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Dear Congress: Tax Rates Won’t Ultimately Matter If You Never Cut Spending

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Neither party wants to reduce spending—a bad sign for future generations, who will pay the price for current leaders’ profligate ways.

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As Republicans in Congress continue work on tax legislation, reconciling differences between the House and Senate bills, debate continues over the legislation’s fiscal impact. Will an enacted bill end up increasing the deficit—and if so, by how much?

Most experts agree that providing tax relief will increase economic growth, and that growth will deliver additional revenue to the U.S. Treasury. But whether that revenue fully offsets the approximately $1.5 trillion cost of the legislation should miss the point—if Republicans had any sense of fiscal discipline about them.

To put it another way: It’s not about the taxes. It’s about the spending, stupid.

Unfortunately, at present our country lacks a party that actually wants to reduce government spending. One party wants to spend more, and the other party wants to tax less. Neither party wants to reduce spending—a bad sign for future generations, who will pay the price for current leaders’ profligate ways.

Spending Promises, Then and Now

Back in 2010, upon the expiration of the Bush tax relief, Republican leaders repeated the same mantra: “We don’t have a revenue problem. We have a spending problem,” claimed Sen. Mitch McConnell (R-KY), current House Speaker Paul Ryan (R-WI), and others.

Fast-forward seven years, when Republicans control the elected branches of government, and how are they working to solve that spending problem? Ryan and McConnell issued a joint statement Friday claiming that automatic spending reductions triggered by the tax law “will not happen,” and that “we will work to ensure these spending reductions are prevented.”

So much for Washington “having a spending problem.” Their comments attempted to assuage Republicans like Maine Sen. Susan Collins, who said publicly she “would not even be considering voting for this [tax] bill” if she knew it would result in spending reductions.

To be sure, the spending reductions in question—an automatic fiscal sequester imposed by the statutory pay-as-you-go law—are blunt and arbitrary. Congress would have good reason to replace a meat-cleaver version of these spending reductions with a more surgical approach. But that’s not Republicans’ plan: “Within the GOP, leaders are confident that once the tax bill is passed, they can strike a quick deal to waive the federally mandated cuts.”

Holiday Spending Binge Ahead

But Republicans don’t just want to back off on imposing spending cuts—they affirmatively want to increase spending. On Saturday, Republican leaders released a two-week continuing resolution that would fund the government through December 22—just long enough for them to strike a budget-busting deal to increase spending caps.

Rightly fearing the government giveaways that always happen in a mad rush before Christmas, fiscal conservatives want to extend the continuing resolution into the New Year, preventing a rushed end-of-year process that would increase the urge for a spending binge. But Republican leaders have rejected that approach: They want to increase spending NOW—just in time to give the next generation more debt as a Christmas “present.”

The president’s budget this year notes that, prior to the effects of any policy proposals in that budget, the federal government is on track to spend approximately $53.4 trillion over the coming decade. Reducing spending by $1.5 trillion over a decade (the cost of the tax bill before taking into account economic growth) would therefore require reducing federal spending by approximately 2.81 percent—a level of discipline apparently beyond the comprehension of most congressional Republicans.

If Washington had a spending problem in fall 2010—when McConnell, Ryan, et al. made their comments, and the federal debt was “only” $13.7 trillion—it sure has a spending problem now, with the debt up to $20.6 trillion, up more than 50 percent from when the Republican leaders first spoke. Perhaps Republicans could start acting like it, and stop trying to find ways to circumvent budget caps. When you’re in a hole, stop digging.

Better yet, Republicans could actually embrace a fiscally conservative approach and take affirmative steps to solve the “spending problem” they complained about in 2010, rather than using Republican control of Congress to exacerbate it.