The latest episode in the Democrats’ popular series “Let’s turn things on their heads” features Sen. Elizabeth Warren.
This week, the Massachusetts Democrat tweeted , “If Republicans hadn’t spent nearly $2 trillion on the Trump tax cuts, and if they hadn’t made it easier for rich people to cheat on their taxes, the US wouldn’t need a debt ceiling increase this year. Or next year.”
This fits right in with the Democrats’ other laughable inversions, blaming the GOP for inflation, migrant chaos at the southern border, and other national ills that are manifestly the fault of President Joe Biden and his party.
The first riposte to Warren is that in passing 2017’s tax cuts, Republicans didn’t “spend” $2 trillion or any other sum but passed legislation that prevented it from being collected. This was because, as the GOP argued, lower individual and corporate tax rates would stimulate economic growth and increase revenues to the Treasury.
Republicans also perhaps clung to a self-deluding hope (defied by experience) that if the money wasn’t there, if higher taxes weren’t collected because Washington didn’t reach so deeply into everyone’s pocket, Congress might be more restrained in its spending. Neither Biden nor congressional Democrats have, of course, been remotely restrained by the idea that they shouldn’t spend money they don’t have. Republicans weren’t restrained either when they were in control.
Instead, Biden and the Democrats added $5 trillion to the national debt with their American Rescue Plan, Inflation Reduction Act, and other misnamed spending splurges. In short, it wasn’t Republicans spending $2 trillion that increased the debt to the point that the ceiling now needs to be raised; it was Democrats spending $5 trillion.
There are two big further points to make about Warren’s tweeted twaddle.
The first is that the 2017 tax cuts did not lower revenues but boosted them. As two of the bill’s authors, Tyler Goodspeed and Kevin Hassert, noted last May, the new tax rates lifted business investment and capital expenditures by 9.4% and 20%, respectively, raised household income, elevated corporate tax revenue $46 billion higher than the Congressional Budget Office forecast, increased corporate tax revenue’s share of the economy by 21%, and prompted companies to bring overseas earnings back to America rather than stashing them abroad.
Total federal tax revenues rose 22% between 2017 and 2021. So, it isn’t reduced revenues that are now pushing congressional heads painfully up against the debt ceiling, as Warren implies. The culprit is excessive spending, to which she objected not at all.
The other big area where Warren is totally off base is not to do with her math but with her language and what it implies. When she accuses Republicans of spending $2 trillion by cutting taxes, the suggestion is that the money is by rights the property of the government. This assumption also undergirds the notion of a government “giveaway,” an allied similar trope of leftist fiscal thinking.
But you can only, as a matter of definition, give away what is yours. Money in people’s pockets net of tax is their property and does not belong to Washington, no matter how fervently Warren wishes otherwise.
To say Republicans spent money because they did not gather it in taxes implies that everyone’s wages and salaries are by rights at the disposal of politicians. This is feudal thinking. Warren and the Democrats are like medieval monarchs who governed on the theory that individual property was granted on sufferance by the king to his inferiors.
This is exactly backward. Our present overlords in Washington do not own the money we earn; we do. Voting citizens agree through the tax laws passed by their elected representatives to give a portion of their annual incomes to the government to spend on what is deemed necessary for the common good, which changes. When Congress lowers tax rates, that is the people deciding to keep more of their own money and implying that the government should live on less. That is voters’ right.
It is not just that Warren and her leftist colleagues are wrong. It is that they are arrogant. In principle, they arrogate everybody’s earnings to themselves, treating your money as theirs and looking scandalized at politicians to their right whose policy is to take less of it.
Then they accuse others, people and corporations that now pay more in taxes than they did before, of greed.