Everyone should be paying attention to the tax "reform" bills making their way through Congress. Whether you are a concerned citizen, a volunteer activist, or a career advocate, chances are the tax legislation will do much more than increase or lower your tax bill.
Much of the mainstream media and financial press, along with some public finance scholars and think tanks, are doing a thorough job of explaining what the tax bills will mean for the rich and the middle class, for corporate taxes overall and some specific tax deductions and loopholes.
It is worthwhile to focus our attention on the overall economic impact of the proposed tax cut and how it will further increase social inequality in America. Certainly it is worth asking why we so desperately need a tax cut when the rich keep getting even richer, corporate profits are booming, the stock markets are at all-time highs, and inequality is at levels not seen since the Great Depression. However, not nearly enough attention is being paid to how we will pay for these tax cuts and what the ultimate impact of lower revenues will be.
Lawmakers who once called themselves deficit hawks and principled "fiscal conservatives" have swiftly changed their tune, kicking their previously stated principles to the curb in the face of a once-in-a-generation opportunity to give themselves and their benefactors a tax cut. But while tax cut proponents spin tales about how resulting economic growth will make up the deficit, the hard reality is that when it comes time to write future budgets, they'll be pushing for cuts in order to close the massive budget gaps their tax bills would create.
On November 13, the nonpartisan Congressional Budget Office (CBO) announced that, to comply with a 2010 law designed to keep the national debt in check, the White House's Office of Management and Budget would be required to find $136 billion in additional spending cuts to finance the proposed $1.5 trillion tax cut. According to that 2010 law, the cuts must come from programs backed by mandatory spending, such as Medicare.
Congress's response was a resounding, "No problem!" In fact, the Senate seemed to treat the CBO warning letter more like welcome advice. Hours later, the majority announced it would take an axe to mandatory spending in the Affordable Care Act. This would kill two birds with one stone – cutting taxes and gutting Obamacare.
While most of the attention is on the revenue side – who pays how much to keep the government running – the spending side is where people will get hurt. The Affordable Care Act won't be the only program in the crosshairs as revenues plummet. The Trump administration and Congress will undoubtedly use the resulting budget squeeze to further ratchet back crucial public investments and protections.
Here in the Chesapeake Bay, we have been dealing for months with the looming possibility of cuts to the Chesapeake Bay Program. While the Trump administration's proposed elimination of all federal funding for Bay restoration was nixed by Congress, we are still facing significant cuts to the Bay Program budget.
A few months back, we learned that the grant for the Chesapeake Bay Journal was being cut. More recently, we received additional bad news — and another indication of how these cuts will continue to play out — when the U.S. Department of the Interior sent notice to the U.S. Geological Survey's (USGS) Eastern Geographic Science Center that the office would be shuttered this fiscal year. This would be bad news for the Chesapeake Bay. (It could also be of questionable legality given that congressional budget committees provided specific instructions about how appropriated funds could and could not be used, including directives like funding watershed mapping and analysis in the Chesapeake and restrictions on things like agency reorganizations and office closings.)
Many of the staff scientists, engineers, and analysts comprising or supporting the Chesapeake Bay Program Office come from agencies other than the U.S. Environmental Protection Agency. Some of the staff in the targeted USGS office have been working on the cutting edge research and tools used to assess the health of the Bay and promote its restoration. Without the contributions of these scientists, we would not have a scientifically or legally defensible Bay restoration effort.
Why would an office that is such an important part of our decades-long effort to restore the Chesapeake Bay be subject to a cut that is a tiny drop in the bucket ($1.2 million compared to a $1.5 trillion tax cut and a $4 trillion annual federal budget)? It probably doesn't help its budget prospects that the office is engaged in scientific research designed to further environmental protection. This administration has made clear its disdain for such lofty ideals. But looking at these cuts in isolation would be a mistake.
Developing the federal budget is no easy task, and it's immensely more complicated when the budget-makers are forced to take out their scalpels to carve out thousands of cuts here and there in an effort to come up with "real numbers" that could be used to finance 13-digit tax cuts.
And there is the problem with tax "reform." On the one side is a profoundly regressive tax policy designed to benefit the richest Americans while simultaneously reducing revenues for the federal government. This much we are all familiar with by now. But we cannot lose sight of the other side of the ledger. A massive reduction in revenues today will lead to excuses tomorrow about why we can no longer "afford" to maintain – or why we must cut – our effort to restore the Chesapeake Bay or an infinite number of other important programs.
Next time you read or hear about "tax reform," swap out that misleading phrase and insert "the Chesapeake Bay" or any other program, service, policy, or cause you care about. Because that is what's at stake right now.