U.S. Rep. Paul Ryan, chairman of the House Budget Committee, promises that his proposed budget will free America “from the crushing burden of debt now threatening its future.”
It would do no such thing. To the contrary, the Tax Policy Center says that major tax cuts included in the Ryan budget would reduce federal revenue by $418 billion in 2015 alone; by 2019, revenue losses would exceed half a trillion dollars each and every year. That will make the deficit worse, not better.
Ryan disputes such analysis, claiming that he will make up that lost revenue by eliminating various tax credits, deductions and exclusions. However, he refuses to specify what those credits might be and instead asks that we trust him on it. The check’s in the mail, in other words.
Last week, the Congressional Research Service took a look at the 20 tax credits, exclusions and deductions that have the biggest impact on tax revenue. Together, they account for 90 percent of the revenue lost through tax deductions in the code.
Here they are:
No, which of these will Ryan eliminate to make up for a half-trillion dollars a year in lost revenue, most of it in tax breaks for the rich? Let’s work through the list, starting from the top:
Is he going to eliminate the tax deduction that encourages employers to provide health insurance to their employees?
No, he is not. If he did, hundreds of millions of Americans might lose their employer-based insurance. No Congress will pass such legislation; no president would sign it.
Is he going to eliminate the deduction that employers take for providing pensions to their employees? No, he is not, for the same reasons outlined above.
Is he going to eliminate the mortgage deduction, the single most important deduction to the American middle class? Riiigggghht. Dig a grave for the housing and real estate industries if you do, and dig another for the careers of all the politicians who voted for it.
Is he going to start taxing Medicare benefits as income to its recipients? Uh, no. He’s not. He is not going to make an elderly couple pay income taxes on the $200,000 in health care they got last year. And is he going to raise the rate on capital gains and treat it as earned income?
I won’t even bother to answer that one.
As analysts for the Congressional Research Service drily concluded, “Given the barriers to eliminating or reducing most tax expenditures, it may prove difficult to gain more than $100 billion to $150 billion in additional tax revenues through base broadening.”
And if you were to make all of the changes that might be feasible, the CRS estimates, you could finance “about a one or two percentage point reduction for each bracket.”
Just as a reminder, Ryan proposes a 10-percentage-point deduction for the wealthiest of Americans.
At some point, we do need to seriously address our nation’s financial situation. That point will clearly have to come after the election. But in the meantime, spare us the histrionics. You cannot claim to be serious about the deficit while in the same breath proposing multi-trillion reductions in government revenue.
Politicians who pretend otherwise are playing the American voter for a fool.
– Jay Bookman