Beware America’s fake fiscal conservatives

An arcane budgetary sleight of hand is poised to take central stage in the US debate over tax and spending cuts. Magic tricks can at least entertain, and sometimes even inspire awe. But the budget trick is, in the words of Congressman David Schweikert, oversight chief for the tax-writing House ways and means committee, just “a fraud”. 

Most of the tax cuts passed by Republicans during President Donald Trump’s first term, in the Tax Cuts and Jobs Act of 2017 (TCJA), which raised deficits by $1.7tn, are set to expire at the end of 2025. Republicans placed the time bomb in their own legislation to reduce the reported cost of the package — and how much they could be accused of adding to the national debt. The expiry was also necessary to clear the procedural hurdle for “reconciliation”, which allows new budget-related laws to avoid a filibuster in the Senate only if they would do nothing to increase deficits after the first 10 years. 

But now the bomb has exploded. Without new legislation, current law requires tax rates to return to their pre-TCJA levels. Maintaining the current policy would cost nearly $5tn in lost revenue over the next 10 years.