Republicans proved once again that they know how to tackle big issues and govern, recently passing the most significant tax overhaul in more than three decades.
It will not only lure tax-battered corporations back home from abroad, it will also unlock capital investment to create stronger economic growth and better-paying jobs, boost middle class incomes, and hand the GOP a winning issue heading into the 2018 midterm elections.
Left-wing, tax-crazy Democrats complained that the bill would further enrich big business and the wealthy and do nothing to boost middle-class paychecks. These were the same big-spending voices in the past who opposed the Kennedy tax cuts in the 1960s and the Reagan tax cuts in the 1980s, both of which strengthened the U.S. economy and improved the lives of ordinary Americans.
Yet even the liberal, tax-happy Washington Post had to admit that the GOP’s tax cuts “would lower income tax bills in 2018 for the vast majority of households.”
It was President Trump’s first major legislative victory in a year of policy turmoil, political controversy and legislative gridlock. While the president’s approval polls have fallen into the 30s, in large part the result of the nasty fights he has had with lawmakers on Capitol Hill and other critics, the U.S. economy has scored major advances in anticipation of the tax cuts he has championed.
The stock market has recorded record gains for much, if not most, of his first year in office, with the S&P 500 stock index up by about 20 percent. And the mighty Dow, the 30-stock industrial average, is soaring toward 25,000. After eight years of painfully sluggish economic growth under Barack Obama’s failed presidency, when the GDP, the broadest measurement of our economy, never climbed out of its 2 percent slump, the Trump economy is already growing at 3.3 percent or higher. Some economists are predicting 4 percent growth once the tax cuts fully kick in. The naysayers, the people who called Obama’s puny growth rates “the new normal,” insist that much higher economic growth is impossible.
But Reagan’s across-the-board tax cuts led to quarterly growth rates of 5.6 percent and 7.7 percent in 1983 that rose to more than 8 percent in 1984. Nevertheless, polls shows the tax cuts are unpopular among 55 percent of Americans who fear it will sharply reduce tax revenues that will worsen the nation’s $15 trillion debt and force spending cuts in social programs like Social Security and Medicare.
The Congressional Budget Office forecasts that, even without the tax cuts, the government’s debt will swell to at least $25 trillion over the next 10 years.
I’ve written three books on wasteful spending, one of which, “Fat City,” Reagan handed out to every member of his Cabinet at their first meeting in January 1981. So I know where there are hundreds of billions of dollars, eventually trillions, that can be saved by abolishing waste-ridden, outmoded, nonessential, inefficient programs, bureaus, subsidies and agencies.
Congress needs to get started, perhaps by creating a permanent budget-cutting joint committee that would be authorized to comb through the entire government each year to compile an annual list of candidates for the axe. And require, by law, an up-or-down recorded vote on each and every program they deem a waste of our tax dollars.
But another way to slash the budget deficit is by raising revenues through stronger economic growth, and I predict these tax cuts will bring in a great deal more revenue than CBO is currently forecasting. Many corporations are already announcing that they will be investing much more in plant expansion than in the previous eight years of Obama’s presidency, a period that was widely criticized for a lack of capital investment. Small businesses are among the the biggest producers of new jobs, and this pro-growth, pro-investment tax reform package will lead to a tidal wave of new enterprises, jobs and employers. And many of them will become future corporations and ripe targets for a growing capital investment market.
But the bottom line of this tax package disproves House Democratic Leader Nancy Pelosi’s false accusations that most taxpayers benefiting from the tax cuts are the rich, leaving little for middle- and lower-income people. The truth is that the vast majority of taxpayers will see their taxes cut, while just 5 percent of Americans, most of whom have six-figure incomes, will end up paying more, says the nonpartisan Tax Policy Center. This massive tax cut bill is a giant step toward making America even greater than it already is.
Donald Lambro has been covering Washington politics for more than 50 years as a reporter, editor and commentator.