Op-ed: Republican economic theory is out of touch on debt and taxes

J. Scott Applewhite, Associated Press

Rep. Mark Meadows, R-N.C., left, chairman of the conservative House Freedom Caucus, and Rep. Doug Collins, R-Ga., right, walk to a meeting of House Republicans. Meadows opposed connecting the Harvey aid bill to increasing the U.S. debt limit.

President Donald Trump pulled the proverbial rug out from under his Republican frenemies in Congress by doing a deal with the Democrats over Harvey funding and the debt ceiling. GOP legislators wanted to use the debt ceiling once again as ransom for getting spending cuts, but Trump turned the tables on them.

There are some important principles in play here that illustrate how out of touch Republican economic theory is. While being correctly concerned about the rising federal debt, they want to solve this thorny problem by cutting taxes and shrinking government. There are two problems here.

First, Republican rhetoric is misleading in a couple of ways. They’ve been selling the idea for almost 40 years now that tax cuts pay for themselves. Unfortunately, there is no evidence that this is true (and plenty of evidence that it is nonsense). They also claim repeatedly that their tax cuts will primarily benefit the middle class and the poor. But simple math shows this is also a fib. Their tax cuts always pay off primarily for the wealthy.

Second, it is difficult to cut government spending significantly. Social Security and unemployment account for about 33 percent of spending. Medicare and other health spending add up to about 27 percent. Military spending amounts to about 16 percent. Interest on the debt is about 6 percent. Veterans benefits contribute 4 percent more. These five categories add up to about 86 percent of government spending.

Some conservatives clamor for cuts to “entitlements,” but this is rather unrealistic. With the baby boomers retiring in droves, many of them with little or no retirement savings because they either weren’t paid enough or their employers eliminated their pensions, demands on Social Security and Medicare will increase, not decrease, over the next several years. And with pay for the bottom 80 percent of the workforce flatlining, more and more young people will require government…

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