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Tipsheet

Fact Check: Democrats Can't Stop Lying About Tax Cuts, Deficits and Debt

AP Photo/Charlie Neibergall

As we've covered recently, the debt ceiling fight is upon us, with initial intra-party and inter-party talks underway.  The US has already technically exceeded the relevant statutory limit, but 'extraordinary measures' enacted by the Treasury Department has pushed the actual cliff off until June.  Whatever one may think about this looming battle, and how each party should play their political hands, let's set the record straight by rebutting a popular talking point among Democrats -- namely, that the 2017 Trump/GOP tax cuts are the real culprit in all of this.  We've seen variations of this feeble spin from Elizabeth Warren, Chris Murphy, and Alexandria Ocasio-Cortez, just to highlight a few. Democrats have been lying and ludicrously fear-mongering about those tax cuts and reforms for years now, and they evidently show no signs of stopping:

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Let's unpack some of this absolute nonsense, piece by piece:

(1) Warren claims Republicans "spent" nearly $2 trillion on the Trump-era tax cuts.  Tax cuts are not government spending.  Tax cuts are allowing people to keep more of the money they earn.  Our earnings do not belong to the government, which munificently allows us to keep some of it.

(2) Warren is making a case in favor of her party's move to double the size of the IRS in the so-called 'Inflation Reduction Act.'  Democrats were given an opportunity to write into their law a provision that this enormous expansion of America's tax collection agency would not target anyone making less than $400,000 per year with its broadened auditing capacity, thanks to tens of thousands of new agents and employees.  They unanimously declined.  Data shows that non-rich Americans are, in fact, disproportionately hit with IRS audits and scrutiny.  This will get a lot worse, for a lot more people.  No wonder Warren wants to pretend this is just about holding rich tax cheats accountable, or whatever.

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(3) Murphy doubles Warren's number on the 'cost' of the tax cuts, making his points twice as wrong.  He frames the tax reforms and cuts as a boon to "corporations and billionaires," favorite lefty bogeymen.  In reality, the tax cuts reduced average tax burdens across every single income group in America, with the overwhelming majority of taxpayers -- especially in the middle class -- receiving a tax cut.  Wages finally meaningfully increased after the law was implemented, disproportionately benefiting working people.

(4) Most importantly, in response to the collective premise of all three tweets, after taxes were cut in 2017, the economy grew and revenues soared to all-time record levels.  Yes, tax revenues increased after taxes were cut.  Blaming these tax reductions and reforms as heavily responsible, let alone primarily responsible, for America's deficit and debt problem is spectacularly wrong.  Again, incoming government revenues went up, hitting historic highs.  New federal revenue records are still being set.  Revenues are not the problem.  Out of control spending, much of it "automatic," is.  Most Republicans are unserious about fixing this unsustainable problem.  Nearly all Democrats deny the problem and insist upon making it much, much worse, as quickly as possible.

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It is fundamentally dishonest to point the finger at the tax cuts (while deeply distorting them) as a serious driver of our national deficits and debt.  There are honest and fair-minded criticisms that the GOP deserves on this front, but the Democrats aren't in a position to prosecute them effectively because in nearly all cases, they've pushed for far more spending, far bigger deficits, and more aggressive denialism.  So they resort to their lazy, fact-free fairy tales about the big bad Trump tax cuts for billionaires.  For those interested in actual nuance and intellectual honesty, read Rich Lowry's critique of Republicans:

After a hiatus during the Trump years, Republicans are back in the mood for fiscal probity. It’s very strange not to seriously pursue a deeply held goal when you have unified control of Washington, then to insist on trying to achieve much of it in one fell swoop when you barely have control of one chamber of Congress...This is the Republican pattern. It has been, fundamentally, driven by the fact that two Republican presidents in row now have won the White House by effectively running against the fiscal conservatism of the congressional wing of the party. The problem is that [Paul] Ryan was right about the substance and Trump is right about the politics, and that dilemma — in a nutshell — is why the country’s debt-to-GDP ratio is nearly 100 percent and is projected to keep climbing. Like the ne’er-do-well occasionally convinced to scrub up and show up at church on a Sunday, the GOP experiences spasms of fiscal rectitude, followed by longer bouts of going along with the usual Washington practice of devil-may-care fiscal blowouts. The party is waging a generational effort … once every 10 years or so. It is showing great staying power … in between the times it barely talks about the issue at all.

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As for the current debt ceiling standoff, I've been arguing that Republicans need to get on the same page with a simple, popular, realistic, modest, unified 'ask' -- and plant the flag there. Whether they'll manage to do so is very much an open question. In case you missed it in my previous post on this subject, I'll leave you with conservative budget expert Brian Riedl's even harsher assessment of Republicans' fiscal policies. Riedl has suggested that one potentially achievable option for the GOP to rally around in this situation is an official rescision of the federak COVID emergency and all of its related authorities, as well as a clawback of unspent COVID 'emergency' funds.

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