Jack Bernard: Despite what NC’s Hudson says, both parties to blame for deficit

“Raising the debt limit without making reforms is not the answer to fixing our current debt crisis.”- Rep. Richard Hudson 

North Carolina Congressman Richard Hudson recently issued a letter regarding President Biden’s State of the Union address. Hudson, a Republican, implied that our budgetary problems were the sole fault of Democrats. But the facts prove him incorrect.

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Under Trump, the Tax Cuts and Jobs Act (TCJA) of Dec. 2017 changed the tax situation for corporations and the wealthy like the former president. It also was a major factor in raising the national deficit to new heights.

The Congressional Budget Office projects that the federal deficit will increase to 10 percent of GDP by 2043-2051, from 4.2 percent of GDP in 2022. That should be unacceptable to Republicans, Democrats and independents. And both parties are to blame.

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Last year, the deficit increased $2,540 billion under Biden. However, it was even higher under the last year of Donald Trump ($3,132 billion).

President Obama was in office 2009-2016. Under Bush, the GOP had understandably pushed the passage of a recovery package to pull us out of a recession. Thus, in 2009 the deficit reached $1,413 billion in Obama’s first year. The annual deficit then went down from his first term, but we still ran a $585 billion annual deficit by the end of his second term.

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Economic theory indicates that during periods of a strong economy our national debt should be reduced, not raised. However, as discussed below, the Trump tax cut happened during a period of a strong economy, causing the national debt to increase.

Trump took over in 2017, and the deficit rose dramatically every year, in part due to the TCJA, an act which primarily reduced taxes for the wealthy and corporations ( from 35% to 21%). Trump was elated, however, misleadingly claiming that “passing the historic tax reform package ... immediately paid huge dividends for millions of hard-working families.”

Members of the administration also falsely stated that the act would pay for itself. But how could that happen when: “Actual corporate income tax revenue in FY2018 was $135 billion lower than CBO’s projection from 2017 —almost exactly a 40% decline,” according to Brookings. And the negative impact was known prior to the act being passed. Once again, Trump misled the American people.

Biden and the Democrats have not been angels in this matter. However, they did pass legislation last year which would dramatically increase IRS audits for the wealthy, only 2% of whom were audited in 2019, dropping drastically from 16% in 2010. However, the GOP leadership opposed this measure.

Now, U.S. Speaker of the House Kevin McCarthy is threatening to let the USA default on its already incurred debts ... although he (and Hudson) had no problem approving raising the ceiling three times for Trump.

McCarthy has not put forth a plan to balance the budget, and neither has Hudson. McCarthy does not want to rescind the TCJA, restoring reasonable taxes on corporations and the wealthy. And he says he will not advise cutting Medicare and Social Security. Further, the GOP has always supported increase in military expenses, which have risen astronomically over time.

So, what is the speaker’s plan?

I am a fiscal conservative, but a progressive on social issues. Many years ago, I joined the Republican Party. One key reason was because I thought they would eventually balance the budget. They did not. Now, I am a Democrat. But my current party also refuses to balance the budget.

Once upon a time, I was Chairman of a rural Georgia County Commission. Tax increases were slashed from 10% a year to 1%, without reducing services. It was difficult, but we cut out pork and wasteful spending. And it was divisive, with most financial votes passing 3-2.

If it can be done locally, it can be done nationally — if there is the political will. And that means cutting expenses (programs) and increasing revenues (taxes). Including making all corporations pay their fair share; currently half pay nothing.

But the with current leadership of both parties, that will not occur. If Hudson really wants to get serious, he needs to acknowledge that the only solution will be bipartisan.

Jack Bernard is the former director of Health Planning for Georgia and a retired high-level executive with a healthcare corporation. He was one of the founders of Premier, Inc. in Charlotte. He is a widely published health reform columnist.

This article originally appeared on The Fayetteville Observer: Jack Bernard: Despite what NC's Hudson says, both parties to blame for deficit