The Laffer Curve is real. President Trump’s team of Goldman Sachs advisors and Treasury Secretary Steve Mnuchin know that reducing America’s corporate tax rate will spur investment and growth for U.S. businesses. This will lead to an overall growth of the economy, which will eventually lead to more revenue for the Feds to do what they want. Or so goes the logic.
And suddenly, Democrats give a rat’s behind about the national debt.
From the AP.
Treasury Secretary Steve Mnuchin, in a Wednesday morning speech, said the proposed overhaul would amount to “the biggest tax cut” and the “largest tax reform” in U.S. history.
- Individual tax rates to drop from 39.6 percent to the “mid-30s,” a modest cut
- Small business owners top rate to drop from 39.6 percent to 15 percent, well over 50 percent
- Corporate tax to drop from 35 percent, the highest in the world, to 15 percent
- Ivanka Trump’s child-care benefit plan to be worked in to the new tax reform
Getting this deal done is going to cost Trump. He’s trading his border wall funding and health care reform in exchange for the tax reform. Both of those items were key campaign promises. Remember “We’re going to build a wall,” and “Obamacare is a disaster”? Well, they’re off the table because now tax reform is the next thing.
When you’re winning so much, you don’t pause to examine your strikeouts, you just put the next batter up. This is how Trump rolls.
Of course, if this huge tax reform passes, it will be a great catalyst for economic growth. It will create jobs and investment. It will help small businesses. I’m 100 percent for it. But it will also increase our ever-growing deficit, do nothing to stop the continual rise of entitlement payments, and burden future generations with our pet projects today.
Passing tax reform now is a bet on Trump’s dealmaking ability later. It’s no guarantee that America will be great–in fact, without spending controls, it guarantees America will be broke before it has time to fully kick in.
But Democrats don’t want spending controls, so now they’re fretting about the $20 trillion national debt–the same national debt they could not have cared less about for the last eight years.
“I’m particularly struck by how some of this seems to be turning on its head Republican economic theory,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.
Added Sen. Bob Casey, D-Pa.: “On a lot of fronts, both the administration and Republicans have been contradictory, to say the least.”
Democrats would rather tax and spend, while Trump Republicans would rather spend on credit and hope to God we grow our way out of debt. Both approaches are wrong. Here’s a novel idea: let’s try spending less on Social Security and Medicare before it bankrupts us.
It’s unlikely we’ll see that on any tax or budget proposal this year, or any other year with Trump in office. Give them bread and circuses, and they’ll never revolt–or vote you out of office.