Cancel Biden’s Spending to Pay for Tax Cuts
The Congressional Budget Office estimates that extending the 2017 Tax Cuts and Jobs Act would cost $3.8 trillion. That has prompted hand-wringing from fiscal hawks. Yet it’s still true, as I have argued in these pages, that a Republican Congress could fund most or all of that extension next year by undoing much of the Biden administration’s spending binge. As fast as the budget gnomes have raised their estimated cost of the TCJA, they’ve hiked their projections of President Biden’s spending plans even more quickly.
In February, the CBO raised its estimated cost of the Inflation Reduction Act’s climate-related tax giveaways to approximately $1 trillion from almost $570 billion in April 2023. Even that didn’t reflect the full cost in the budget office’s estimation because of uncertainty about new emission standards. In light of the stringent rules the Environmental Protection Agency finalized in March, the CBO should raise its cost estimate of the green subsidies to as much as $1.2 trillion.
Also in March, the CBO estimated that undoing the Biden administration’s 2021 changes to food stamps, which outside organizations asserted would save $180 billion to $193 billion over 10 years, would in fact save $425 billion over a decade. And in April, the administration announced a new round of student-loan forgiveness that the Penn-Wharton Budget Model estimated would cost $84 billion, on top of the $475 billion 10-year cost of Mr. Biden’s prior forgiveness proposals.
Repealing all this spending would net more than half the cost of extending the expiring TCJA provisions. In addition, a Politico story last week noted that four Biden-era laws appropriated $1.1 trillion in spending on energy and infrastructure, most of which hasn’t been contractually obligated and therefore can be rescinded by Congress.
Funding tax-cut extensions by repealing Biden-era spending would give businesses long-term certainty to invest in growth. Under the Senate’s budget-reconciliation procedures, extensions that are paid for can be permanently codified with a 51-vote majority. Repealing spending provisions legislatively would also prevent a future Democratic president from resurrecting dormant programs via regulatory action. And replacing green subsidies with broad-based tax relief would get the government out of the business of picking winners and losers, preventing new Solyndras before they happen.
Republicans haven’t exactly been paragons of virtue on spending. But it takes an especially reckless disregard for economics to shovel out trillions in Covid-era welfare and then put trillions more toward green pork and other pet projects. The next time Mr. Biden wants to lecture the GOP on fiscal responsibility, he should first take a look in the mirror.
This post was originally published at The Wall Street Journal.