GOP Gamesmanship on Taxes and Deficits

Posted by AzBlueMeanie:

The GOP's "Gimmicks-R-Us" shop that crafted a sunset provision into the Bush tax cuts to get around using the reconciliation process to double the national debt in eight years is coming back to bite them at the end of this year. An expiration of a law is not the same as enacting a law. But that never stopped a Republican from shouting "Democrats are raising taxes!" Ezra Klein explains the gamesmanship. Republicans now blaming Democrats for Bush tax cuts:

The new Republican line is that there's a “Democrat tax hike" on the way. And it's a big 'un: "An unprecedented $3.8 trillion increase" that will affect — and this is their bold and underline, not mine — "every American who pays income taxes!"

To understand what's going on here, you need to go back 10 years to the passage of the Bush tax cuts. In order to maximize the size of the cuts, Republicans had to minimize the influence of minority Democrats on the package. So they chose to run the bill through the reconciliation process.

But that posed some challenges. Budget reconciliation had never been used to increase the deficit. In fact, it specifically existed to decrease the deficit. That's why one of its rules was that you couldn't use it to increase the deficit outside the budget window. Republicans realized they could take that very literally: The budget window was 10 years. So if the tax cuts expired after 10 years, they wouldn't increase the deficit outside the budget window. They'd also have the added benefit of appearing less costly in the Congressional Budget Office's estimates, as the CBO duly scored them as expiring after 10 years, which kept the long-range budget picture from exploding.

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But the plan was never to have the tax cuts expire. Instead, the idea was that people would get used to the new tax rates, and no future Congress would want to allow a big tax increase, so when the time came, either Republicans in office would extend the cuts or Republicans in the minority would hammer Democrats until they extended them. And that's where we are now: Democrats control the government, so Republicans are screaming about tax increases as a way to get Democrats to extend tax cuts.

It's really hard to know where to start with this one. It's not a tax increase passed into law by Democrats. It's a reversion to old tax rates passed into law by Republicans. It's not how law is supposed to work. It's the result of twisting a budget process meant to reduce the deficit so you could use it to massively increase the deficit. And as for the policy itself, it's a fiscal nightmare: No one who professes concern for short-term deficits can argue for the extension of these deficit-financed tax cuts and retain credibility on debt issues. This is a litmus test. It's not Democrats who are trying to pass the largest tax hike of all time, but Republicans who are calling for the largest increase in the deficit in memory.

Graph credit: Center for Budget and Policy Priorities.

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