Republicans, Trapped by Their Flimflam

Paul Krugman – The New York Times

Last week the Trump administration and its congressional allies working on tax reform achieved something remarkable. They released a tax plan — or, actually, a vague sketch of a plan — that manages both to add trillions to the deficit and to raise taxes on a large fraction of the population. That takes talent.

But like the G.O.P.’s terrible, no good, very bad health plans, this tax debacle was years in the making. On taxes, as with health, leading Republicans have been lying for years. And now the fraud has caught up with the fraudsters.

The road to this tax-cut turkey began in 2010, when Paul Ryan — now speaker of the House — unveiled the first of a series of much-hyped budget plans, all purporting to offer a blueprint for eliminating the U.S. budget deficit.

In fact, they did no such thing. They proposed major tax cuts — primarily benefiting the rich, of course — then simply asserted that no revenue would be lost, because reduced tax rates would be offset by closing loopholes and eliminating deductions. Which loopholes and deductions? Ryan didn’t say.

In analyzing these plans, the Congressional Budget Office assumed that Ryan’s revenue targets would be met — because he instructed them to make that assumption. But the office cautioned, in what sounds to me like discreet snark, “There were no specifications of particular revenue provisions that would generate that path.”

By the way, the Ryan plans also assumed drastic cuts in spending outside Medicare, Medicaid and Social Security. What programs would be cut? The budget office again: “No proposals were specified that would generate that path.”

And what was the Ryan plan if you took out those mysterious revenue raisers and spending cuts? A plan to drastically cut taxes on the rich, savagely cut benefits for the poor and the middle class, and increase the overall deficit.

In other words, it was all a con. As I wrote in a 2010 column titled “The Flimflam Man,” “The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.” That judgment looks as valid now as it did then.

But this was a message many people didn’t want to hear. Professional “centrists,” whose whole identity is bound up with pretending that there is equivalence between the two parties, desperately wanted a Serious, Honest Conservative to praise. So did much of the news media. So they slotted Ryan into that role, never mind the actual content of his policies. He received adoring news coverage; he even received an award for fiscal responsibility from a coalition of deficit-scold organizations.

And the con went on for years. To this day one sometimes reads articles portraying Ryan as a serious policy wonk, despite abundant evidence of his unseriousness and real questions about his actual command of policy.

But then Republicans regained the White House, meaning that they had to come up with actual tax legislation. And this has put the con under terrible strain.

True, Republicans could just cut taxes on rich people — always their overriding priority — not worry about paying for it, and blow up the deficit. After all, their supposed concern about federal debt was always just a pose, applying only when a Democrat was president. But after all those years of pretending to be deficit hawks, they feel the need to be seen doing something to offset their high-income tax cuts, to close some loophole somewhere.

So they came up with what probably seemed like a clever idea: eliminate the deductibility of state and local taxes. Hey, that would mainly punish people in tax-and-spend blue states, right? Not their problem.

But this turns out to be a much bigger deal than they seemed to realize. (As with health care, they appear to have no idea what they’re doing.) According to the nonpartisan Tax Policy Center, their plan would give huge tax cuts to the top 1 percent, who would receive 79.7 percent of the benefits. But eliminating deductions would make many Americans, especially in the upper reaches of the middle class, directly worse off: Almost 60 percent of households between the 80th and 90th percentiles of the income distribution would face tax increases.

 

And this would happen even though the plan would add several trillion dollars to the deficit. Did I mention that many of those facing tax hikes vote Republican?

How are the tax plan’s advocates responding to their very big, very bad problem? Partly with evasiveness: You can’t evaluate our plan yet, declared Mick Mulvaney, Trump’s budget director, “because it’s not finished.” And partly with outright, ludicrous lies: “Wealthy Americans are not getting a tax cut,” declared Gary Cohn, chief Trump economic adviser. Who are you gonna believe, me or basic arithmetic?

In broad outlines, the tax story is a lot like health care. In both cases, Republicans have spent years getting away with big promises backed by lies. Now, with real policy to be made, the lies won’t work anymore. And they can’t handle the truth.

 

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