According to Trump's new Treasury Secretary, Trump's first budget will include tax reform, tax cuts, spending increases...and no entitlement reform at all. This is not a good idea.
This is a budget that lowers revenue while increasing spending, a move that will cause our already-large deficits (and, thus, national debt) to balloon even further.
The White House's argument is that the reduction in tax burden that will result from this bill will lead to economic growth that will, in turn, lead to higher government tax revenues. This argument is false.
It is true that our tax rates are far too high. It is true that our regulatory environment is stifling. It is true that both of those should be dramatically overhauled, reduced, modernized. That said, it is also true that those factors are not the only causes behind our now-slower economic growth. The United States faces a rising number of welfare recipients, an aging work force, and population growth that is slowing. These factors also are behind our slower growth, and they are, if anything, made worse by this budget proposal.
Trump claimed that his reforms would lead to 4%-6% annual economic growth, a claim that has been thoroughly debunked by liberal and conservative economists alike. Trump's own Treasury Secretary says that that number will be closer to 3%. Even if the Secretary is correct (3% growth rate), this would not lead to enough additional revenue to stop the growth of our national debt. (Additionally, imagine how dramatically our national debt will grow the next time we enter a recession if we've already reduced revenue but have also failed to make changes to our most expensive federal programs.)
In order to blunt some of this sting, Trump proposes cuts "domestically" (just not to domestic welfare programs), which probably means to programs like science and education. Unfortunately, our science and education funding have already shrunk dramatically, and the U.S. is slowly losing our scientific--and thus technological--competitive advantage. We've already lost our educational advantage; American public high schools simply no longer are good schools--on average--when compared to those of other developed nations. There's also a practical issue here: federal funding for science and education is so small that it could be halted in its entirety and still would not eliminate our budget deficit--not by a large margin.
I am quite excited about most of the tax reforms Trump is proposing. I'm excited about the reduction in regulation. I'm excited about the lower overall cost to our economy of government action. That said, these reforms MUST be accompanied by real and long-term reductions in spending. This is very much in keeping with common-sense conservative principles.
Federal welfare programs eat up approximately 50% of our budget, and our interest payments bring this total to nearly 60%. Both of these are still growing very quickly. You cannot solve our deficit problems without reforming these programs. You simply cannot.
Even if, hypothetically, this budget led to enough additional revenue to cover the costs of those programs in the short-term, what about when we inevitably encounter recessions? Even more concerning, what about the fact that these welfare programs are still growing--and fast? In other words, even if this additional revenue were enough right now, it wouldn't remain enough for long. (Since it actually isn't enough even right now, one can scarcely imagine how inadequate it will be over the long term.)
Paul Ryan is right to demand entitlement reform. He is right to demand welfare spending reductions in addition to these wonderful tax proposals. He must ensure that any budget that passes Congress includes both tax AND spending reductions. A budget that causes the national debt to grow even faster is not a truly conservative budget.
Trump must accept reductions in welfare spending. It makes no sense to increase military spending, increase welfare spending, and reduce revenue and then to make the impossible claim that all of this will be paid for by cutting tiny programs like science and education.
He got the tax reform part right. Now conservatives must demand that he get the other piece right too.
Follow libertyLOL on your favorite social media sites:Facebook
Countable: Government Made Simple
Steemit blog on a blockchain
libertyLOL's Liberty Blog RSS Feed
We also run a couple twitterbots which provide great quotes and book suggestions:
Murray Rothbard Suggests
Tom Woods Suggests
Jason Stapleton Suggests
MORE FROM LIBERTYLOL:
Your comment will be posted after it is approved.
Leave a Reply.
Search and Shop on Amazon.com!
Tom Wood's Liberty Classroom
"Get the equivalent of a Ph.D. in libertarian thought and free-market economics online for just 24 cents a day...."
At Liberty Classroom, you can learn real U.S. history, Western civilization, and free-market economics from professors you can trust.
Short on time? No problem. You can learn in your car.
Find out more!