Critics from both sides of the aisle say President Donald Trump‘s tax plan is going to blow up the deficit because there’s no way to pay for the tax cuts.
They’re trying to present themselves as the sober critics who are simply being fiscally responsible. But what they really are is a group of folks who don’t even have their priorities straight and don’t really have the guts to admit it.
Because the Republican and Democratic Party intelligentsia, (such as it is), believes that raising revenue is the primary job of the government when it comes to tax policy. After all, running the government is an expensive proposition and our debt is already at $20 trillion and growing. Don’t we need more cash from the taxpayers, and fast?
No we do not.
And even though the real debt in America is more like $100 trillion when you count all our unfunded liabilities coming due in the future, the answer is still no.
That’s because the only real solution to our debt and cost of running the government is to make spending cuts. And the reason why we keep hearing about raising more revenue and not focusing on real cuts and spending reform is because both the Republicans and Democrats in Congress are too cowardly to make those cuts and reforms. Besides, getting on their high horses about how the Trump plan is fiscally irresponsible is a lot easier than being taken to task for getting us into this budget mess and never doing anything meaningful to fix it for all the decades before Donald Trump was even a candidate.
We know this because Uncle Sam keeps breaking records for tax revenue. Washington hauled in a record $1.08 trillion in tax revenues in the first 4 months of this current fiscal year. The Treasury is bursting at the virtual seams, and still that debt keeps growing. Tax cuts aren’t the issue, it’s the spending. It’s always been the spending.
But wait. Even if we can all agree that cuts should be made a priority, won’t reducing incoming tax revenue at least make the problem worse? From a purely mathematical side, that’s basically true as less money coming in would grow the deficits. But first, we also know that after a short waiting period of a year or so, previous tax cuts made by the Harding, Kennedy, Reagan, and George W. Bush administrations did lead to growing revenue in the end.
Second, cutting revenues will have a very important — perhaps even more valuable — effect: It will cut off the addict. The Trump tax plan sends Washington a message that the private sector is tired of paying for the government’s excesses. The economy indeed has suffered from our higher corporate tax rates that strand trillions of U.S. dollars overseas, byzantine income and small business taxes that choke off investment and entrepreneurship, and regressive sales taxes that unfairly burden the poor. But every time the public faces a problem, it seems like Washington tells us that all it needs is more of our money to solve it. And yet, even as it gets more and more of our money, the deficits keep growing. That has to stop.
All our increasing taxpayer money is really subsidizing is Republican and Democrat cowardice. And it’s not just on Capitol Hill — President Trump’s proposed budget didn’t include enough cuts either. Unless Social Security, Medicare, and defense are significantly reformed and cut, not even a 100-percent tax increase will get us out of debt. And the myth that the public will not tolerate changes and cuts to those programs at all is just that — a myth.
When it comes to money — our tax money, that is — there’s plenty of bipartisanship in Washington. And we’re seeing and hearing plenty of the uniquely Washingtonian bipartisan delusion that the government deserves and needs more of the rest of the country’s money. The Trump tax plan is shining a light on that delusion. The big question now is whether that light can also serve as a disinfectant.
Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.
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