No. of Recommendations: 15
But tax cuts - according to the premise of your first post - have devastating, deficit ballooning, horrible bad effects on things, right? So why not just have the government just take all the money and decide what to do with it?
Because the amount of the tax cut - or tax increase - matters. Not just the direction. Just because it might be good for your health to eat a little less doesn't mean it would be better for your health to stop eating entirely.
Giving government "all the money" is terrible - as is giving government "none of the money." The fact that the extreme of any directional change is bad does not mean that a modest directional change will be bad. Or that a directional change in the opposite direction will be good.
The GOP adopted two major rounds of tax cuts in their last two trifectas. They did so because they were convinced, in part, that either the tax cuts would stimulate the economy so much that revenue wouldn't fall and/or that if they cut taxes then spending would fall as the government was starved of revenue. Laffer and Norquist, as I mentioned in my earlier post. Neither of those things turned out to be true, in reality. Those big tax cuts just meant we reduced federal revenue by a ton - revenue didn't rise, and government programs weren't reduced. We just ramped up the deficit.
If we reverted back to the 1999 tax regime and undid the Bush and Trump tax cut bills, federal revenues would increase by roughly 3% of GDP, and the deficit would fall to about 2.6% of GDP. That deficit would be below the fifty-year average, would result in a "primary budget surplus" (ie. we would be taking in enough to cover current expenses, with the deficit just resulting from servicing past debt), and would put the deficit below the expected rate of GDP growth (which would mean it would be sustainable).
Had Bush and Trump not slashed taxes, we wouldn't be in this fiscal mess. Which means it's pretty unlikely that we're going to get out of this mess with austerity, as you suggested above. We're going to instead get out of it by raising taxes back to a level that is more sustainable than what resulted from the Bush and Trump programs. And it will probably get fixed with a Democratic administration, which will pay a political price for cleaning up the fiscal wreckage caused by Bush's and Trump's profligacy.