The current national debt has topped $20 trillion, and the administration’s tax proposal does not clearly demonstrate how it will keep from adding to the annual debt.
Michael Peterson, president and CEO of the Peter G. Peterson Foundation recently commented, “Tax reform that´s unpaid for would actually be anti-growth, because more debt hurts our economy,” and continued to say, “Our leaders should provide more details on the fundamental question of fiscal responsibility”
Initial analysis by the Bipartisan Committee for Responsible Federal Budget shows the reform plan would add $2.2 trillion to deficits over a decade. By cutting taxes by $5.8 trillion and adding new tax revenue of $3.6 trillion through “base broadening.”
“ Tax cuts shouldn´t be handed out like Halloween candy,” commented Maya MacGuineas of the Committee for Responsible Federal Budget. Further saying, “Deficit financed tax cuts are a recipe for a short term economic sugar high followed by sluggish long-term growth.”
President Trump is relying on annual growth of at least 3 percent, which the U.S hasn´t achieved in more than a decade.
The President also put fiscal responsibility a cornerstone of his campaign stating before the election that he would never allow the debt ceiling to rise and that he planned to get rid of the national debt “Over a period of eight years”.
It is strongly felt amongst budget and policy groups that the tax cuts will end up hurting the majority of middle-class Americans, by putting pressure on Congress to reduce spending on programs to offset revenue losses from tax relief.
Andy Stettner from The Century Foundation commented in a recent interview that, the drop in federal revenues will jeopardize critical investments in education, healthcare, and social services for tens of millions who need them most. History shows that tax cuts result in big deficits and national debt rises.
The above chart shows Individual income and payroll taxes account for over two-thirds of government spending. In 2017 one-seventh of the government’s spending will be financed by deficits.
Why the Deficit has Increased in the last decade.
Attacks on 9/11. Led to the War on Terror. Doubled annual Military Spending. From $437.4 billion in 2003 to a peak of $855.1 billion in 2011. Currently is $824.6 billion.
Mandatory spending has risen. That includes Social Security, Medicare and other mandated programs. Exceeded $2 trillion a year since 2011.
President Obama’s 2009 economic stimulus package added $787 billion. Extended unemployment benefits, and public works projects.
The recession reduced federal revenue and taxes. As the economy bottomed out, so did tax revenues.
Annual Deficits Chart Past, Present, & Future Projections
One Dollar In Added Debt Is Too Much
Lets never forget that the US national Debt is a very small fraction of our nation’s total liabilities. In fact according to justfacts.com it represents less than 20% of the 84 trillion we really owe. This current plan only helps the rich and super rich while placing the burden squarely on the shoulders of middle class. This is not the fiscally conservative values many of the president’s supports signed on for.
The Analysts & Economists Opinion
The main consensus is that the new tax reform proposal will simply add to the current deficit with no real national economic benefit, adding a potential $2.2 trillion of debt over the next 10 years.
In addition there are too many who won´t benefit, mainly The Middle and Lower Middle America. The consequences of a higher deficit will ultimately lead to a drop in investment in education, social services and healthcare affecting millions.