The Can Kickers’ Cacophony, by David Stockman

Congress and the Trump Administration are doing nothing to address the soaring national debt. Tax cuts are only partially paid for with tax increases, and spending is not being cut by even one thin dime. From David Stockman at davidstockmanscontracorner.com:

They are kicking so many cans down there in the Imperial City that the endless din of clanking and banging is getting downright cacophonous. The last minute delay in the ballyhooed GOP tax bill, for example, is going to be a real racket maker because it’s not just a one day delay—-it’s the start of a forever delay.

In a word, the GOP has lathered itself up in behalf of tax cuts costing $5.5 trillion over the next decade, but only had the (misguided) nerve to carve out a $1.5 trillion free pass (deficit add-on) in its phony FY 2018 budget resolution. We will have more to say about this yawning $4 trillion gap below, but here’s the crux of the matter.

Speaking for the GOP on both ends of Pennsylvania Avenue a month ago, the so-called Big Six framework included $3 trillion of business tax cuts alone. The latter featured three huge sugar plums eagerly sought on the K-Street/PAC corridors—–including the 20% corporate rate ($2.0 trillion), the 25% pass-thru rate for unincorporated businesses ($800 billion) and 100% first year expensing of equipment through 2022 ($200 billion).

But the GOP rank and file on Capitol Hill is just now hearing about the “payfors” and professes to be shocked(!) And unlike Captain Louis Renault in “Casablanca”, no one is going to slip them some cash if they clear the waiting room at Gucci Gulch.

That’s because any “payfors” that could make a dent in the $4 trillion hole are pure political poison. Thus, a true rollback of the 401 (k) deduction could save perhaps $500 billion over ten years, but would also trigger a massive withdrawal of campaign cash by Wall Street and the brokerage industry.

Likewise, eliminating the SALT (state and local tax) deduction entirely would save $1.3 trillion, but would send the real estate brokers, local business leaders and upper income GOP contributors into paroxysms of outrage.

So we are quite confident that most of the big “payfors” will be diluted and compromised down to a relative pittance—even before the tax bill gets out of the Ways and Means Committee.

To continue reading: The Can Kickers’ Cacophony

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