Not long ago, Paul D. Ryan stood before charts and graphs as the House Budget Committee chairman like a new Ross Perot, promoting an austerity plan that slashed taxes and spending, and warning of the dangers of deficits.
“The facts are very, very clear: The United States is heading toward a debt crisis,” he said then. “We face a crushing burden of debt which will take down our economy — which will lower our living standards.”
Now as House speaker, the Wisconsin Republican is undergoing a role reversal, championing President Trump’s tax plan, which promises massive tax cuts for corporations and to some extent individuals — and which experts say will add some $2 trillion to the nation’s red ink over the next decade.
It’s a sizable shift for Ryan, and he’s hardly the only one. The Republican majority, which swept to power just a few years ago in part by warning of then-President Obama’s run-up of debt, now plays down concern over deficits. Economic growth must take priority, many Republicans say, and will ultimately take care of worries about red ink.
Asked recently whether he had gone to the “dark side,” Ryan offered a reply that sounded like something a Democrat might have said to justify spending more on repairing roads and bridges or putting additional resources into schools.
“If this results in giving us a faster economic growth, that will help us reduce our debt,” he said in a CBS interview.
“You have got to have tax reform to get faster economic growth,” he added. “Faster economic growth is necessary for us to get our debt under control.”
Republicans are racing to assemble Trump’s tax package, which remains more conceptual than actual legislation, at a time when the nation’s debt load has topped the eye-popping level of $20 trillion.
For Trump, who routinely leveraged borrowing to expand his real estate empire and declared on the campaign trail that he loved debt, a tax plan that expands the government’s deficit may be no problem.
But for Republicans in Congress, who won their majority in the House, and later the Senate, in large part by railing against deficit spending during the Great Recession, the tax plan signifies a big change.
But, the lawmakers asked, what if growth isn’t so strong — most mainstream economists doubt it will be — what’s Plan B for making up the deficit shortfall?
For that, there was no clear answer, said those who attended.
“Republicans have for years railed against deficits,” said Rep. Linda T. Sanchez (D-Whittier), stunned after leaving the meeting at the White House. “You’re going to have less revenue and more deficits.”
Central to the GOP plan are tax cuts that slash the corporate rate from 35% to 20% and cap the rate for small businesses and other so-called pass-through entities at 25%. Individual tax rates would be set at 35%, 25% and 12%, but the income limits for those brackets have not been determined. Some deductions would be eliminated and the standard deduction would be doubled, in hopes of simplifying the code and broadening the base of taxpayers.
Senate Republicans acknowledge the tax cuts could add a net of up to $1.5 trillion over 10 years to the projected deficit, which they plan to make up for largely through economic growth. They have inserted a provision in their budget that waives the requirement for a nonpartisan Congressional Budget Office analysis of the tax bill before it’s voted on.
That drew objections Wednesday from a top Democrat.
“Republicans spent years pretending to care about the deficit when it came to making cuts to middle-class priorities, but the minute it came to handing tax breaks to the rich, that all went out the window,” said Sen. Patty Murray (D-Wash.).
Mick Mulvaney, now the White House director of the Office of Management and Budget, was so keen on deficit reduction as a member of Congress that he urged on fellow Republicans to threaten to shut down the government rather than approve a budget that involved red ink.
Sunday, in an interview on Fox News, he rejected the idea that a tax cut should not worsen the deficit.
“I’ve been very candid about this,” Mulvaney said. “We need to have new deficits.... If we simply look at this as being deficit-neutral, you’re never going to get the type of tax reform and tax reductions that you need to get to sustain 3% economic growth.”
The nonpartisan Committee for a Responsible Federal Budget estimates the tax plan would involve roughly $5.8 trillion in tax cuts over 10 years, and $3.6 trillion in so-called base-broadening, resulting in about $2.2 trillion in net tax cuts.
“We absolutely have to find a way to pay for this,” Marc Goldwein, the group’s senior policy director, said at a forum Wednesday on Capitol Hill. “If we cut the rates at the expense of higher debt, all we’re doing is cutting taxes today at the expense of a tax on future generations.”
Later, asked in an interview about the Republican shift, he said, “The hypocrisy is astounding.”
Republicans argue that the tax cuts ultimately will more than pay for themselves through a combination of economic growth, elimination of existing deductions and additional spending cuts.
Treasury Secretary Steven T. Mnuchin has said growth from the tax cut would be as much as $2 trillion, enough to pay for the cuts and start paying down deficits.
“The president is not going to sign something that he believes is going to increase the deficit,” Mnuchin said recently on NBC.
Neither the projected growth nor offsetting budget cuts is a sure thing, however. Growth estimates are highly uncertain, and Congress repeatedly has shown, even under Republican control, that it has been unable to impose the kind of draconian reductions to Medicare, Medicaid and other safety-net programs called for in Ryan’s budgets.
Trump has told lawmakers and others not to call the plan “tax reform,” which had been the preferred lingo in Congress, because it’s too confusing for ordinary Americans. Call it what it is, he told them — a tax cut.
But as members of Congress begin the hard work of filling in the details of the plan, deciding what deductions to trim or eliminate from a code that has arguably become more tangled since the last overhaul in 1986, the possibility of a tax bill that could saddle future generations with debt is giving pause to some.
“The question is to what degree? I think that’s what we’re all going to struggle with,” said Rep. Mark Sanford (R-S.C.).
At the same time, Republicans are under great pressure to deliver on taxes, to have something to show for their hold on Congress and the presidency, especially after the collapse of efforts to repeal and replace the Affordable Care Act.
Rep. Thomas Massie (R-Ky.) hung a debt clock in his office — even before photos of his kids — after he was elected. Now, he worries that his colleagues may put aside concern over deficits.
“I didn’t want to forget that is the main issue here that I came to solve,” said the libertarian-leaning congressman. “I may very well be alone. Part it is the zeal for the deal on tax reform, and people are willing to hold their nose.... Because we’ve done nothing else.”