Robert Doar explains why one approach to a stalled federal tax bill would make the nation’s fiscal picture worse.
The Wyden-Smith tax bill, which combines an expanded child tax credit (CTC) with a variety of business tax breaks, has been in limbo in the Senate for the past three months. Majority Leader Chuck Schumer has promised to bring up the bill if there’s enough support, but so far, these votes have not been forthcoming as leading Senate Republicans have rightly expressed skepticism about the lack of sufficient employment incentives. Nonetheless, Punchbowl reported yesterday that the bill’s supporters on both sides of the aisle are making a new push to secure passage.
Sen. Josh Hawley (R-MO) is trying to secure votes by combining the tax bill with a dramatic expansion of the Radiation Exposure Compensation Act (RECA), which provides money to individuals impacted by nuclear testing. Reports estimate that the expansion will cost $50-60 billion over ten years, none of which is offset with spending cuts or taxes.
Far from sweetening the package for Republicans, this proposal only exacerbates the other fundamental problem with Wyden-Smith: its total lack of fiscal responsibility. Instead of saving almost $80 billion by eliminating the Employee Retention Credit, Wyden-Smith supporters immediately plowed the money into more spending on favored interest groups. And while with phony Washington accounting gimmicks the ERC savings can hide the true cost of these tax cuts through 2025, the Committee for a Responsible Budget estimates that the total price tag could spiral into the hundreds of billions over the next decade—all of which would add to our biggest problem: out of control spending and a ballooning national debt.
All it takes is a quick look at our deteriorating fiscal picture to realize this is no time to add billions in new spending. The economic outlook remains uncertain as inflation and thus interest rates remain stubbornly high.
