When Congress was on the cusp of passing the Republican tax plan last year, experts lined up to warn about the effect the plan would have on the federal deficit and the stress it would place on future budgets. As predicted, the Congressional Budget Office now reports that the tax cuts will add $1.85 trillion to the federal deficit over the next decade.
But rather than recognizing the deficit-ballooning role of their unpopular and lopsided tax cuts, Republican leaders are instead blaming Social Security, Medicare and Medicaid.
Under the guise of addressing the federal deficit, those GOP leaders are taking aim at health care and Social Security — threatening Americans’ access to medicine and secure retirement. Under GOP Speaker Paul Ryan’s leadership, the House has already passed a budget with a $537 billion cut to Medicare. Now, Senate Majority Leader Mitch McConnell is also testing the waters for cuts to entitlements.
Remarkably, while they’re considering how to make cuts to health care and Social Security, Republicans are pressing for even more tax cuts that will continue to grow the deficit, starting the cycle all over again.
Last year’s tax bill delivered more than half of its benefits to the wealthiest 5 percent of households, cut the corporate tax rate by 40 percent and triggered record-breaking stock buybacks that gave windfalls to CEOs and shareholders (all while promised wage increases for workers have been few and far between).
It’s wrong for politicians to ask seniors and the poor to pay for tax cuts for the wealthiest and most powerful. And it’s disingenuous for lawmakers to claim that Social Security, Medicare and Medicaid are driving the deficit when the latest numbers from the CBO show that these programs increased in cost by a combined $73 billion last year while corporate tax cuts alone cost $92 billion over the same period.
These programs, which people contribute to throughout their working lives, are crucial to guaranteeing retirement income and access to health care for hundreds of thousands of Mainers. In Maine, 329,968 people hold original or Advantage Medicare plans. Meanwhile, 261,363 Mainers use Medicaid or the Children’s Health Insurance Program. According to census data, 200,987 Mainers are collecting Social Security benefits.
These programs support the ability of Mainers to afford the basics. Together, they bring $8.12 billion to the state each year, according to reports from the Kaiser Family Foundation and census data. It would be a mistake to unnecessarily go back on the promises around which so many Mainers have planned their retirement and health care, especially when doing so would take money out of Maine’s economy.
A more sensible solution exists.
Deficits on their own do not constitute a crisis. Experts don’t find a debt threshold over which the economy meaningfully is compromised. Instead, the key goal during good economic times is stability, which can only be achieved when the economy is growing faster than the deficit.
Thanks to the budget-busting tax cuts, it’s not. Despite our relatively strong economy, this year’s deficit increases out-paced economic growth nearly sixfold. The Trump tax cuts are contributing to that rapid deficit growth. A joint statement from the Treasury and Office of Management and Budget in October reported that federal revenues will fall short of their 40-year average in 2019, down to only 16.5 percent of GDP. That’s a $181 billion drop in real terms from the four-decade average.
A recent PBS/NPR/Marist poll indicates that 60 percent of Americans would rather roll back the Trump tax cuts than cut Social Security, Medicare and Medicaid — including a plurality of Republicans. Instead of targeting seniors and the poor with cuts, political leaders should strengthen and these critical programs, which promote greater economic opportunity for all Americans. Congress should rebuild revenues to historic levels by closing loopholes for the wealthiest and big corporations and start rebalancing the tax code.
A good start would be repealing the Trump tax cuts.
Sarah Austin is the lead tax and budget policy analyst at the Maine Center for Economic Policy, a nonprofit, nonpartisan research and analysis organization based in Augusta.