BEYOND THE NUMBERS
GOP Budgets, Statements Make Plans Clear: Costly Tax Cuts for Wealthy Now, Program Cuts Later
As we’ve explained, the tax bill that congressional Republicans are finalizing is step one of a likely two-step tax and budget agenda: enacting costly tax cuts now that are heavily skewed toward wealthy households and profitable corporations, then decrying the enlarged deficits that those tax cuts fuel — and insisting that they necessitate program cuts mainly affecting low- and middle-income families. Republican leaders have repeatedly said in recent weeks that after enacting a tax bill, they will turn to budget cuts — particularly “welfare reform,” long a code for cuts to programs that help families of limited means afford food, housing, health care, and other basic needs.
“We’re looking very strongly at welfare reform,” President Trump said last month, “and that’ll all take place right after taxes, very soon, very shortly after taxes.” Republican lawmakers — including House Speaker Paul Ryan — have made similar statements over the last few weeks:
- Speaker Ryan, November 14. The Washington Examiner reported that Speaker Ryan said that “Congress will turn next year to spending cuts to try to lower the deficit, [and that] that’s the second step after cutting taxes.” Asked why Republicans were not cutting spending to pay for the tax cut, he said: “We're going to keep focusing on spending cuts. . . . We passed a big spending cut bill in the fall or in the spring. We are going to go back at that next year but what we don’t want to do is complicate the issue of the Tax Cut and Jobs Act.”
- House Ways and Means Chairman Kevin Brady, November 28. Chairman Brady said that after the tax bill, he wants to do “welfare reform.”
- Senator Marco Rubio, November 29. When asked whether he was concerned about the tax bill’s effect on deficits, Senator Rubio said that deficits can’t be fixed through higher taxes and that tax cuts would help drive higher economic growth. He added, “But you also have to bring spending under control. . . . The driver of our debt is the structure of Social Security and Medicare for future beneficiaries."
- Rep. Ron De Santis, December 1. When asked about the GOP tax bills adding to deficits and debt, Rep. DeSantis said:
“Well, so let’s take the debt. So it’s been scored at [$1.5 trillion], was kind of the number. Even the more static analys[es] say you probably are going to get more economic growth, so it's probably going to be about $500 billion. That’s on the conservative side, some conservatives think you may get more from an increased economic pie. Everyone agrees that there's about $500 billion of that, of things that are currently in the tax code that end up getting extended anyway. They know it’s scored that way because they're not permanent right now but most people think they should be made permanent. So if you look at that extra $500 billion, I would suggest members of my party who crow about government wasting money and big government, why don't we get together and figure out a way to slow down the growth of spending?”
- House Financial Services Committee Chairman Jeb Hensarling, November 30. Asked about the higher deficits that the tax bill would create, Chairman Hensarling responded, “If I thought that this would exacerbate the deficit I would not support it. Everything I know about this tax package based upon my reading of other pro-growth tax reform packages is that this will help bring about an extended era of 3 to 3.5 percent economic growth. That will be more than enough to make up the static [$1.5 trillion] over 10 years that this [bill] is being estimated [as costing], or what we call scored now in Washington, D.C. So the most important thing we can do with respect to the national debt, and it is the greatest crisis that receives almost no attention in Washington, D.C., what we need to do is obviously reform current entitlement programs for future generations.”
The tax bills themselves make these statements even more striking. Both the Senate and House tax cuts would flow overwhelmingly to wealthy households and profitable corporations, while adding nearly $1.5 trillion to deficits over ten years. The Senate bill also raises taxes on millions of low- and middle-income households and raises the number of Americans without health insurance by an estimated 13 million. Mainstream economic estimates, including those of Congress’ official tax and budget scorekeepers, contradict Republican leaders’ claims that the bill would largely or entirely offset its cost through additional revenues that higher economic growth would generate.
Republican leaders are already laying the groundwork for step two. The congressional budget resolution that Congress approved in October, which created the process and set the parameters for the tax bill, also calls for $5.8 trillion in budget cuts over the coming decade, including deep cuts in Medicaid, Medicare, and other health care programs; basic assistance including food assistance through SNAP (formerly known as food stamps); and non-defense discretionary funding, the part of the budget that funds education and training, transportation and other infrastructure, medical research, child and elder care, and other important priorities.
They chose not to include sufficient offsetting revenue-raising measures or cuts to important programs in the tax bill itself to offset its cost. Doing so would have made the tax bill even more unpopular, and its trade-offs more transparent. Instead, GOP leaders appear poised to pass the deficit-raising tax bill this year and then seek large budget cuts next year. But separating the budget cuts and tax cuts doesn’t change their priorities:
- Very large tax cuts for the most well-off — under the Senate bill, the top 0.1 percent of households (those with annual incomes above $5.1 million) would get an average tax cut of $182,000 per household in 2027;
- Higher taxes for millions of middle-income households; and
- Cuts to basic assistance and health care for millions of families struggling to make ends meet.
- El crédito tributario por hijos
- Federal Payroll Taxes
- Federal Tax Expenditures
- Fiscal Stimulus
- Marginal and Average Tax Rates
- Tax Exemptions, Deductions, and Credits
- The Child Tax Credit
- The Earned Income Tax Credit
- The Federal Estate Tax
- Where Do Federal Tax Revenues Come From?
- Where Do Our Federal Tax Dollars Go?