Tax reform without massive spending cuts is like dieting without exercise

We’re coming to the end of tax season. Millions of American tax payers are likely upset about something, whether it’s having to pay more than they expected, not receiving back as much as they’d hoped, or simply having to deal with the mess our tax system has become in recent years. To put it bluntly, tax season is depressing for many, but there’s hope! The GOP is in control across the board, so things are going to get easier by next year, right? Well, no. Probably not. If things go as Paul Ryan and Donald Trump have planned, we could be looking at a situation over the next three or four years that’s negligibly better than it was under the last administration.


The biggest misconception that Republicans often perpetuate is that the benefits of tax cuts on the economy will be enough to compensate for lost percentage points in federal revenue. This is true to some extent, but it’s misleading because the two aren’t temporally aligned. Yes, reducing taxes, particularly on the middle class, will prompt people to spend more and thus improve the nation’s economic health, but the benefits come later. In other words, we’ll have to suffer through budget deficits, national debt increases, and market instability unless they couple tax reform with massive spending cuts.

Even that breakdown is incomplete. It doesn’t take into account the actions and corrections of corporate America. Most large companies don’t wait to see what happens before reacting. They plan based upon assumptions. The most prominent assumption they planned for 2017 was favorable tax changes for their companies as well as their direct or indirect consumers. These actions helped cause initial spikes in first quarter growth numbers, but the corrections that are coming have many worried. Why are they correcting? Because there are mixed signals coming from the administration. From tax reform now to tax reform next year to tax reform next month back to tax reform now… every day (and often multiple times in the same day) we’re hearing about a new plan.


For the sake of transparency, I must admit I’m biased. As a proud member of the new Federalist Party, it behooves me to call out the foibles of the GOP. They were my party for decades, but consistently broken promises and faux-conservatism forced me to look elsewhere. With all other third parties failing to make any sort of impact, it became apparent that we need to build real change similar to what Ronald Reagan pushed for with his “new Federalism.” Still, I always put America above any party loyalties, so offering this advice to current Republican lawmakers is acceptable.

My advice: start cutting spending immediately and at a grandiose scale. For years, we’ve heard about how important it is to balance the budget. We’ve been told that all we need to do is give the GOP control and they’d reverse the national debt trends through fiscal responsibility. Unfortunately, giving them power was not enough. They now have a strong desire to keep power, which means fiscal responsibility is being replaced by populist concepts. Spending cuts, while appealing to some and necessary for the future of the nation, have been directly tied to losing elections. It’s not popular to cut up credit cards and force people into the private sector. It’s not popular to attack some of the biggest economic monsters through entitlement reform. As a result, we’re looking at continuing to increase the budget and balloon the national debt.


Tax cuts in that scenario will not be enough to spark the economy. Again, the benefits will not be immediate, so we’re going to be looking at deficits that would make Obama blush. It’s like cutting down on food without accompanying it with exercise. The diet strategy is fine if you need to lose 20 pounds, but it’s not going to make a dent if you’re 200 pounds overweight. To lose a lot of weight in a short time, you have to burn it. That means better diet AND a serious physical fitness regiment. Our budget was $600 billion dollars in the red, yet we’re now talking about building walls, a huge infrastructure project, and a multitude of other budget increases. Add in a failure to fully repeal Obamacare and the GOP is acting more like the Democrats than the party of smaller government that they claim to be. For the sake of headlines and Tweets, they’re planning on making cuts in many areas such as the EPA. Party members cheer, yet looking at the math reveals they’re simply redirecting the money to other areas. In short, the “cuts” are actually balance transfers. The debt and budget hits will remain and more spending is inbound.

If we could administer sodium thiopental into each Republican lawmaker in DC today and ask them if there’s a dire need to cut spending at a massive scale, the vast majority would say yes. They’re playing politics and focused more on 2018 and 2020 victories than the well-being of the nation. This is why I joined a new party. It’s why we must go after the Democrats and the Democrat Lites (aka Republicans) with everything we’ve got. They’re not going to be able to spend their way out of our problem forever. Eventually, every bill comes due.



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