Sort by

Tax Reform and Its Automatic Budget Cuts are Starve-the-Beast in Action

Mark Huelsman

“The budget also reflects a series of tough choices. If taxpayer money were limitless, we wouldn’t need a budget at all. But by its very definition, a budget reflects the difficult decisions of how best to appropriate the limited taxpayer dollars we have.”

-Secretary Betsy DeVos, to the House Appropriations Committee, May 24, 2017

For much of the past month, the national discussion has fixated on what is—and what isn’t—included in Congressional Republicans’ plans for tax reform. From stories about which families or states would see a net benefit, to tick-tocks about which deductions and incentives remain in the Senate bill that were eliminated in the House bill, to analyses over the impact of tax cuts on the deficit, the focus has been on which individual provisions can get so-called moderate GOP senators to fall in line and vote for the bill.

In essence, the tax debate has been about, well, what the tax system is going to look like and who’s going to come out ahead (hint: not low-income families). While this makes all kinds of sense, it actually undersells the impact of this current debate on working-class communities, and misses part of why the GOP tax plan is so radical.

Right before tax reform debate began in the Senate, the Republican Congress passed a budget resolution to free up the funds for its impending tax cuts. This was a necessary move in order to pass a tax cut bill without needing any Democratic votes, and freed up $1.5 trillion for the GOP to use on tax cuts that mainly favor the wealthy and corporate interests. But that $1.5 trillion didn’t just come from anywhere—in order to get to that $1.5 trillion, Republicans had to outline the same amount of money in cuts to government spending over the same time.

These cuts, unless Congress chooses to pass separate laws avoiding them, are automatic and deep. Margot Sanger-Katz of the New York Times is out today with a beautiful—and terrifying—visualization of what those cuts mean. Among other things, they include $25 billion in cuts to Medicare, $13.4 billion in cuts to programs that fund medical care, funeral expenses, job losses and mental health counseling for victims of crime, and nearly $4 billion in cuts to programs investing in rural communities. They include $1.7 billion in cuts to social services block grant programs like Meals on Wheels, which Trump administration OMB (and now CFPB) director Mick Mulvaney has claimed do not “show results” (which is not only heartless but has the added benefit of being wildly untrue).

There’s a ticking clock on when some of these cuts will kick in; some will happen as early as next year. Maybe Congress will step in and save some programs, maybe not. But through sheer inertia, Republicans can ensure that social spending goes down in order to partially pay for tax cuts. They can allow some critical programs to waste away simply by not doing anything.

And we have plenty of evidence that massive cuts to the safety net are part of current conservative governing philosophy. Earlier this year, the Trump administration’s budget called for over $2 trillion in cuts to non-defense spending, Medicaid, and the Children’s Health Insurance Program. Some of that comes from successful but already-meager government benefits, from TANF to the Supplemental Nutrition Assistance Program, and none of it comes from the military or national defense budget.

On higher education, both Trump’s budget and Congressional Republicans have proposed cuts to the surplus from the Pell Grant program, which would now be less likely to be made whole again if, say, a recession occurs and there’s less government revenue to go around in the future. Likewise, their budget proposals this year have called for cuts to subsidized student loans, Public Service Loan Forgiveness, and the consolidation of various programs without any added investment in students or the institutions they attend.

This governing philosophy is as damaging as it is self-fulfilling. With lower tax revenue, future administrations and Congresses will continue to argue—as Betsy DeVos and other cabinet officials did earlier this year—that cuts to the safety net reflect “tough choices,” and that we simply “cannot afford” some of the programs upon which families rely for basic needs. Tough choices, in essence, almost never come at the expense of wealthy households. 

Simply put, this tax reform debate cannot be about only one side of the ledger. Sure, by all accounts, the benefits of the GOP tax plan accrue to the wealthy at a time of record inequality, and we should scrutinize why the relief in this plan is permanent for corporations, temporary for the middle class, non-existent for the working class. Heck, we might even want to discuss the effect of this plan on the national deficit. But let’s not lose sight of the impacts of this tax plan, the cuts that go hand-in-hand with it, and the political philosophy underpinning it.