The Republicans of Congress are trying to spend a budget this week with a massive tax reduction which, according to them, is not a tax reduction – a sleight of hand which depends on an arcanic accounting device which would make the intriguers of Ponzi blush. The room could vote on magic mathematics on Tuesday; The Senate of the Republican-majority gave him a green light early Saturday morning.
Welcome to the last act of smoke and budgetary mirrors of Washington.
To understand the regime, you must return to 2017, when the congress adopted the tax reduction of President Trump and the law on jobs, which included $ 2,000 billion in tax reductions which mainly benefited the rich. To reduce the cost to American chests, the congress included a “sunset” clause because of its entry into force at the end of this year. He properly used a “current reference base” which showed that income increased in 2026. Now, the Republicans want to move on to a “current political basis line”, which – Presto, Cha change -O – simply assumes that the 2026 income gains have never been in the table and allows them to say that the extensive tax reductions are “free”.
However, this gadget does not eliminate the cost of the cuts; He just hides them. The cost will be real: 4 dollars billions added to public debt over 10 years.
The non -partisan committee for a responsible federal budget slam the basic maneuver as “nihilist, anhistoric and inaccurate”. Even some Republicans would have been uncomfortable with the plan, denouncing it as “intellectually fraudulent. “” As a Wag said“It is like telling your spouse that continuing to pay your subscription to the gymnasium of $ 900 per month is free – since you already do.”
Chicanerie serves two political objectives.
First, it allows the Republicans to posture as a deficit hawk while making a massive hole in the budget. The head of the majority of the Senate, John Thune, for example, described the national debt “time bomb“And the president of the room Mike Johnson says it is”Number one threat to our nation. “If they run away with the reference switch, they can continue to claim that they care about the debt, while increasing it by billions of dollars.
Second, the erasure of the impact of the original cuts and their extension will also allow Republicans to adopt even greater tax reductions than budgetary rules would normally allow it.
The moment of all this could not be worse. Our national debt becomes uncontrollable, posing a risk both for economics and national security. Only this year, the budget deficit should reach nearly 2 dollars, while total public debt has reached 28.9 billions of dollars. Alarming, we spend more in interest payments than for national defense or health insurance, the debt service becoming the fastest expenditure in the federal budget. While we spend more to respond to our debt, it is more difficult to find dollars for critical initiatives such as education and health care.
The increase in deficits is also bad for consumers. They strengthen higher interest rates and inflation and reduce economic growth. Due to red ink, the non -partisan congress budget office warned against the “significant risks” for the economy, and the International Monetary Fund described the sharp increase in the “astronomical” loan and an engine of persistent inflation. Unsurprisingly, the mortgage and car loan rates remain high, while inflation oscillates around 3%. A Yale economist projects This increased debt triggered by this new tax reduction will reduce the purchasing power of American households over $ 1,000 after five years. It is a huge success in wallets in addition to that which the president has just announced following the import rates that he imposes.
This reckless approach to budgeting also increases America's vulnerability to foreign opponents like China, which has a significant investment in American debt. If China decided to unload its assets from the American debt, the consequences would harm our economy leading to higher interest rates, to a weakened dollar and to more increasing inflation. Do we really want to give this type of economic lever to hostile nations?
It is important to recognize that the two political parties share the responsibility of our growing debt. Trump’s initial administration has increased it by nearly $ 8 billions of dollars, powered by both the tax reduction of $ 2 billion and more than 3 dollars in emergency reduction measures. President Biden added 4.7 billions of dollars to debt, partly by the US rescue plan of $ 1.9 million. Instead of overthrowing the course in red ink in assembly, the Republicans plan to pour petrol over budgetary fire.
Why is there no more public outcry on debt? Ironically, as our budgetary deficits have climbed, the national concern and the political will to shrink them have shrunk, especially among many Republicans. In 1997, when I started working on the Chamber’s Budget Committee, the nation was sufficiently worried about an expected annual deficit of $ 200 billion that Congress felt obliged to negotiate a reduction set of several years which led to four years of balanced budgets. Today, the Congress Budget Office projects annual budget deficits approaching 2 dollars of dollars on this subject, and America increases its shoulders.
It is a moment of truth. Voters should demand that the Republicans of the Congress and the President let the Sunset clause take effect on the 2017 Cups and abandon the fantasy that prolongs them has no cost. Instead, the two political parties should negotiate a serious and bipartite-reduction plan of the deficit with expense reductions and income increases. The only way responsible to follow for America is to reduce deficits – and not to raise them under the cover of deception.
Thomas Kahn is an eminent faculty of the Faculty of the American University. He was director of democratic staff and chief lawyer of the chamber budget committee from 1997 to 2016.
