In the past few weeks I’ve seen a number of conservatives and libertarians argue — as a defense (or at least quasi-defense) of the GOP’s tax bill and its impact on the deficit — that the U.S. has a spending problem rather than a lack of tax revenue. They often note that taxes have kept steady for decades as a share of GDP, while spending has risen. It’s an important point in general, but one I’m not sure hits the mark when it comes to the bill before us.
As a conservative, I’m obviously sympathetic to the idea that we should close the deficit by cutting spending rather than by raising taxes. In fact I’d like to cut spending so much that we run a surplus and can afford to cut taxes at some later date. But the bottom line is that spending rose because the American people voted for it to rise — and that two of the biggest culprits, Social Security and Medicare, are hugely popular. We can try to bring spending back down again, but in the meantime it’s irresponsible to cut taxes when the current taxes aren’t even enough to fund the government.
I also find it helpful to consider the tax bill’s impact in a few different contexts. The Joint Committee on Taxation puts the bill’s revenue loss at about $1.5 trillion over ten years. This is wrong in both directions at once — it accounts for neither economic growth nor the bill’s budget gimmicks — but it will do for some rough back-of-the-envelope math.
According to Congressional Budget Office estimates released in June, federal debt held by the public will total $25 trillion in 2027, and total federal revenue over ten years will amount to $43 trillion. The bill will increase the debt 6 percent and reduce revenue 3.5 percent, then. That doesn’t sound too bad.
But $1.5 trillion looks different in the context of what we’re doing to change the debt picture. The CBO estimated we would rack up about $10 trillion in new deficits over the next ten years; the tax cut will increase that number 15 percent. We’ll be borrowing significantly more money from our kids in the next decade than we planned to.
And we already planned to borrow a lot, with $10 trillion amounting to $31,000 for every person currently living in America.