The Republican budget problem

For the past several weeks, House Republicans had been studying and debating proposals for the upcoming federal budget which is being taken up by both houses of Congress this month. The House Budget committee created a fifty page document showing potential cuts to the budget with estimated savings and costs for possible new additions.

The major cost items were for interest on the national debt, defense, Social Security, Medicare and Medicaid. Oh, and also the permanent extension of the giant 2017 tax cut. The budget committee’s hope was that the hundreds of smaller cuts minus the additions like not taxing tips or overtime pay would reach a target number that would not increase the National Debt more than a number to be agreed on by a majority of the members of the House and subsequently the Senate, currently two trillion dollars.
But strangely, none of the Republican leaders seemed ready to speak about the other major element in the budget that, by silent acceptance was to be left alone: the massive tax cuts that were set to expire at the end of the year and President Trump and all the rest of the leadership insisted be renewed.

The tax reductions were in two sections. The corporate tax had been reduced in 2017 as a permanent reduction from 35% to 21%. But Trump demanded that it be further reduced this year to 15% at a major additional cost. The proposal by the Finance Committee to extend the personal income tax and other miscellaneous additional tax cuts was estimated by the Budget Committee at $4.2 trillion! Where would they possibly find items in the budget to offset these enormous expenditures?

Proceeding on a totally different track but in certain respects toward the same goal was Elon Musk’s “Department of Government Efficiency," a not really legal entity created by Trump and run by Musk, to fire a large number of employees at most federal agencies. There is no record yet of how many civil servants have been dismissed and no record of plans for future terminations. While many cases are now in the courts challenging these dismissals, all of which were done with Trump’s blessing (but without legal justification), still no one seems to know where it will all end and when. Trump and his supporters have been trying to sell these acts as a necessary trimming of the federal budget. But as various observers have pointed out, government salaries make up less than 6% of the Federal budget and even if Trump and Musk were to fire half the federal workforce it would be nowhere near enough of a cost reduction to balance the federal budget. And the ruthless and thoughtless way the Musk team has been proceeding may well bring the whole federal government to a halt before the “Department of Government Efficiency” gets much further.

The most obvious place to find places to cut the budget would be in Social Security or health care. Yet recently Musk’s ‘DOGE” operation has reduced the already understaffed Social Security Administration workforce by 12% and Trump insists it be further cut to 50%.

Both Medicare and Medicaid are extremely popular; Medicaid exists primarily for the elderly and poorer part of the population serving over 70 million people. But now the House bill is calling for massive cuts in Medicaid. Almost everyone receiving Social Security feels they are already getting less than they deserve; any further cuts will make untold millions of people very angry.
Foolishly, the DOGE committee cut the budget for the long underfunded IRS where a significant increase in additional inspectors to audit high income taxpayers would yield several times the expense of hiring and training in previously uncollected taxes. But apprehending tax cheats has not been a high priority for Republican members of congress and with a government now more dominated than ever by billionaires this is unlikely to change anytime soon. But despite Musk‘s and Trump’s claims to the contrary, most Democrats see this cost cutting charade mostly as a strategy to cripple democracy and bring on totalitarian government.
The Republicans have arranged it so that the Senate vote on the budget bill will be a Special Reconciliation bill requiring only a majority to pass with no opportunity for a filibuster which would require a sixty vote majority to become law. Indications are that Senate Democrats will all vote against the bill if the tax cut section stays as planned. With a current 53 to 47 vote majority, the Republicans can still win the vote if no more than 3 of their party defect.
 

The income tax reduction that the Republicans insist on extending is heavily weighted in favor of the highest earners, with more than 40% of the entire amount going to the top 01%, a modest benefit for the simply “well to do” and very little for everyone else. As U.S. Senator Chris Murphy (D-Conn.) said recently: “If you’re in the top 1%, your average tax cut is about $70,000. Why do people making $600,000 a year need $70,000 while only a hundred bucks goes to everybody else?”

Architect and landscape designer Mac Gordon lives in Lakeville.