This week the Senate finally passed the controversial Republican tax plan. While everyone’s taxes will fall, by far the biggest beneficiaries of the tax cuts by over the next decade would be the top 1% and the top 0.1% of American households, says Ben Chu in The Independent. What’s more, the way the bill is drafted implies that, by 2027, taxes would rise for the lowest income groups. At the same time, the bill also repeals the Obama administration requirement that all Americans obtain health insurance. As a result, 13 million fewer Americans, most of them poor, will have health coverage by 2027.
“This is a tax plan conjured up by people who have spent their lives lining their wallets at the expense of the ‘hard-working Americans’ they so piously claim to protect”, says Michael Moritz in the Financial Times. Indeed, “instead of stiffing the banks – as was his past practice when one of his many misbegotten real-estate adventures failed”, President Donald Trump is “now stiffing the generations who will be left to deal with the consequences of this tax plan”. Still, “I suppose we should have expected this, since piling up debt is the one arena where, before arriving in Washington, Trump can genuinely claim to have excelled”.
So much for the Republicans’ endless “fiscal moralising”, says Economist.com. They have cast aside their Obama-era insistence on balanced budgets, showing that they have no objection to government borrowing when it suits them. “The overarching policy objective that unifies them is cutting taxes – and damn the fiscal consequences.” Those consequences will be more serious than they have consistently claimed.
The Republican leadership and the Trump administration have said that these tax cuts will pay for themselves. But the Joint Committee on taxation thinks that they will cost $1 trillion by 2027. The implication is that they could generate enough growth to pay for around a third of the overall package. These cuts will add another 3-4% to America’s debt-to-GDP ratio, which current projections suggest will be around 91% that year.
While the passage of the bill is being seen as a major victory for Trump, it is actually “yet more evidence of the president’s weakness, rather than as a sudden demonstration of new stature”, argues Matthew Glassman on Vox.com. After all, he “appears to have had little influence over the timing or substance of the policies the House and Senate devised” and was “content to simply sign on to whatever agenda congressional Republican leaders set”. So, “far from unifying Republicans around a Trump agenda, he appears reduced to cheerleading for a Republican one”.