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If Trump Is So Serious About Tax Cuts, Why Doesn’t He Cut Spending?

By: Daniel J. Mitchell - @danieljmitchell - May 3, 2017, 8:34 am
Trump tax cuts
In this profligate environment, it’s hard to be optimistic about tax cuts.(Wikimedia)

I want tax cuts. I support tax cuts. I relish tax cuts.

  • I like tax cuts because I’m a curmudgeonly libertarian and I think people should have the first claim on the money they earn.
  • I like tax cuts because I’m an economist and we’ll get more growth if penalties on productive behavior are reduced.
  • I like tax cuts because the academic research supports the “starve-the-beast” theory of less revenue leading to less spending.

This is why I wrote favorably about Trump’s campaign tax plan, and this is why I like Trump’s new tax plan (with a few exceptions).

But I confess that my heart’s not in it. Simply stated, I don’t think the new plan is serious.

If Trump really wanted a big tax cut, he would have a comprehensive plan to restrain the growth of government spending. He doesn’t.

If Trump genuinely wanted lower taxes, he would be aggressively pushing for genuine entitlement reform. He isn’t.

And Congress isn’t much better. At least in the absence of leadership from the White House.

It’s not merely that I’m concerned lawmakers won’t put the brakes on spending. And it’s not just that I fear they won’t enact much-needed entitlement reform. I worry they’ll actually increase the burden of federal spending. Just look what’s happening as Congress and the White House negotiate a spending bill for the remainder of the 2017 fiscal year. The pending deal would trade more defense spending for more Obamacare subsidies. Everyone wins…except taxpayers.

In this profligate environment, it’s hard to be optimistic about tax cuts.

By the way, I fully agree we would get more growth if Trump’s tax plan was enacted. But the Laffer Curve doesn’t say that all tax cuts pay for themselves with faster growth. That only happens in rather rare circumstances.

Yes, the lower corporate tax rate would have a big supply-side impact (and there’s plenty of evidence from overseas to support that notion), but many of the other provisions of his plan are sure to reduce revenue.

Again, I don’t lose sleep about the prospect of less money going to Washington. But you can be sure that politicians pay attention to that issue.

Which is why I’m pessimistic. I don’t think Congress is willing to approve a big tax cut.

The bottom line is that there are three possible outcomes.

  1. Congress and the White House decide to restrain spending, which easily would create room for a very large tax cut (what I prefer, but I won’t hold my breath for this option).
  2. Congress decides to adopt Trump’s tax cuts, but they balance the cuts with dangerous new sources of tax revenue, such as a border-adjustment tax, a carbon tax, or a value-added tax (the option I fear).
  3. Congress and the White House decide to go for a more targeted tax cut, such as a big reduction in the corporate income tax (which would be a significant victory).

Ultimately, I want to completely junk our corrupt system and replace it with a simple and fair flat tax. But for 2017, I’ll be happy if we simply slash the corporate rate.

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review. This article was originally published on FEE.org. Read the original article.

Daniel J. Mitchell Daniel J. Mitchell

Daniel J. Mitchell has a PhD in economics from George Mason University and is a senior fellow at the Cato Institute.

DNC Head Tom Perez Wrong to Suggest “No Human Being is Illegal”

By: David Unsworth - @LatinAmerUpdate - May 2, 2017, 4:56 pm
The American Left increasingly promotes a narrative in which borders and immigration laws are illegitimate (

Yesterday DNC chair Tom Perez addressed a gathering of workers' and immigrants' rights groups in front of the White House, sharing a refrain often repeated by the social justice warrior crowd: "No human being is illegal." Perez, who narrowly bested Bernie Sanders-backed Minnesota Congressman Keith Ellison in the race to head the DNC, is the former Secretary of Labor in the Obama administration. The emergence of a Perez/Ellison horse race is an indication of just how radicalized the base of the Democratic party has become in the wake of Trump. To the hard left of the Democratic party, borders are an injustice, attempting to enforce and control them is racist, and anyone who wants has the inherent right to immigrate to the United States. In this socialist fantasy world, it would be a grave injustice to deny anyone the opportunity to enter the US and take advantage of its extremely generous social safety net. In this Orwellian fantasy world of politically incorrect thought crimes, it becomes socially unacceptable to even ascribe the accurate terms "illegal" and "immigrant" to a human being. Read More: To Solve the Immigration Conflict in the US, Just Look to the Constitution Read More: Three Myths that Distort US Debate on Immigration The fundamental problem with the mantra, "No human being is illegal" is that it is inherently untrue. Human beings are subject to the laws, rules, and regulations of the sovereign nation in which they are located. It is their moral, legal, and ethical responsibility to obey those laws. To suggest that the rule of law is subject to the interpretation of those who wish to violate it, will lead us down the slippery slope towards anarchy and chaos. Immigration law applies to all human beings, whether the American Left chooses to acknowledge it, or not. American citizens are also subject to rigorous enforcement of immigration laws. Brazil, Russia, India, and China, for example, all have difficult and burdensome requirements merely to apply for a tourist visa. When I applied for a visa to Brazil, for example, I was required to prove that I would not become an economic burden on the Brazilian state, and to show 6 months of bank statements proving substantial financial resources. Brazil, as a sovereign nation, has the absolute right to set their own immigration rules and regulations, as does the United States. Tom Perez's suggestion that we can disregard the laws that we don't like is a dangerous one. Illegal immigrants have no right to be in the United States, neither morally nor legally. A new generation of social justice warriors has emerged, advocating a radical ideology of victimhood. In their twisted logic, citizens from economically deprived nations are "victims" who have the fundamental "right" to come to the United States regardless of what immigration law has to say about it. To the Democratic party nothing would be more delightful than mass immigration from third world countries: the more people relying on government social safety nets, and receiving free taxpayer-funded education, healthcare, food, housing, and transportation, the better. After all, today's penniless third world immigrant is tomorrow's most loyal Democratic voter. Fundamentally, socialism and mass illegal immigration are the perfect partners in crime. During his eight year presidency, Barack Obama repeatedly and flagrantly refused to enforce American immigration law, or enforce our southern border, to the delight of hard-left Latino activists, who constitute a key power base in the Democratic Party. The Democratic establishment was shocked on November 8, when Trump won nearly a third of Latino votes. How could this happen? How could a man who had antagonized the Latino community so, perform better with the Latino community than moderate Mitt Romney? The answer is that the American Latino community is hardly monolithic. There are plenty of conservative, libertarian, and moderate Latino voters, in addition to the Tom Perezes of the world. The Latino community is also hardly monolithic with regard to immigration. In fact, a recent poll by Pulse Opinion Research demonstrates that Latinos are also extremely concerned about unchecked immigration: "Of likely Hispanic voters, 51 percent responded that efforts to enforce the law have been "too little", compared to 38 percent who indicated that it was 'too much' or 'just right'." That hardly seems to bolster Perez's contention that "no human being is illegal." Nor does it bode well for Democrats' attempts to use immigration as a wedge issue to boost Latino turnout for Democratic candidates. googletag.cmd.push(function() { googletag.display('div-gpt-ad-1459522593195-0'); }); Illegal immigration presents serious problems for society. It drives down the wages of American workers. It funds murderous human trafficking networks who control migratory routes through Central America and Mexico. It outrageously strains American education, healthcare, judiciary, transportation, and infrastructure, as millions of illegal immigrants use public services but pay little to no taxes to fund them. Under Article II of the Constitution, it is the president who has the authority to regulate immigration in the United States, a view that has been consistently upheld by the Supreme Court. The Trump administration is currently under siege by liberal activist judges, many based in the 9th Circuit, who seek to make, rather than interpret, the laws, in subversion of American Constitutional order. So, sorry Tom. Yes, it is not illegal to be a human being. But, no. You are fundamentally incorrect to suggest that "no human being is illegal." Immigration laws and borders are real and legitimate and sovereign nations have every right to enforce them, despite what the hardcore liberal activists and social justice warriors heading up the Democratic Party may say.

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