When congressional Republicans last year passed their massive, deficit-funded tax cut, they promised it would help working people and pay for itself with economic growth. Since then, the already-apparent outcome of the cuts has been the rich getting richer as working people's wages have remained almost stagnant.
And now the other shoe drops: The fiscal year that ended last month saw the biggest U.S. deficit in six years, according to new federal data.
This isn't the first time the Republican religion called supply-side economics has been debunked by hard numbers. As is generally the case with true believers, though, they're not going to be persuaded by facts. Across the nation, Republican congressional incumbents continue to talk about the tax cuts as if they saved the nation from Armageddon. At this point, only a resounding ballot box defeat would shake their unwarranted faith.
What former President George H.W. Bush once correctly derided as "voodoo economics" (before later embracing it) is based on an unlikely leap of faith: If you slash taxes for the rich, their re-investment of those savings would so boost the economy that the losses to the federal treasury would be more than offset by revenue from the taxes of newly hired workers and other stimulus-prompted economic activity.
The judicious use of tax cuts to spur the economy during troubled times has long been accepted by economists; even President Barack Obama used cuts to help pull the economy out of the nosedive he inherited in 2009. But the notion that cuts automatically pay for themselves, and so should be deployed as often and as deeply as possible, has been repeatedly disproven in practice — starting with huge deficits run up by the original voodoo economics practitioner, President Ronald Reagan.
Unlike Obama, Republicans last year weren't responding to an economic emergency; the Obama-directed recovery had long been in progress with no sign of slowdown. Their tax cuts weren't about economics, but politics, which is why the largess was so lopsided toward corporations and the wealthy. Much of it was used for record-breaking stock buybacks that primarily enriched already wealthy stockholders.
And those promised skyrocketing wages? They've barely outpaced inflation.
Still, even a little benefit is better than none if it all pays for itself, right? Except that's not happening. The Treasury's annual report, released Monday, shows the U.S. deficit widened in fiscal 2018 to $779 billion, some $113 billion more than 2016 and the highest since 2012.
Treasury Secretary Steven Mnuchin — who last year blithely declared the tax cut package "will pay for itself with growth" — now says that's still going to happen, "going forward."
As always, economic salvation is just around the corner. So is Nov. 6.
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