Everyone is Full of S***, Part 638

Greg Ip at the Wall Street Journal calling it as he sees it (will probably get fired):

Throughout Barack Obama’s eight years as president, Republicans hammered relentlessly at the horrors of debt. In 2011 they took the country to the brink of default because they didn’t want to raise the statutory debt ceiling. Last year candidate Donald Trump repeatedly ripped Mr. Obama for doubling federal debt.

Yet in their drive to overhaul taxes, President Trump and his congressional allies are about to make the trajectory of debt even worse.

Long story short, the budget allows for some $1.5 trillion in tax cuts over the next ten years, anything above that must be paid for somehow. Trump’s plan, which, as is characteristic, is short on details but long on promises he can’t keep. He’s proposing a little over $5 trillion in reductions to the tax base, most of which will never happen in his wildest dreams. Read Anthony Nitti at Forbes for why this is all going to be nearly impossible.

This proposal would be deficit spending way into the future on a galactic scale. When the other guy was president, congress wouldn’t even agree to fund the current government. Hilarious to see how quickly all of that pious hand-wringing about debt and deficits is forgotten about.

Now, in Fantasyland, all of these cuts will pay for themselves by unleashing faster economic growth. We’ll leave aside that this didn’t work out under Bush II, who oversaw an eight year period of wage stagnation, rising income inequality, economic slowing and then financial catastrophe. In the real world, deficit spending will ultimately push a key debt ratio higher, faster:

But permanently widening deficits is risky when the publicly held federal debt, now 77% of GDP, is on track to hit 91% in a decade as aging baby boomers draw on Social Security and Medicare. A $1.5 trillion tax cut would push that to 100%, according to the Committee for a Responsible Federal Budget, a watchdog group.

If the GOP wants to do this, they should do it (or at least try). But let’s not pretend that anyone has any actual principles anymore.

Source:

The Tenuous Logic Behind Republicans’ About-Face on Debt (Wall Street Journal)