The senior Republican senator was adamant that the tax cuts his party was embracing would pay for themselves and bring the government closer to a balanced budget by spurring growth that would produce a gusher of revenue.
“We will never balance the federal budget until we make tax cuts that will generate more rapid economic growth in the years ahead,” he declared. “It is this faster-growing economy that will in itself bring in more revenue and will bring the budget into balance.”
That wasn’t a current Republican lawmaker making the case for the tax cuts President Trump and his party hope to enact by the Fourth of July — though it could have been. It was former Senator Charles H. Percy, Republican of Illinois, arguing for President Ronald Reagan’s tax cuts in 1981, one of four such packages pushed through over the last four decades by G.O.P. administrations pursuing an aggressive tax-cutting agenda.
The arguments have remained fixed: Tax cuts will stimulate growth, pay for themselves and benefit all Americans. But a retrospective by a nonpartisan, nonprofit organization made up of former top congressional aides found that the previous tax cut measures — in 1981, 2001, 2003 and 2017 — did exactly none of those things, falling short of the claims made beforehand.
“This record reveals a consistent pattern,” said the report, which was released this month by the group Co-Equal. “The tax cuts did not deliver on the promises of their advocates. In fact, they often achieved exactly the opposite, worsening the debt and exacerbating income inequality.”
The potential consequences of the sweeping tax cut and domestic policy bill making its way through Congress are at the heart of the escalating fight over the legislation, as Republicans, urged by Mr. Trump, try to deliver Senate approval in the coming days.
Democrats are uniformly opposed to the measure, which would slash social safety net programs for the poor to help cover the cost of tax cuts that deliver the largest benefits to the wealthy. Republicans are divided on the details of the package, which polls show is unpopular.
Top Republicans insist that the bill, which would extend tax cuts first enacted in 2017 — coupled with about $1.5 trillion in spending reductions and some significant policy changes — would supercharge the economy and begin reducing the spiraling debt. They argue that allowing the tax cuts to expire as scheduled at the end of the year would prove devastating to the economy and slow growth, and must be avoided at all costs.
“What happens when you reduce taxes and you incentivize and increase the incentives for investment is people invest, they make money and they pay more taxes, and government revenue goes up,” Senator John Thune, Republican of South Dakota and the majority leader, said in a recent appearance on Fox News.
“I am telling you: This is going to reduce the deficit,” Speaker Mike Johnson said earlier this month on NBC’s “Meet the Press.”
On Wednesday, the White House Council of Economic Advisers issued another bullish report on the benefits of the tax plan, forecasting “surging investment” and a “blue collar boom,” along with as much as $11 trillion in deficit reduction from growth, higher tax revenue and savings on debt payments.
But nonpartisan analysts and fiscal experts across the political spectrum have taken a much more pessimistic view of the Republican plan, saying it will drive up deficits and not produce the economic growth proponents are promising.
They have been critical of an accounting gimmick used by Republicans that masks the potential deficit consequences of extending the tax cuts by asserting that they would cost nothing. Traditional ways of measuring the revenue lost by continuing the tax cuts show that they would add trillions of dollars to the debt.
The report by Co-Equal does not take a position on the current plan, but instead looks back at what was said about previous tax-cutting exercises, and what actually occurred.
“There’s so much turnover in Congress that institutional memory is often lost,” said Phil Schiliro, a co-founder of the group and a former staff director of the House Oversight Committee and legislative affairs director for President Barack Obama. “Newer members rarely have the benefit of any retrospective analysis that compares claims made during previous legislative fights with what subsequently happened.”
The report notes that Mr. Reagan and his team boasted of the potential for new prosperity that Democrats derided as a “rosy scenario,” projecting a 4.2 percent surge in the gross national product and sinking unemployment as a result of steep cuts in individual and corporate tax rates.
Instead, the gross national product fell and unemployment rose as federal revenues declined, prompting a series of tax increases negotiated with Congress — the first increases in decades.
Upon taking office in 2001, President George W. Bush went back to pushing tax cuts to take advantage of budget surpluses posted during the final years of the Clinton administration — the first surpluses since the 1970s.
“By lowering the tax on the fruits of investment, both in the form of capital gains and of dividends, we will get more investment,” Orrin Hatch, then a Republican senator from Utah, said in 2003. “This tax cut on investments will bode well for our economy both in the next few months and years, and for decades to come.”
Instead, the economy underperformed during much of the Bush administration and lagged behind the gains of the Clinton administration, even though higher tax rates were in place then. Mr. Bush left office in 2009 during an economic collapse.
In 2017, Mr. Trump and congressional Republicans picked up the tax-cutting mantle. They engineered a big drop in the corporate tax rate that the president and his advisers promised would push economic growth above 4 percent, prompt a big jump in median income and generate greater tax proceeds that would close any government revenue gap.
“The bottom line is we will be able to fill any deficit hole with additional revenues,” Representative Jeb Hensarling, then a Texas Republican who chaired the Financial Services Committee, said at the time.
In the end, according to the Co-Equal report, real economic growth fell far short of the predictions and averaged just under 3 percent for 2018 and 2019. Hiring slowed and revenues declined, contributing to an increase in the deficit even before the pandemic hit.
The authors of the report suggested that claims about the economic consequences of tax cut legislation should be taken with a grain of salt — and not the state and local tax deduction (SALT) kind that Republicans are fighting over increasing in the current bill.
“The major tax cuts of 1981, 2001, 2003 and 2017 increased deficits, produced uneven economic results and delivered their largest benefits to wealthy Americans,” it said.
In fact, the best economic outcomes were produced with an action that Republicans disdain.
“Over the last 50 years, the economy performed best during the Clinton presidency, which saw 3.9 percent real annual growth, robust wage increases,and booming private investment,” said the report. “Notably, this economic success followed tax increases, not tax cuts.”
Tony Romm contributed reporting.
Carl Hulse is the chief Washington correspondent for The Times, primarily writing about Congress and national political races and issues. He has nearly four decades of experience reporting in the nation’s capital.
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