As Republicans threaten to tank the entire U.S. economy in order to force through massive cuts to federal programs and climate initiatives, supposedly to reduce the national debt, a new report finds that one of the GOP’s parallel efforts to make permanent a deluge of massive tax cuts for corporations and the wealthy would undo all of the “savings” from their debt limit package and pile trillions of dollars onto the national deficit.
According to a Congressional Budget Office (CBO) analysis requested by Senators Sheldon Whitehouse (D-Rhode Island) and Ron Wyden (D-Oregon) released this week, Republicans’ plan to permanently extend the Tax Cuts and Jobs Act (TCJA), signed into law by President Donald Trump in 2017, would add $3.5 trillion to the deficit within the next decade.
Extending the individual income tax provisions alone, most of which are slated to expire by the end of 2025, would add $2.5 trillion to the deficit, the CBO found. Debt-service costs would add another $278 billion. Meanwhile, the inclusion of other provisions within the TCJA, like the extremely high estate tax exemptions and business tax provisions, would tack on another roughly $1 trillion.
This would wipe out all of the budget cuts proposed under House Speaker Kevin McCarthy’s (R-California) debt ceiling bill, undermining the entire purported purpose for the cuts. According to an Americans for Tax Fairness analysis of the cuts, McCarthy’s debt limit bill cuts $3.2 trillion in discretionary funds from vital agencies and from provisions like renewable energy spending.
Meanwhile, the TCJA has provided huge benefits to the wealthy — having already added $2 trillion to the national deficit — and would continue to do so if its provisions were made permanent.
According to an analysis published earlier this month by the Institute for Taxation and Economic Policy, the richest 20 percent of Americans would see 63 percent of the tax cuts from extending the TCJA, while the poorest 20 percent would see only 1 percent of them. The average tax cut for the richest 1 percent would be $25,650 in 2026 — or the entirety of a yearly income for a full time worker paid $12 an hour. Meanwhile, the poorest 20 percent would see an average tax cut of merely $100.
In other words, if the GOP got their way with both the tax cuts legislation and McCarthy’s debt ceiling bill, Republicans would be sapping trillions of dollars away from the public and government agencies in order to funnel major tax cuts to the rich.
The report is further proof that Republicans only use their hand wringing about the deficit as a cover to cut spending for public programs and that it is a moot topic when it comes to giving favors to the wealthy and corporations.
“As the CBO report makes clear, the GOP is fine with piling on more government debt if it means shielding their rich friends and benefactors from paying their fair share of taxes,” executive director of Americans for Tax Fairness David Kass said in a statement. “We know Republicans’ long-time strategy is to gut the programs and services that working families rely on and transfer those public dollars directly into the pockets of the ultra-wealthy. But it’s still shocking to see the cycle play out so brazenly.”
Whitehouse also pointed out Republicans’ clear ulterior motives in a statement.
“MAGA Republicans don’t give a damn about the deficit, and today’s estimate of the cost of kickbacks for their friends and donors is further proof,” Whitehouse said. “Republicans racked up the national debt by giving tax breaks to their billionaire buddies, and now they want everyone else to pay for them.”
The report bolsters other analyses on the TCJA. In March, the Center for American Progress found that tax cuts enacted by the TCJA and by President George W. Bush in 2001 have caused more than half of the increase in the debt ratio — or the proportion of the national debt to the size of the economy — since 2001. If the Great Recession and COVID-19 recession stimulus packages are excluded from analysis, the packages were responsible for 90 percent of the increase of the debt ratio, the report found.