The 2017 Republican tax cuts will soon become law, but the debate over the GOP’s economic plan to jump-start a growth economy is just beginning. As often happens with tax cut proposals, it can be a tough sell initially for reasons beyond usual voter skepticism.
Any legislation moving through Congress, but especially tax legislation, is usually more “work-in-progress” than fait accompli in the best of circumstances. Marketing a product in development may work for Apple, but it’s got the brand to generate a potential sale. The Republican congressional brand, like its Democratic counterpart, is challenging.
Without details to sell or results to show — and in the face of withering criticism from Democrats and the media — it’s not surprising Republicans have yet to win the tax cut argument with voters and make the sale.
At this point, people don’t know if the plan will work or, more importantly, what’s in it for them. So, until the dust settles, the brand image of congressional Republicans will define the GOP tax plan — understandable and fixable, but not an ideal position from which to launch Republicans’ signature legislative achievement of the session.
In the end, what has become a bitter debate over taxes will be settled with the answer to one simple question. Are these tax cuts good for most individuals, particularly those living paycheck to paycheck?
Watch: Protesters Interrupt Floor Speech Before Tax Vote
Republicans believe tax cuts spur growth, which in turn creates jobs, better wages and opportunity and will inevitably lead to increases in federal revenues as a result of increased economic activity. Democrats generally oppose tax cuts and see increased spending as a better way to stimulate the economy and redistribute wealth.
So, who’s right?
Time will tell. If the economy takes off after the tax bill goes into effect next year and voters see bigger paychecks and more jobs, Republicans will win the argument. Given the track record of past tax cuts in positively impacting the economy and, by extension, the federal government’s fiscal position, Republicans have an advantage regardless of polling numbers today.
Putting the partisan messaging and messengers aside for a moment, a quick review of the four major tax cuts of the last 50 years and their impact should give Republicans hope for a better 2018.
1964 — Kennedy tax cuts
- The tax cuts lowered both individual and corporate taxes and produced a 66 percent increase in federal revenues from 1964 to 1969. GDP growth was above 6 percent for the two years after the tax cut was passed.
- 11.8 million jobs created (1965-69).
1981 — Reagan tax cuts
- These cuts went into full force in 1983. Starting in the second quarter of 1983, the economy grew by 8 percent or more for four straight quarters. Growth was at or above 3.5 percent for seven consecutive years also beginning in 1983.
- 20.1 million jobs created (1983-1989).
1997 — Clinton/Republican Congress Tax Cut
- Congress balanced the budget for four straight years following passage. Economic growth was over 4 percent through the year 2000.
- 8.2 million jobs created (1998-2000).
2003 – Bush tax cuts
- By 2007, annual federal revenues had increased by $786 billion (1.782 trillion in 2003 to 2.568 trillion in 2007) and the deficit had been cut by 57 percent, from $378 billion to $161 billion.
- 7.8 million jobs created (2004-2007).
For years, Democrats have argued against tax cuts, in part, by asserting that the Bush tax cuts drove up the deficit and created the financial crisis of 2008-2009. Although the housing crisis happened on Bush’s watch, the Bush tax cuts had nothing to do with the 2008 economic collapse.
That disaster was brought on by President Bill Clinton’s housing policies and exacerbated by unscrupulous Wall Street practices.
Democrats avoid noting the nation’s strong economic performance, which occurred in the years following every major tax cut. Any objective review of economic data supports the conclusion that tax cuts have consistently had a positive impact on crucial economic indicators — jobs, GDP and federal revenues.
This doesn’t mean there couldn’t be other factors that also impacted these results, and that would be an interesting policy discussion to have — but the underlying context for that discussion starts with positive economic numbers.
It’s possible the 2017 tax bill could be an exception, but so far, in opposing the tax cuts, Democrats have done little more than cherry-pick provisions in the bill for criticism instead of analyzing the legislation in its entirety. Yes, an individual may be impacted negatively by one change, but for the vast majority of people, other changes will likely put them ahead.
Historic data makes the case for tax cuts. But the GOP must make a stronger defense of their own economic theories and results or face the same kind of misinformation campaign that blamed the Bush tax cuts for the 2008 recession. Today, that false narrative is too often reported as fact.
To appropriate a little Winston Churchill, when it comes to last night’s vote on the 2017 tax cuts, “Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
For Republicans, the next six months should focus on winning the argument for tax cuts and the work is just beginning.
Correction, Dec. 20, 2017, 11:30 a.m. | An earlier version of this column misstated the rate of growth after the Reagan tax cuts, the jobs created after the Bush tax cuts and the amount of the deficit in 2007. Growth was at or above 3.5 percent for seven consecutive years beginning in 1983. Between 2004 and 2007, 7.8 million jobs were created, and the deficit in 2007 was $161 billion.
David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for House Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, and is an election analyst for CBS News.