Thirteen Republicans
The lone Republican not from those states to oppose the bill? North Carolina’s Walter Jones, who represents the 3rd District covering much of eastern North Carolina.
The bill passed 227-205, with all 227 yes votes coming from Republicans. The 12 other than Jones who opposed it did so primarily because it eliminates the federal deduction for state and local income taxes and sales taxes. Since those congressmen are from high-tax states, that provision would hurt their constituents.
Jones, though, opposed it for a bigger reason: The bill would have the United States borrow at least $1.5 trillion to pay for tax cuts. That money would be paid back by our children and grandchildren down the road.
There are a number of major flaws with the House plan, and with the proposal the Senate will consider in coming days. But the defect that Democrats and Republicans alike should balk at is the $1 trillion to $2 trillion the bills would add to the nation’s debt over just the next 10 years. America’s debt passed the $20 trillion mark recently. It will grow to $30 trillion under current law over the next 10 years. The House and Senate tax reform plans would do nothing to slow that and in fact would accelerate it. Accounting gimmicks make the true ballooning of the debt likely to be much more.
As Jones reminded voters, Michael Mullen, when he was chairman of the Joint Chiefs of Staff, warned that the country’s greatest national security threat was the debt. He said that seven years ago; the debt has grown 50 percent since then.
“I’m all for tax reform,” Jones said after Thursday’s vote, “but it must grow the economy, not the debt.”
And that points to the other major flaw of this legislation. It’s based on the premise that massive tax cuts will spur dramatic economic growth. You may have heard this argument before, like when the Bush tax cuts went through in 2001. That led to a quick sugar high, sluggish growth and then a precipitous crash. Companies did not use the money saved from tax cuts or repatriation of overseas cash to hire workers. They mostly increased their shareholders’ dividends and bought back their own stock.
President Trump’s chief economic adviser, Gary Cohn, was speaking at a CEO forum recently, trumpeting the tax cut plans and what they would do for job creation. The audience of executives were asked to raise their hands if they would increase their capital investment if the tax cuts go through.
A few hands went up.
“Why aren’t the other hands up?” a baffled Cohn said.
Cohn should not have been surprised. We have seen over and over that tax cuts don’t ignite investment and hiring. Rather, companies do that when they believe there are customers to support the investment.
Why do Republicans think this time will be any different?
The Charlotte Observer (Charlotte, N.C.)