Since Republicans are pretending to be Very Concerned About the Deficit — as they only are when a Democrat is president — the White House offered Republican leaders in Congress a list of ideas that would help reduce the deficit, primarily by closing tax loopholes that cost the federal government billions in lost revenue.
You will absolutely guess what happened next: The Republicans, who have been demanding massive (but mostly unspecified) cuts to non-defense spending as the price of raising the debt ceiling, “rejected every item” on the list, according to three anonymous “people familiar with the matter,” as the Washington Post reports (free gift link):
On a phone call last week, senior White House officials floated about a dozen tax plans to reduce the deficit as part of a broader budget agreement with House Republicans, including a measure aimed at cryptocurrency transactions and another for large real estate investors, two of the people said. They were all swiftly rejected by the GOP aides on the call, the people said.
This is because Republicans don’t actually care about reducing government debt; they care about telling people they want to reduce government debt. Debt limit negotiations continue this week, as Democrats work to find a way to prevent the disastrous economic consequences of defaulting on the US national debt, and Republicans work to find a way to force Democrats to accept wholesale dismantling of successful Biden policies by threatening to force a default on the debt.
Previously! On Wonkette!
House Republicans Finally Deliver Debt Ceiling Ransom Note
The Debt Ceiling, AGAIN? The Deuce You Say! – Wonkette
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Two people who are “familiar with the matter,” and may or may not be entirely different from those familiar with the loophole thing, said that some kind of budget agreement might include “new limits on federal spending, a clawback of unspent pandemic aid funds and a package of permitting reforms designed to unleash domestic energy production.” Those sound at least slightly more plausible than the initial Republican hostage note, which demanded hacking much of nondefense discretionary spending by more than 20 percent. Biden made clear that notion (it was never a “plan”) would go nowhere.
The Post also says that the negotiations are being held up by several details, such as how long any spending limits going forward would last. The White House wants only two years of such “caps,” while Republicans want to freeze spending for between 10 years and forever and ever. Biden remembers damn well that the last time Republicans threatened to crash the economy for the lulz in 2011, Barack Obama agreed to “sequestration” spending cuts that slowed the recovery from the Great Recession, so damned if Joe wants that again.
Further, while Republicans “appear to have dropped their demands to block student debt relief” (cautious “yay”), they’re dead set on ramping up work requirements for federal antipoverty programs, even though most able-bodied working-age adults getting federal assistance are already working and the main effect of work requirements is to kick otherwise eligible people off programs because of paperwork problems, all while making the programs cost more to administer. As with pretending to care about debt, Republicans want to be able to say they got tough on “welfare cheats,” and that’s all they care about.
The Post says that Biden
told reporters on Sunday that he was open to the GOP’s work requirements proposal, but White House spokesman Michael Kikukawa said in a statement that the president “has also been clear that he will not accept policies that push Americans into poverty.”
Not surprisingly, House Republicans are claiming that the White House proposals amounted to “tax increases,” although their actual effect would be to close tax loopholes affecting some investments in cryptocurrency and real estate, as the Post ‘splains:
The cryptocurrency proposal would ensure that investors could not claim a loss on an asset that they then quickly repurchased — a rule that already exists for stocks and other assets. Similarly, the real estate proposal would prevent investors from deferring taxes on swaps of property — similar to a rule for stock trades.
The two changes would increase federal revenue by about $40 billion, but treating such investments equally under the tax code would magically make them “tax increases,” because words mean nothing and time is a flat circle anyway. And for all the GOP complaints about how the problem is ” too much spending,” the Post story also points to a recent study by the Center for American Progress showing that were it not for tax cuts forced by the George W. Bush and Donald Trump administrations, the US would be bringing in enough revenue that “the debt ratio (debt as a percentage of the economy) would be declining.”
Why yes, two Republican trifectas in government since 2020 not only gave huge tax cuts to the wealthy and to corporations that didn’t result in an economic boom and which they don’t want to pay for now; they also deepened the very federal debt that Republicans profess to worry about so much.
Add in the 1981 Reagan tax cuts, and for the first time since 1946, the debt ratio began rising, not falling. The Bush II and Trump tax cuts have so hobbled the government’s ability to pay its debts that
federal debt as a percentage of the U.S. economy is on a path to grow indefinitely, with increased noninterest spending due to demographic changes such as increasing life expectancy, declining fertility, and decreased immigration and rising health care costs permanently outstripping revenues under projections based on current law.
It ain’t spending that’s doing that, either: The study notes that “relative to earlier projections, spending is down, not up. But revenues are down significantly more.”
On the other hand, billionaires are making out like bandits, so we should probably tighten your belt to sustain that, the fucking end.
[WaPo (gift link) / Center for American Progress]
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