Koch Brothers' Internal Strategy Memo on Selling Tax Cuts: Ignore the Deficit
Talking points circulated by the Koch brothers network tell tax-cut advocates not to worry about the deficit impact.
Charles Koch Fortune Brainstorm Tech 2016, July 11th, 2016 in Aspen, Colorado. Photo credit: Kevin Moloney
The billionaire brothers Charles and David Koch spent much of the eight years of the Obama presidency stoking fears about the budget deficit. Their political network aired an unending cascade of campaign advertisements against Democratic politicians, sponsored several national bus tours, and paid organizers in communities across the country to mobilize public demonstrations, all focused on the dangers of increasing the deficit.
One such ad even warned that government debt would lead to a Chinese takeover of America — which, for many voters, is a concern linked to debt. Another effort, also quietly bankrolled by the Koch network, used Justin Bieber memes to try to reach millennials about too much government borrowing.
Now that Republicans control all levers of power in Washington and the Koch brothers are poised to reap a windfall of billions of dollars through tax cuts, they have a new message: Don’t worry about the deficit.
The Intercept obtained a messaging memo from the Koch brothers’ network on how to sell tax reform legislation. The memo went out to members of the network of likeminded Republican donors, which includes dozens of wealthy investors and business executives.
The talking points suggest that backers of the tax cuts feel vulnerable to the charge that the tax cuts will jack up the deficit.
“In case it is helpful to you in your own discussions with lawmakers and others,” the memo begins, “below is a list of talking points that address some of the key hurdles to passing tax reform this year.”
The memo goes on to encourage lawmakers to avoid becoming distracted by deficit concerns when passing the GOP tax reform package (emphasis added):
“Avoid getting distracted on revenue neutrality; economic growth increases revenues. Some Republican Senators have expressed concern over supporting comprehensive tax reform that adds to short-term deficits. Though we fully appreciate those concerns, the long-term economic growth that would result from the first comprehensive tax reform in a generation would help to offset short-term deficits over time. That was the result of the Kennedy and Reagan tax reforms—there’s no reason this time will be any different.”
The current tax cut plan under negotiation would cost as much as $2 trillion over the next 10 years.
The messaging document claims that any shortfall created by the tax package will be filled by tax revenue generated by economic growth sparked by the reduction in rates. It’s the same “pay for themselves” argument used to justify the tax cuts passed by President George W. Bush in 2001 and 2003. “You cut taxes and the tax revenues increase,” Bush claimed.
In reality, the Bush tax cuts reduced revenue collected by the government and ballooned the deficit. Center on Budget and Policy Priorities estimates that the Bush tax cuts have slashed government coffers by more than $5 trillion since they were first enacted, and the cuts remain among the biggest drivers of the current national debt.
Stated concerns on the GOP side about debt and deficits tend to be driven by the fear that future tax hikes will be needed to pay them. Since the concern about the deficit is truly a concern about taxes, it makes sense that when a tax cut is attainable in the moment, worries about the deficit evaporate.
When wealthy donors now ask Republican lawmakers to ignore the debt, they will find some former deficit hawks already prepared to change their tune.
“It’s a great talking point when you have an administration that’s Democrat-led,” Rep. Mark Walker, R-N.C., the chair of the far-right Republican Study Committee, told the New York Times when asked about deficit concerns. “It’s a little different now that Republicans have both houses and the administration.”