Remember the days when Republicans were spending and deficit hawks, you know, the way they act whenever they’re not in total control of the White House and Capitol Hill?
This was before they decided to give their ultra-wealthy donors a humongous tax cut and add $1.5 trillion to the U.S. budget deficit.
Now, the Congressional Budget Office is warning that the Treasury Department will probably run out of cash by the middle of March due to the sudden decrease in tax revenue that the new tax law has initiated and that the Congressionally-mandated debt ceiling must be raised before then, according to a report today on The Hill.
“Because the tax legislation reduced individual income taxes for most taxpayers, the Internal Revenue Service released new income tax withholding tables for employers to use beginning no later than the middle of February 2018,” CBO said in a statement today.
“As a result of those changes, CBO now estimates that, starting in February, withheld amounts of individual income taxes will be roughly $10 billion to $15 billion per month less than anticipated before the new law was enacted.”
Before everyone rushes out to spend all their new-found pocket money from their lowered tax withholding, it might be prudent to remember that what Congress has done is the equivalent of running up the nation’s credit cards at a time when they’re approaching their credit limits and then asking for the banks to raise that limit while at the same time letting them know that you’re earning a lot less than you used to at your job.
The only difference is that the people spending the money are the same people approving the increase in the credit limit, and they know that they probably won’t still be in their jobs when the day of reckoning arrives.
Of course, Congress could refuse to raise the debt ceiling, but that would result in several unpalatable options. In one scenario, the Treasury could delay payments of its obligations, leaving individuals and companies in potentially desperate circumstances as they wait for the money they are owed until the government finally gets enough money in tax revenue to pay them. Not a great option.
In another scenario, the government would simply default on its debt, resulting in the collapse of the country’s and, for that matter, the world’s economy. An even worse, catastrophic option.
The last, and most likely, scenario has already begun playing out in the halls of Congress. Having provided the oligarchs who fund their organization with the billions of dollars worth of unneeded tax cuts they so ardently desired, the Republicans will now attack spending, looking to reduce the dollars allocated to Medicare, Medicaid, and Social Security, as well as any other spending that benefits people who aren’t in the donor class.
House Minority Leader nancy Pelosi seized upon the CBO’s announcement today as proof of the tax plan’s failure.
“Already, the dire effects of the GOP Tax Scam’s giveaways are being exposed,” she said in a statement. “Far from paying for itself, as Republicans promised, the GOP’s fevered push to pad the pockets of corporations and the wealthiest one percent is exploding the deficit.”
SInce the majority of Americans opposed the Republican tax giveaway according to polls, no one can say that the Republicans weren’t warned. Given their slavish devotion to their corporate masters, they just didn’t, and still don’t, care.