OPINION:
No one gets everything they want — not in university life, business or politics. Folks who won’t compromise usually end up with nothing, but for Republicans blocking a Senate tax bill the consequences for the country could be much worse.
President Trump has put the U.S. economy on the threshold of a new prosperity. GDP growth is rocking at 3 percent for three quarters running — something not seen since 2004 — stocks are zooming, unemployment is near 4 percent and inflation is so low the Fed is reluctant to raise interest rates quickly.
The strong conviction in corporate executive offices is the Capitol is no longer occupied by forces hostile to free enterprise. Mr. Trump has managed to ease regulations and CEOs are optimistic U.S. business taxes, now much higher than in other industrialized countries, will be coming down.
Neither the House bill nor Senate drafts are perfect vehicles to fulfill expectations on taxes. As the reluctant senators claim both bills do too much more for corporations than small businesses that pay through the personal tax system, the projected $1.4 tax cut will raise annual federal deficits and the personal tax reforms will likely raise the taxes of about 10 percent of Americans.
Unfortunately, the administration has made outsized claims about Republican tax plans. White House economists can’t even get conservative economists to endorse that a tax cut will generate enough growth to pay for itself.
Overall, however, either the Senate drafts or House bill would be a lot better than what we have now. Economic growth will get a further boost — small businesses and individuals paying marginally higher taxes will get further relief from that. The impact on the deficit would be well south of $100 billion a year.
The biggest losers will be over-bloated state and local governments in the Northeast, Illinois and California who have been excessively spending. Politicians tell beleaguered taxpayers they can get a subsidy from Uncle Sam — and taxpayers in other states — by deducting their outsized local tax bills on their federal returns.
Critics on the left have raised data mining and distortions to new highs. In an independent analysis, The New York Times alleges the Senate bill will raise taxes immediately on 25 percent of middle class households but its analysis omits single persons and households headed by folks over 65, and discounts childless couples. It seems all those singles, folks whose children have grown and become self-sufficient and seniors who read or work at The New York Times don’t pay taxes?
Virginia Sen. Mark Warner, for example, is flogging those stacked findings to anyone who will listen. However, more menacing is that the Republican senators who would kill the good for the lack of the perfect apparently have not considered the consequences of voting no.
By failing to compromise on Obamacare repeal, they permitted draconian federal mandates to continue largely unchanged. Premiums continue to rocket, businesses remain harassed and overregulated, and many individuals are still compelled to deal with torturous government websites. However, that harm pales by comparison to what will happen if the GOP fails to pass a tax bill.
The economic recovery will stall, the stock market rally will reverse and unemployment will rise.
Businesses that banked on tax relief will again start looking to move abroad factories, corporate headquarters and taxable property — in particular patents that generate royalties. And the rush to exit will be worse than during the Obama years.
Businesses and investors know a Republican failure on taxes means the Democrats will likely take the House in 2018 and whole shooting match — House, Senate and the presidency — in 2020.
The Democrats have made no bones about their intentions: higher taxes, even more regulation, French style industrial policies to move their social agenda, surrendering U.S. sovereignty to global institutions, gutting the military — look at their handiwork on a U.S. fleet that can no longer keep its ships from bumping into other ships — and willful neglect of U.S. security — consider the North Korean nuclear arsenal President Obama kept hush about until Mr. Trump’s first post-election visit to the White House.
If Republican senators want those outcomes, then they should keep holding out for everything they want in a tax bill.
• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.
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