Rubio: My Tax Cuts Will--and Won't--Pay for Themselves
Of all of the myths Republicans have generated for American voters, the fiction that "tax cuts pay for themselves" is the Uber Lie. After all, almost four decades of U.S history and a mountain of incontrovertible evidence show the only certain outcomes of GOP tax-cutting plans are skyrocketing national debt and ever-widening income inequality. It's no wonder that even Keith Hall, the Republicans' hand-picked choice to lead the nonpartisan Congressional Budget Office (CBO) recently acknowledged, "The evidence is that tax cuts do not pay for themselves."
So it was with good reason that 2016 GOP White House hopeful Senator Marco Rubio (R-FL) initially refused to make that claim about his own tax cut proposals. With some analyses estimating the revenue lost to Uncle Sam to be as much as $4 trillion over 10 years under his scheme, Rubio proclaimed in March:
"I've never believed that tax reform by itself should pay for itself. That basically argues that the money belongs to the government."
Alas, Marco Rubio traveled to Fantasy Land on Monday, telling CNBC's John Harwood that the "dynamic" effect of supposedly accelerated economic growth would stop his hemorrhage of red ink from the U.S. Treasury. When Harwood declared of Rubio, Bush and Trump, "All of you guys have got tax plans, all of you abandoned the guardrail of making [it] deficit neutral," Rubio demurred:
RUBIO: Well, within the ten-year window, my plan begins to create a surplus. The second point I'd make to people is, you can't tax your way into a stable budget.
HARWOOD: Wait, your plan creates a surplus because of the dynamic effect?
As Jeopardy host Alex Trebek might say, "Oh no, I'm so sorry."
As independent analyses have shown, all of the 2016 GOP tax proposals produce red ink as far as the eye can see. The Tax Policy Center among others put the 10-year cost of Rubio's plan at least $2.4 trillion, Jeb Bush's at $3.7 trillion and Donald Trump's as much as $12 trillion. That's why Republicans in Congress and on the presidential campaign trail have turned to so-called "dynamic scoring" in order to make big deficits smaller and convert small deficits into surpluses. Marco Rubio is no exception, touting the fuzzy math of Bill McBride of the conservative Tax Foundation to magically turn red ink black:
[T]he growth in the economy would eventually boost tax revenue, relative to current law. We find after all adjustments (again, about 10 years) that federal tax revenue would be about $94 billion higher on an annual basis. This is our dynamic estimate. Our static estimate, i.e. assuming the economy does not change at all, shows a tax cut of $414 billion per year. We believe the dynamic estimate is much closer to reality.
Just not any reality Americans have lived through since Ronald Reagan first saw the Laffer Curve sketched on a cocktail napkin.
As The Hill ("Republicans embrace debt-busting tax plans") and the AP ("Republican field pushes tax cuts bound to drive up debt") recently documented, the GOP field has tossed deficit reduction to the wind. After the beatings Mitt Romney suffered on the subject, Republican candidates are mostly dropping the constraint that their tax cut windfalls for the wealthy not blowing multi-trillion dollar holes in the budget. Kyle Pomerleau, an economist at the Tax Foundation, put it this way:
"Republican candidates aren't looking to be revenue-neutral" anymore, he said. "They're saying 'let's cut taxes for everyone so we're not accused of raising taxes for everyone.' "
Or as Dick Cheney famously put it to President Bush in 2002, "Reagan proved deficits don't matter." At least, not for Republican presidents or presidential candidates.