The Republicans of the Congress are trying to approve a budget this week with a mass tax cut that, they say, it is not a tax cut, hand games that depends on an arcane accounting device that would make Ponzi schemes blush. The camera could vote on magical mathematics as early as Tuesday; The Republican majority Senate shamefully gave an approval of Saturday morning.
Welcome to the last act of smoke and budget mirrors of Washington.
To understand the scheme, it must return to 2017, when Congress approved the Tax Reduction Law and Tax Joba of President Trump, which included $ 2 billion in tax reductions that mainly benefited the rich. To reduce the cost for US coffers., Congress included a “sunset” clause that will begin at the end of this year. He correctly used a “baseline of the current law” that showed the increase in income in 2026. Now, the Republicans want to change to a “current policy base line”, which-presto, Change-O, simply supposes that the income profits of 2026 were never in the image and allows them to say that extended tax cuts are “free.”
However, this trick does not eliminate the cost of cuts; Simply hide them. The cost will be real: $ 4 billion added to public debt for 10 years.
The non -partisan committee of a responsible federal budget criticized the reference maneuver as “nihilist, ahistoric and inaccurate.” According to reports, even some Republicans are uncomfortable with the plan, denouncing it as “intellectually fraudulent.” As a WAG said: “It's like telling your spouse that continuing to pay for your membership in the $ 900 a month gym is free, since you have already been doing it.”
The Chicanería serves two political objectives.
First, it allows Republicans to posture as a deficit hawks while blowing a massive hole in the budget. The leader of the majority of the Senate, John Thune, for example, has called for national debt a “time bomb”, and the president of the House of Representatives, Mike Johnson, says it is the “number one threat to our nation.” If they go out with their own, they can continue to affirm that they care about the debt, while raising it for billions of dollars.
Secondly, deleting the impact of the original cuts and their extension will also allow Republicans to approve even larger tax cuts than they would normally allow budgetary rules.
The moment of all this could not be worse. Our national debt is out of control, which represents a risk for both the economy and for national security. Only this year, it is projected that the budget deficit will reach almost $ 2 billion, while the total public debt has shot at $ 28.9 billion. Wiring, we spend more on interest payments than in National Defense or Medicare, and the debt service becomes the fastest growing expense in the federal budget. As we spend more to address our debt, it is more difficult to find dollars for critical initiatives such as education and medical care.
Growing deficits are also bad for consumers. They boost higher interest rates and inflation and reduce economic growth. Due to the growing red ink, the non -partisan Congress budget office warned about “significant risks” to the economy, and the International Monetary Fund has called the “astronomical” loan increase and a driver of persistent inflation. As expected, mortgage and car loan rates remain high, while inflation is around 3%. A Yale economist is projected that the debt caused by this new tax reduction increased will reduce the purchasing power of US homes in more than $ 1,000 after five years. That is a great success for the pockets in addition to that the president has just announced as a result of the import rates that he is imposing.
This reckless approach to the budget also increases the vulnerability of the United States to foreign adversaries such as China, which has a significant investment in the United States debt. If China decides to download their US debt holdings. UU., The consequences would damage our economy, which would lead to higher interest rates, a weakened dollar and more growing inflation. Do we really want to deliver this type of economic leverage to hostile nations?
It is important to recognize that both political parties share the responsibility of our growing debt. Trump's initial administration increased by almost $ 8 billion, fed both for the reduction of $ 2 billion taxes and more than $ 3 billion in emergency covid relief measures. President Biden added $ 4.7 billion to the debt, promoted in part by the US $ 1.9 billion rescue plan. Instead of reverse the course on the red ink of the assembly, the Republicans plan to pour gasoline into the fiscal fire.
Why is there no more public protest about debt? Ironically, as our budget deficits have risen, national concern and political will to reduce them have been reduced, especially among many Republicans. In 1997, when I started working in the Chamber Budget Committee, the Nation was sufficiently concerned about an annual projected deficit of $ 200 billion that Congress felt forced to negotiate a several -year reduction package that led four years of balanced budgets. Today, the Congress Budget Office projects annual budget deficits that approach $ 2 billion as far as it is visible, and America shrugs.
This is a real moment. Voters must demand that the Republicans of the Congress, and the president, allow effect of the 2017 cuts and leave the fantasy that extending them has no costs. On the other hand, both political parties should negotiate a serious and deficit reduction reduction plan with income cuts and income increases. The only responsible way for the United States is to reduce deficits, not raise them under the cover of a hoax.
Thomas Kahn is a distinguished member of the Faculty of the American University. He served as director of Democratic Personnel and main lawyer of the Budget Committee of the House of Representatives from 1997 to 2016.
