Republicans Need to Stop Chasing Fantasies to Justify Tax Reductions

Like any good Republican, I fully support lower tax rates. Always have. There’s a moral justification to be made for reducing tax rates just so long as all of the social engineering tax credits get eliminated. A simpler system is better for all and the less money the government takes from people, the better.


That said, it’s going to take some guts to tell people, “Hey, this is going to hurt short-term, but long-term it is going to help.” Unfortunately, politicians are not prone to being that honest including “Tells It Like It Is” Trump. Trump is like the mayoral assistant in ‘Serpico’ saying, “Beautiful! Dynamite! Amazing!” without realizing it’s going to come crashing down any moment.

At first glance, I like Trump’s tax cut plan. Simpler, with lower rates is a good thing. But just like with any other proposal, the Trump team is ill-equipped to go out and sell it to the public. Democrats are already asking the bogus question of how will they “pay” for these tax reductions. The left is still of the mindset that all money is theirs and they’ll decide what you can keep and what you cannot.

The Trump administration is putting forth the “economic growth” theory to support their idea initially, and it’s a dumb way to sell it. Steve Mnuchin promises 3% or higher sustained GDP growth will make up for lost revenue. Contrary to the myth of “tax cuts cause deficits” the proof is looking at the 80’s when Reagan cut tax rates and when George W. Bush did the same in the 2000’s. Deficit increases were the result of additional spending not lost revenues. In 2007, the government collected a record (at that time) $2.57 trillion in tax revenue.


Mnuchin’s problem is over-emphasizing the effect of GDP growth and spending less time on ending loopholes and other credits that make some of the current tax structure pointless and also confusing. It’s hard to accept the idea of a year over year GDP growth of 3 percent or more when growth hasn’t been at that level for over ten years.

Despite all the crowing from President Obama and his sycophants about the “recovery,” we enjoyed under Obama’s tutelage, GDP growth was only fair which is a positive sentiment. Discounting the recession in 2009, GDP numbers for Obama were: 

  • 2010 2.5%
  • 2011 1.6%
  • 2012 2.2%
  • 2013 1.7%
  • 2014 2.4%
  • 2015 2.6%
  • 2016 1.5%

The last time the economy grew at a rate of over 3% was in 2005 when GDP growth measured 3.3%

That last time the economy grew at a rate of over 4% was 1999, and that was fueled in part by the dot-com bubble that burst by summer of that year.

The last time the economy grew at a rate of over 5% was in 1984 when the economy grew at a rate of 7.3% in the midst of the Reagan economic boom.

To make the case, Republicans have to point to the failure of the Obama administration to have any sustained economic growth thanks in part to a tax code that prohibits growth. They will need as well to offset some of the reductions with further reductions in spending.


That’s where the pain comes in. Unfortunately, Republicans haven’t shown the ability to sell anything controversial and until Team Trump and congressional leaders map out an effective plan, nothing will get done on tax reform.



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