|New York Times editorial board room|
The problem with President Trump’s corporate tax cut is that it was not matched by a cut in government spending. Thus it has resulted in an explosion in government debt.
The New York Times in an editorial today made exactly this point:
This week, [Treasury Secretary Steven] Mnuchin repeated the risible fantasy that the Trump administration’s 2017 tax cuts will bolster economic growth sufficiently for the government to recoup the revenue it has lost by lowering tax rates.
“I’ll stick with my projections that the tax deal will pay for itself,” he said from Switzerland.
The claim that tax cuts don’t cost money is a lie that won’t die, because proponents of tax cuts have learned that many voters like to hear it. Republicans have steadily insisted for almost four decades that tax cuts are free, even as each new round of tax cuts fails to pay for itself. Mr. Mnuchin and other proponents of the most recent tax cuts were already peddling a delusion when they made the claim in 2017.
Two years later, the results are in. The annual federal budget deficit has topped $1 trillion. And it is even more difficult to understand how anyone could make such a claim.
Of course, The Times is a supporter of big government so they don’t see the solution as a cut in spending but rather an increase in taxes.
Sadly, they ended the editorial this way:
The economy doesn’t need another round of Keynesian stimulus at the moment, and the federal government needs more tax dollars, not fewer.
The Trump administration instead could press Congress to reverse the 2017 cuts.
The administration also could make a meaningful difference by collecting more of the taxes that corporations and the wealthy still owe.
It wasn’t always this way at The Times.
Henry Hazlitt, who was once an editorial writer for The New York Times, got the full picture right, what is needed is tax cuts accompanied by cuts in government spending, he wrote:
Taxes, in other words, are a purely derivative problem. The real problem is to cut expenditures. But nobody wants to face this. So everybody can be a cheap Santa Claus by voting for tax cuts while voting for more expenditures.