GOP Tax Plan Would Not Shrink the Size of the Federal Government

The middle class is not getting tax relief under the GOP tax plan currently under consideration. It’s getting big government on a credit card.

This is yet another indication that the size and scope of the federal government never shrinks, no matter which party controls Washington D.C.

Here’s a fun fact. Did you know virtually all of the individual tax cuts in the Senate version of tax reform are temporary?

Indeed, what the Senate giveth, it also taketh away. Most of the tax cuts for individuals would expire in 2026 under the Senate plan.

So what’s the reasoning behind sunsetting the tax cuts?

Under Senate rules, any bill adding more than $1.5 trillion to the deficit over 10 years must pass the Senate by 60 votes. Republicans have to keep their plan under that figure to have any chance at passing it. They don’t have 60 votes. By allowing the individual tax cuts to expire within that 10-year window, the total deficit increase comes in right under that max amount.

One might pause here to consider that a $1.5 trillion increase in the deficit is somehow considered trivial. As we have reported, many economists say the substantial increase in debt that will occur if Congress passes tax cuts without any accompanying decrease in the size of government will fail to spark the economic growth being promised.

In his latest podcast, Peter Schiff reiterated that it won’t.

Even if they are able to deliver, I think it’s going to be a buy the rumor, sell the fact, especially since the fact is not going to deliver what the rumor promises, which is a lot more economic growth. These tax cuts are not going to grow the economy because they do not shrink the size of government. Government continues to grow despite the tax cuts, meaning the government will have to find an alternative source of revenue, and that alternative source will be deficit spending and money printing, which will be negative for the economy.”

Nevertheless, the GOP is pushing ahead with its plan and trying to gingerly step around a slew of political landmines. By keeping that deficit figure below $1.5 trillion, they skirted one mine. But their solution buries another. The Republicans have painted themselves into a tight corner. Now they have to explain to the middle class why their tax cuts are going away in less than 10 years while corporations get “permanent” cuts. After all, the rhetoric all along has centered on relief for the middle class.

Peter said this shows just how disingenuous the whole process is.

The Senators are saying, ‘Oh, don’t worry about the fact that these tax cuts are temporary because no future Congress is going to allow them to expire.’ So that in six years, when the temporary tax cuts are coming to an end, a future Senate and Congress and president will pass legislation to prevent that from happening. So, in other words, they’re admitting the whole thing is a sham, because they’re using the expiration period to make the impact on the deficit smaller, but they’re saying, ‘Oh, it’s really not going to make the deficit smaller because we’re not going to allow the tax cuts to expire the way we’ve written into the bill in order to be able to pass it we are going to cancel it,’ which means the whole thing is a farce. It means that the Senate version of the bill adds much more to the deficit than what the senators are claiming in order to get the thing passed. So, the whole is smoke and mirrors.”

Either direction you step, you hit a land mine. On the one hand, the tax plan will add even more to the national debt than advertised – a number already north of $20 trillion. That would have real negative ramification on the US economy.

On the other hand, do you really trust that a future Congress and president won’t let the tax cuts expire? Peter doesn’t.

I’ve made this point before. No tax cuts are permanent. It doesn’t matter what these guys say.”

Peter pointed to the state of Illinois to illustrate this point. In 2011, the state cut its individual tax rate from 5% to 3.75%. It was touted as a permanent tax cut. This year, the state raised the rate back up to 4.95%. So, the permanent tax cut lasted all of six years.

Why did the Illinois have to raise rates again? Because the tax cuts came with no corresponding reduction in the size of government.

While Illinois cut taxes, it didn’t cut government spending. Government spending kept growing. So, in other words, those tax cuts were not really tax cuts. It was like putting your tax cut on your credit card because now Illinois taxpayers have to pay for all those tax cuts … They didn’t cut taxes. They just said, ‘Hey, you can have all this government and you don’t have to make any payments until 2017.’ It was all this free government, but the bill wasn’t going to come for six years.”

It’s the same with this GOP tax plan. The middle class isn’t getting tax relief. Its getting government on a credit card.

If your kid was running up huge credit card debt, what would you do? I bet you would cut up the card.

That’s the only hope of reining in the size and scope of the federal government. Unfortunately, D.C. will never limit itself. The only hope is to minimize the government ability to print money out of thin air. That means undermining the Federal Reserve’s monopoly on money. Click HERE to read the Tenth Amendment Center’s 4-step plan for doing just that.

The Tenth Amendment Center is a national think tank that works to preserve and protect the principles of strictly limited government through information, education, and activism. The center serves as a forum for the study and exploration of state and individual sovereignty issues, focusing primarily on the decentralization of federal government power as required by the Constitution.  This article originally appeared at:   http://tenthamendmentcenter.com/2017/11/29/gop-tax-plan-would-not-shrink-the-size-of-the-federal-government/