A Look At The GOP's Plan To Cut Taxes
MICHEL MARTIN, HOST:
Let's move to another major policy issue the American people will soon have to confront - taxes. This past week, Republican leaders in Congress and the White House unveiled the outline of a plan to slash taxes for companies and individuals. They argue, as many Republicans have for decades, that tax cuts will supercharge economic growth. We wondered about the plan's core idea - that tax cuts inevitably lead to economic growth. And we also wondered how that squares with what had been another GOP policy goal - reducing the federal budget deficit.
That's why Bruce Bartlett's very blunt op-ed in last week's Washington Post caught our attention. He was a domestic policy adviser to President Ronald Reagan, and he posted a piece titled "I helped Create The Gop Tax Myth. Trump Is Wrong: Tax Cuts Don't Equal Growth." Four decades ago, he helped make low tax rates a Republican policy priority. So I asked him why it made sense to him then and what's changed now.
BRUCE BARTLETT: Well, two things. One is the tax rates of that time were vastly higher than they are today. And secondly, you had vast amount of inflation in the 1970s. And it interacted badly with the tax schedule because as workers got cost-of-living pay raises, they got pushed up into higher tax brackets that were basically reserved for the wealthy, not for average working-class people. So we really needed a big tax cut just to keep taxes from rising. And it seemed appropriate to have an across-the-board tax rate reduction. And so I think that was good policy at that time.
MARTIN: And so what's changed now? Is it that the other economic conditions are so different - or what is it?
BARTLETT: One of the things that we thought was a result of inflation is that it meant that you had too much demand and not enough supply. Well, today, our problem is really the reverse. We have very little demand and excessive supply. And the evidence for that is that inflation is very, very low. Interest rates are the lowest in - practically, in American history. And I just think the nature of the economic problem is quite different, and we need different policies.
MARTIN: Republicans that say that they want to cut taxes - but reducing revenue also raises the deficits unless the math really does work - that you actually generate enough economic growth to compensate for those deficits. It's also been kind of part of core conservative philosophy to keep federal budget deficits as low as possible. People have said for, you know, decades that this is a tax on future growth. This is a tax on future generation. It puts upward pressure on interest rates. Is that idea simply not even discussed anymore...
BARTLETT: Oh, it's discussed.
MARTIN: ...Or why is it that deficits aren't considered more of an...
BARTLETT: It's only discussed when there's a Democrat in the White House. The rest of the time, Republicans are just hypocrites and liars because they know perfectly well from experience. We had recent experience with George W. Bush. He cut taxes six or eight different times during his administration. Growth was half of what it had been in the 1990s. We lost literally trillions of dollars of revenue that added to the debt and the deficit. And they just blithely ignore this stuff. I have heard any number of Republicans, including Mitch McConnell, the Senate majority leader, say, we didn't lose any revenue. It's just crazy. They just make things up.
MARTIN: So you do argue that the tax code could merit overhaul. What form should that take?
BARTLETT: You should get rid of tax deductions and loopholes that no longer merit being in the tax code that perhaps may distort economic activity and make us worse off and pay for those rate reductions. And the other principle was that it should be distributionally neutral - that is, you shouldn't help one income class more than the others, and you sure - certainly shouldn't penalize people at the low end of the economic spectrum. I mean, we dropped the top federal income tax rate from 50 percent to 28 percent, and the corporate tax rate dropped from 46 percent to 34 percent. And all the people who ever looked at it said, yes, this is revenue-neutral. It neither raised nor reduced revenues, and it was roughly distributionally neutral. Those are still good principles to follow.
MARTIN: That's Bruce Bartlett. He was a domestic policy adviser to President Ronald Reagan. He's the author of "The Benefit And The Burden: Tax Reform - Why We Need It And What It Will Take." And he was kind enough to join us in our studios in Washington, D.C. You can read his Washington Post op-ed on their website, by the way, if you're interested. Bruce Bartlett, thanks so much for speaking with us.
BARTLETT: Thank you. Transcript provided by NPR, Copyright NPR.