On Deficits

With the deal being hammered out between Speaker Pelosi and the Trump administration, there are some articles popping up talking about the federal deficit.  Of course, fear of deficits didn’t stop Republicans from passing a massive tax cut for the rich in 2017.  Proponents of the tax cut, to the extent that they discussed the impact of the cuts on the deficit at all, predictably claimed that the improvement in the economy from the tax cut would make the tax cuts pay for themselves.  Of course, a couple of years have passed and, nope, revenues went down.  Meaning the deficit went up.  And let’s not even start on the other argument Republicans made about the cuts – how they would trickle down to the middle class and that companies would use the tax cut to expand.  Nope, they preferred stock buybacks instead.

So with the tax cut already a done deal, it’s a virtual certainty that, under a President Warren or Harris, Republicans will change their tune and be deficit hawks once again.  I expect the CNN moderators to raise this as an issue at the debates next week.  Most of the Democratic candidates for President have proposed new spending, higher taxes, or both.  How should the candidates answer this question?  Here are some thoughts.

First, I think it’s not a bad idea to point out the hypocrisy of how Republicans care about deficits when they’re not in the White House and when it’s for programs they don’t care about.  Say something like, “where was the concern about deficits when the Republicans were passing a huge giveaway to the rich and big business in the form of the 2017 Trump Tax Cut?”  You might even throw in the story about how Trump advisors warned him about deficits and he responded, “but I won’t be here.”

Second, some of the candidates have made a point of trying to show how they pay for their proposals with increases in taxes, most prominently Elizabeth Warren.  It’s probably important for these candidates to point out how they try to pay for their proposals, but they shouldn’t box themselves in on that point.  If they stick too strictly to the idea that it has to be paid for exactly, they’re going to be hamstrung down the road or during their eventual presidency.

Third, if the question is about the recent deal, point out how little of the federal budget is discretionary.  Be careful going too hard after the military part of the budget, but if your platform is focused on ending the wars overseas, you could make some points talking about the savings that can come from that (even though it probably won’t amount to much in the grand scheme of the deficit).  You could also point out that the driver of the deficit is X.  Healthcare, entitlements, or whatever.  And, look, my plan will actually help keep the deficit from growing because I’m reforming this area that is such a big part of the deficit.  I’m thinking of Bernie here, with his pitch on Medicare for All, but it probably applies to any of the candidates that have major plans for overhaul of the healthcare system.

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