One of the last times federal lawmakers faced a debt-limit crisis, Republican Sen. Marco Rubio of Florida blasted the “Washington-manufactured drama” that he said threatened America’s future.
On Fox News, he bemoaned the “$17 trillion national debt that continues to grow. I’ve now been here three years; nothing has been done to seriously address that.”
Now it’s his turn to do something.
Yet the tax plan Rubio offered in advance of his presidential campaign might not only add to the national debt – it could keep it higher than today’s levels for 25 years, according to an analysis Rubio’s office itself has highlighted.
A disconnect between a leader in the party of debt reduction pushing a proposal that could do the opposite isn’t new. But in this year of a big Republican field and even bigger tax-cutting dreams, the difference between what voters say they want and what the candidates offer up is particularly stark.
Rubio’s tax-cutting proposal isn’t even close to being the biggest one. And yet the chance that he or other candidates will get punished by the electorate seems remote.
For his part, Rubio has said his tax plan needs to be paired with budget controls, and that it would not require raising the debt ceiling. Other presidential hopefuls say much the same about their tax plans.
The nation is heading toward another showdown in November over whether to raise the $18.1 trillion limit on how much debt the government can hold. At the same time, candidates for the Republican presidential nomination are coming out with their proposals to restructure the nation’s tax system.
$2.4 trillionThe cost of Marco Rubio’s tax plan to the U.S. treasury over 10 years, according to a dynamic economic analysis by the Tax Foundation. Rubio says he’d offset that by better controlling the budget.
One thing they share in common is that they reduce tax revenue by trillions of dollars, possibly adding to the national debt. That would be something that voters – particularly ones from their party – say they oppose. But it’s also one that – as history has shown – isn’t likely to hurt the candidates in the long run.
“That’s a head-scratcher,” said Jared Bernstein, a former top aide to Vice President Joe Biden who is now a senior fellow at the Center on Budget and Policy Priorities, a Washington think tank. “I’ve become convinced that the politicians you are describing have much less fiscal rectitude than their posture – and that their supporters in the electorate kind of feel the same way.”
Bernstein, of course, represents the other side of the partisan divide – the one more willing to raise taxes as a way to patch up the nation’s long-term fiscal issues.
But the dynamic he describes is borne out by polling data that show Americans profess to abhor the nation’s growing debt – with conservative Republicans most likely to hold those views.
Dessert first, spinach later – and we fill up on dessert, leaving no room for spinach.
Larry Sabato, University of Virginia
But like the reality that voters hate Congress but keep sending back their own representative, many voters say they dislike the debt – but really aren’t all that upset about it, polls show.
In 2013, during a debt-limit crisis in Washington, a survey from the Pew Research Center asked people whether the country needed to raise the federal debt limit, allowing it to raise the funds necessary to meet its obligations. Overall, Pew found, 43 percent of conservative Republicans believed that raising the debt ceiling was not needed at all. And more than half of tea party Republicans and Republican-leaners said it was not necessary – then or ever – to raise the debt ceiling.
A USA Today/Gallup poll found much the same in 2011, during a different debt-ceiling standoff. Asked whether they approved or disapproved of an agreement to raise the debt ceiling, 64 percent of Republicans disapproved, while 26 percent approved (overall, the split was 46-39 disapprove to approve).
“Republican voters say they are worried about the expanding national debt, but when you question them closely, their solution is to slash the size of government,” said Larry Sabato, director of the Center for Politics at the University of Virginia.
But because cutting the government is so difficult, promised tax cuts come quickly but the government cutbacks don’t necessarily follow. “Dessert first, spinach later – and we fill up on dessert, leaving no room for spinach,” Sabato said.
Rubio, he said, has plenty of company.
“The GOP candidates can all do so with confidence since no one has ever paid a price for this,” he said. “In fact, you can argue that mainly, they are rewarded politically.”
The Republican candidates began rolling out their proposals earlier this year, and Rubio got a lot of attention with a March proposal to cut both corporate and individual income taxes.
Rubio unveiled his tax proposal even before he was a declared presidential candidate. In a press conference with Sen. Mike Lee, R-Utah, the two senators proposed their plan to cut taxes and – as a consequence – spur the economy.
On the individual side, it would cut and simplify the number of tax brackets, create a new $2,500 child tax credit, and eliminate certain deductions (although it would keep deductions for charitable giving as well as a modified one for mortgage interest). On the corporate side, it would drop rates and make several other business-friendly changes.
The senators haven’t yet put pen to paper and introduced their ideas as legislation. Said Alex Burgos, a Senate spokesman for Rubio: “It’s still in development with stakeholders, experts and other interested parties.”
The Lee-Rubio plan has essentially become the Marco-Rubio-for-president tax plan, joining similar efforts by candidates Jeb Bush, Rand Paul, Donald Trump, Bobby Jindal and Rick Santorum.
You have to do two things, and you have to do them simultaneously. You have to grow your economy . . . and second you have to hold the line on spending. This plan is the growth side of the equation.
Sen. Marco Rubio, discussing his tax plan
Even if Lee and Rubio did formally introduce their plan, it’s not likely anything would happen this Congress. More likely than not, the tax overhaul Rubio and Lee touted in March will have to wait until 2017 before any congressional eyes really look at it.
In the Senate, Orrin Hatch, R-Utah, is chairman of the Finance Committee, and he’s interested in pursuing comprehensive tax reform. But he also knows that in order to accomplish that, the Congress and the president will need to be on the same page – and that certainly isn’t the case with Democrat Barack Obama in the White House.
“For any major deal or meaningful changes to actually take place we need presidential leadership,” Hatch said in a statement to McClatchy. While Hatch credited Obama for his leadership on trade issues, he said he hasn’t seen the same on tax issues.
“Imagine what could happen if the president applied that same effort to overhaul our nation’s broken tax code,” Hatch added.
As the plans have come in, the assessments of them have followed. Politicians such as Rubio prefer that their tax plans be assessed – scored – on what is known as a dynamic basis, attempting to factor in how the economy will change over time because of the tax cuts they put in place. The traditional approach is known as a static analysis, which doesn’t factor in such growth.
And while Rubio prefers a dynamic analysis, the reality is that his plan as advertised will add to the national debt for years – whether under a dynamic or a static analysis, according to the Tax Foundation, a Washington think tank.
Others would, too. Trump, the businessman now leading the Republican presidential field, announced his tax plan last month, and wrote in The Wall Street Journal that it “will not add to our deficits or to the national debt. . . . With moderate growth, this plan will be revenue-neutral.”
At the Tax Foundation, economist Alan Cole read Trump’s piece and came away puzzled. “I do not believe this to be true under any scenario remotely resembling Mr. Trump’s plan,” he wrote.
While the candidates tout the tax-cutting parts of their plans, they generally don’t agree the revenue losses mean the national debt will grow. Santorum, for example, says his plan to repeal the Affordable Care Act – Obamacare – would offset his plan’s tax cuts, and Paul plans to abolish several federal departments and shrink others, spokesmen for each candidate said.
But as for those revenue losses: Among the six GOP candidates’ plans with enough specifics in their proposals to be analyzed, Trump’s costs the most, under the Tax Foundation’s analyses: $12 trillion over 10 years.
Jindal’s would cost $11.3 trillion, Rubio’s $6 trillion, Bush’s $3.6 trillion, Santorum’s $3.2 trillion and Paul’s $3 trillion.
I certainly haven’t heard any cuts of that magnitude – or any magnitude – specified by Rubio.
Jared Bernstein, Center on Budget and Policy Priorities
Even under dynamic scoring – thus taking into account economic growth it spurs – Trump’s would cost $10.1 trillion, Jindal’s $9 trillion, Rubio’s $2.4 trillion, Bush’s $1.6 trillion, Santorum’s $1.1 trillion and Paul’s less than $1 trillion, according to Tax Foundation analyses.
The Tax Foundation also went forward 35 years to show the impact the Rubio plan would have on the national debt. In the long run, the plan raises revenue, it said. But unless the tax cuts are offset elsewhere in the budget, the proposal would increase the debt in the first eight years – and the “cumulative effect . . . would be significant,” it wrote in a March report.
Bernstein of the Center on Budget and Policy Priorities is more blunt: “The only way to absorb such large revenue losses without incurring significant new debt – debt that would take us way over the ceiling – is to cut spending by the same amount. And that’s simply implausible. I certainly haven’t heard any cuts of that magnitude – or any magnitude – specified by Rubio.”
Because of the impact of initial deficits and the extra interest costs they produce, the proposal as offered by Rubio and Lee in March would only return the national debt to its current levels in the year 2040, according to the Tax Foundation analysis.
Since introducing the tax plan in March, Rubio has said he plans to attack the broader debt issue by doing two things: Cutting taxes to boost the economy and holding the line on spending. He says that the country needs to change Social Security and Medicare, ensuring that they are protected for the current recipients but acknowledging that the programs will be different for younger generations.
On Social Security, for example, he has a list of policy proposals. Some of those would reduce costs, such as one to gradually increase the Social Security retirement age. But the actual cost to the budget or to individual Americans hasn’t been specified.
Asked whether his tax plan would result in the debt ceiling needing to be raised, campaign spokeswoman Brooke Sammon said Rubio doesn’t think it will need to be.