By Beth Anne Mumford
It’s been a year since Nancy Pelosi, proclaimed that the Tax Cuts and Jobs Act, passed by Congress just before the start of 2018, was “the end of the world.”
This “Armageddon,” she said, would be brought on by passage of “the worst bill in the history of the United States Congress.” I will leave it to students of history to fight over which are the worst bills ever passed in US history.
We can dismiss such hyperbole and over-heated rhetoric as simply the political style of the presumptive Speaker of the House. But others made more concrete predictions about what would happen. And while less ridiculous, they were just as wrong.
Case in point, Pelosi’s fellow Californian, outgoing Gov. Jerry Brown, who said proponents of tax reform were “throwing a wrench into the engine of our economy.”
According to my colleague, Russ Latino, who serves as VP of Economic Opportunity for our network, politicians couldn’t have been more wrong. Writing in an oped, he makes the case that the TCJA has been good for our economy and for individuals. It’s government spending that remains the problem.
“Of course, the law has jump-started our sluggish economy and improved lives across the country. The nonpartisan Tax Foundation says that economic growth will be around 2 percent greater from 2018 to 2027 because of tax reform. This will boost the GDP by $5.3 trillion, increase wages by an additional 1.5 percent and create 340,000 more jobs.
Claims by Sens. Bernie Sanders, Elizabeth Warren, and Chris Van Hollen that the bill was “highway robbery” and “a heist” because benefits of tax reform would be enjoyed only by the wealthy have also been proven false.
The bill cut taxes for the average American household in every state, including right here in Pennsylvania, providing a savings in 2018 of $1,400 for individuals and $3,000 for married couples with two children. Over the next decade, that savings coupled with higher wages will amount to $26,000 for individuals and nearly $45,000 for married couples with a couple of kids. That’s a college education, a down payment on a home, money to start a business or chase a dream.
Of course, many politicians in Washington prefer to spend our hard-earned money as they see fit, rather than letting us keep it. So there was plenty of fretting that the Tax Cuts and Jobs Act would “dramatically expand the deficit to force huge future cuts to education, roads, health care,” as Sen. Chris Murphy of Connecticut warned.
The truth is, revenue isn’t the problem, spending is. From 1989 to 2018, revenue has grown at a compound annual rate of 2 percent. During the same period, spending has grown at 2.2 percent. Between 2014 and 2018, the difference was even greater: revenue grew at 1.1 percent, and spending at 2.6 percent. Revenue is going up. Spending is just going up more.
Hardworking American families know, that if you spend more than you take in, you’ll end up in debt. The rules aren’t any different for Washington.
Rather than adding to the deficit, the Tax Cuts and Jobs Act is boosting the economy, growing the GDP and in turn, increasing revenues. The Department of the Treasury reported that revenue collections in 2018 were $3.3 trillion. That’s almost $14 billion more than in fiscal 2017. State revenue collections are also up, largely thanks to the growing economy.
Now, if Washington can just start spending more responsibly, the debt will shrink.”
I agree with Russ and others who argue that it’s government spending that needs our attention if we are to give the next generation a good footing.
As we head into 2019 with a leadership change in the House of Representatives, and a slate of new members of Congress from PA, it’s more important than ever that citizens keep an eye on how our lawmakers spend our dollars. Allowing citizens to keep more of the money they earn is good for the economy, out of control government spending is not. Here’s to working together for a more prosperous New Year for Pennsylvanians and all Americans.
I’m Beth Anne Mumford, state director of Americans for Prosperity PA. Join our effort at www.afppennsylvania.com