Cost-Free Tax Cuts Are Just the Most Extreme Example of GOP Financial Fantasies

When does giving away trillions of dollars not cost a cent? Apparently when you’re a Republican leader in Congress desperate to give more tax cuts to the rich

By William Rice

When does giving away trillions of dollars to the very rich not cost a cent? Apparently when you’re a Republican leader in Congress desperate to give more tax cuts mostly to the rich and don’t want to be blocked by worries over the national debt. But it’s doubtful that this GOP “magic math” will work elsewhere in the budget: as soon as someone suggests protecting, expanding, or improving public services for working families, Republicans insist that every dollar will suddenly count. 

The incoming Republican chairman of the Senate Finance Committee, Mike Crapo (ID), has called “ridiculous” the seemingly obvious proposition that cutting taxes by $4 trillion will lose $4 trillion in revenue. He argues that somehow because those $4 trillion in tax cuts (which, when you add in the interest on all the extra debt, would cost closer to $5 trillion) would be an extension of cuts that would otherwise expire, they don’t cost anything.  

Crapo’s impatient demand that we ignore reality is really a further twist on what was already a Republican accounting trick. The first time Donald Trump was president, he and a Republican Congress rushed through a huge tax overhaul that cost $2 trillion, gave most of the cuts to corporations and the rich, and failed to deliver any of the economic benefits promised. 

This expensive bust of a bill would have cost even more if its authors had not limited how long most of the tax cuts would last. The end of 2025 was set as the expiration date for reduced tax rates, a weakened estate tax, a hobbled alternative minimum tax and other provisions that mostly benefit the highest-income households. (A huge cut in the corporate tax rate that Republicans judged would be tough to get by a skeptical public twice was made permanent.)

So for eight years we’ve been anticipating the end of the Trump-GOP tax cuts and a subsequent upswing in revenue. There are plenty of good uses for that money: lowering prices families pay on healthcare, education, housing and other essentials; confronting the climate challenge; paying off debt. 

Sure, everyone knew Republicans would try to extend the cuts. But just because they wanted it didn’t mean it would happen. It’s only likely to happen now because they won back the presidency and control of Congress—including the House by the narrowest of margins. And most important: the law says the cuts end on Dec. 31, 2025. If the law is changed to say they don’t, that’s still new spending, just as much as if it were an entirely new collection of tax cuts. 

This isn’t a complicated idea. Say you had a mortgage on your house for 20 years. Year after year, you looked forward to the day when the loan was paid off and you no longer had to make that monthly payment. You planned what you would do with the extra money you were no longer sending to the mortgage holder: maybe pay for a family vacation, buy a new car, or add to your savings. 

Then, the very month you made your last payment on your initial mortgage, you took out a second one. The monthly payment on this second mortgage was identical to the first—but does that mean you don’t have to pay the monthly payment? Of course not. Yet according to Sen. Crapo weird theory, that second mortgage is cost-free.

Crapo’s accounting fantasy is another example of Republican politicians growing more detached from the real world. Despite decades of experience to the contrary, they continue to push the idea that giving tax cuts to the rich and corporations will somehow “trickle down” to everyone else. They seem to believe it’s OK for billionaires and huge corporations to pay lower tax rates than teachers, mechanics and police officers—and sometimes pay no taxes at all. They think a nation growing larger, older and with greater healthcare needs can somehow meet its obligations without raising more tax revenue from those who can most afford to pay. 

It’s time we put an end to all these dangerous delusions—let’s start with Sen. Crapo’s denial of simple subtraction.