet such claims have been rejected by virtually all mainstream economists, including the economic advisers of both Reagan and Bush. Those administrations implemented their cuts anyway – and, as economists had warned, budget deficits increased sharply.
The tax cuts that the Trump Republicans are attempting to pass today would be even more damaging. There is good reason to fear much more serious long-term consequences of the rise in the budget deficit, owing to two key issues of timing – one cyclical and the other demographic.