A Liberal Economist Shoots Down the GOP’s Fiscal Chicken Hawks
Republicans want a tax cut, but they don’t want to fully pay for it and may be willing to increase the deficit by $1.5 trillion over 10 years. This would continue a troubling cycle, economist Jared Bernstein writes, in which supposed fiscal conservatives “use the deficit argument to block spending, promote fiscal austerity, and small government, conveniently tossing deficit concerns aside when it comes to tax cuts.”
You’ll hear arguments about how increased economic growth will make up for the budgetary effects of the tax cuts, but don’t believe them. “Our fiscal history on this point is clear: Cutting taxes loses revenues, which, unless offset by higher taxes elsewhere or spending cuts, increases the budget deficit, which in turn raises the debt.” When this happens again, and the promised growth effects don’t materialize, the tax cutters will go back to pushing for spending cuts.
The country faces a number of serious challenges, including an aging population that by itself will require increased government spending, and we need a tax policy that does more than drive up the deficit. “The problem with structural deficits — ones that go up even in good times — is that they reveal that we’re unwilling to raise the necessary revenues to support the government we want and need. This enables those who whose goal is to shrink government to point to deficits and debt as their proof that we can’t afford it, whatever ‘it’ is, except when ‘it’ is tax cuts.” (New York Times)
Coming Soon: Deductible Relief Day!
You may be familiar with the concept of Tax Freedom Day – the date on which you have earned enough to pay all of your taxes for the year. Focusing on a different kind of financial burden, analysts at the Kaiser Family Foundation have created Deductible Relief Day – the date on which people in employer-sponsored insurance plans have spent enough on health care to meet the average annual deductible.
Average deductibles have more than tripled over the last decade, forcing people to spend more out of pocket each year. As a result, Deductible Relief Day is “getting later and later in the year,” Kaiser’s Larry Levitt said in a tweet Thursday.
Chart of the Day: Families Still Struggling
Ten years into what will soon be the longest economic expansion in U.S. history, 40% of families say they are still struggling, according to a new report from the Urban Institute. “Nearly 4 in 10 nonelderly adults reported that in 2018, their families experienced material hardship—defined as trouble paying or being unable to pay for housing, utilities, food, or medical care at some point during the year—which was not significantly different from the share reporting these difficulties for the previous year,” the report says. “Among adults in families with incomes below twice the federal poverty level (FPL), over 60 percent reported at least one type of material hardship in 2018.”
Chart of the Day: Pragmatism on a Public Option
A recent Morning Consult poll 3,073 U.S. adults who say they support Medicare for All shows that they are just as likely to back a public option that would allow Americans to buy into Medicare or Medicaid without eliminating private health insurance. “The data suggests that, in spite of the fervor for expanding health coverage, a majority of Medicare for All supporters, like all Americans, are leaning into their pragmatism in response to the current political climate — one which has left many skeptical that Capitol Hill can jolt into action on an ambitious proposal like Medicare for All quickly enough to wrangle the soaring costs of health care,” Morning Consult said.
Chart of the Day: The Explosive Growth of the EITC
The Earned Income Tax Credit, a refundable tax credit for low- to moderate-income workers, was established in 1975, with nominal claims of about $1.2 billion ($5.6 billion in 2016 dollars) in its first year. According to the Tax Policy Center, by 2016 “the total was $66.7 billion, almost 12 times larger in real terms.”
Chart of the Day: The Big Picture on Health Care Costs
“The health care services that rack up the highest out-of-pocket costs for patients aren't the same ones that cost the most to the health care system overall,” says Axios’s Caitlin Owens. That may distort our view of how the system works and how best to fix it. For example, Americans spend more out-of-pocket on dental services ($53 billion) than they do on hospital care ($34 billion), but the latter is a much larger part of national health care spending as a whole.
