Why another round of tax cuts is a monstrously bad idea
The White House is considering another round of tax cuts, according to an article last Thursday by The Post’s Erica Werner, Josh Dawsey and Jeff Stein. This is a monstrously bad idea, but it’s hardly a surprise. It displays President Trump’s cavalier attitude toward budget deficits, as earlier reflected in his 2017 tax cut of $1.5 trillion over roughly a decade. Nothing in the October jobs report (unemployment rate 3.6 percent, payroll jobs up 128,000) suggests that the labor market needs more stimulus.
What we have here is a glaring example of a political bribe — tax cuts — masquerading as economic policy. The economy is already near “full employment,” with budget deficits of $12 trillion projected for the period of 2020-2029. Any Trump tax cut would simply add to the total. To be fair, Democrats’ various spending proposals — for expanded health care and free college — seem to treat present deficits as a fait accompli and build on top of them.
At this stage of the business cycle, the government should be running small or large budget surpluses. Instead, any new Trump tax cuts would amount to campaign spending. Trump would borrow with one hand and give away the proceeds with the other. The message would not be subtle: Vote for me and receive, in return, more tax cuts. The cost is likely to be considerable.