Why did Rand Paul vote in support of the 2017 tax cuts if he's against increasing the deficit?

Question

I've seen lots of media sources calling Sen. Rand Paul a hypocrite for blocking the 9/11 victim compensation fund bill until the cost is offset elsewhere, but not voting against the 2017 tax cut bill under the same rationale.

Rand Paul supposedly has a consistent voting record against bills that increase the deficit. But it looks like Rand Paul was in favour of the 2017 tax cuts, and in fact would have preferred an even larger cut. But I thought tax cuts increase the deficit? If this is the case, what was his rationale for voting in favour of the tax bill? I'm trying to understand his reasoning.

Answer 1

Rand Paul is not being hypocritical.

The 2017 Tax Cut and Jobs act had a PayGo requirement, following statute from 2010. Through this requirement, the tax cuts would have been Deficit and Debt Neutral, requiring either sufficient offsets from elsewhere in the budget or through automatic spending cuts. Unfortunately, that requirement was waived through a vote in conjunction with the Continuing Resolution in December 2017.

While numerous websites are building the narrative that Rand Paul is virtue signaling, they're not providing the full story. Here, he explains it himself:

He said he is like most Americans who want to see Sept. 11 victims and first responders taken care of, but insisted that all federal spending must be compensated through cuts to other programs -- citing America's $21 trillion debt.

In addition, Paul said the 56-year-old comic was mischaracterizing his support for the Trump tax cuts as an exception to the lawmaker's fiscal responsibility mantra.

He said when he cast his vote in favor of the tax cut, there was a "pay-go" provision in the bill that afforded some semblance of budgetary neutrality. That provision, Paul claimed, was removed in the final version signed by President Trump.

Paul's office previously defended his objection to Gillibrand's call for unanimous consent:

"Senator Paul is not blocking anything," it read. "He is simply seeking to pay for it. As with any bill, Senator Paul always believes it needs to be paid for. Senator Paul is simply offering an amendment, which other senators support, to pay for this legislation," a spokesperson told Fox News in a statement.

So, how did Rand Paul Vote on the Continuing Resolution in December 2017? He voted against it, saying:

On Thursday evening, Sen. Rand Paul objected to the CR’s paygo waiver, which prevents automatic spending cuts related to the GOP’s $1.5 trillion tax bill. Paul offered a motion, which was rejected, that would have kept those spending cuts in place.

"We have rules in place. The rules in place say that there are budget caps. So, they’ve got a special little waiver they’ve put in the spending bill because we are now going to exceed those caps,” Paul, R-Ky., said.

Answer 2

Why did Paul vote for tax decreases? Because the is a Libertarian.

He believes in smaller government, and fewer taxes. He also believes in a balanced budget and reducing the deficit and debt.

While it may seem like common sense that lowering taxes will increase the deficit, that is not necessarily the case. As a previous answer pointed out, decreasing taxes can actually increase revenue by stimulating the economy and increasing overall taxable output.

But, this is not Paul's only objection. There is no proof, that increasing (or not decreasing) taxes would in any way serve to reduce the deficit. This is because, the US government has a track record of refusing to decrease spending, and in fact almost always increases spending. The debt ceiling has already been raised several times to accommodate our ballooning debt.

For that reason, Paul prefers to advocate for lower taxes and more responsible government, rather than increasing taxes which will almost undoubtedly be used for increased spending in the future, and more debt.

Paul had introduced a plan to reduce the debt. He called this plan the "penny plan". In it he proposed a $400billion reduction in spending for 2019 and in subsequent years, to cap spending increases at 1%.

With just these modest limits, the budget would be balanced by 2023 and we could be paying down $700billion of the debt per year by 2028. At that pace the debt would vanish by about 2055.

You would think that Paul could get some traction with his ideas with a Republican President and Senate, but unfortunately many Republicans these days are conservative in name only. Instead of the $400Billion reduction Paul wanted, Trump increased spending by about $300billion this year. Trump is running deficits above the level of the Obama years, which is really pretty pathetic for a so-called "conservative".

Answer 3

There is a common belief among Republicans that cutting taxes will lead to lower spending. Because it is easier to avoid spending when the budget is in deficit than surplus. So under that view, it makes sense to cut taxes first and cut spending later.

There is also a belief that cutting tax rates can lead to higher tax revenues. This is because reducing rates encourages more economic activity. If the tax base increases enough, then it can offset the cut in rates. If you want, you can read more about this as the Laffer Curve. The original observation was that a tax rate of 100% would produce zero revenue, as no one would have any reason to engage in the underlying activity. There is some rate at which there is an exact balance between the increase in the tax base and the rate cut.

Under that view, the Congressional Budget Office is underestimating revenues. Because of this, even an unbalanced cut can end up balanced. Because the increase in revenues from the swelling tax base will offset some of the losses projected for the cut.

Overall, I suspect that you will find that Rand Paul's consistent record is against higher spending, not tax cuts. It's just that there are far more votes on spending than on taxes. So it looks like he almost always votes for lower deficits, even though he rarely votes against tax cuts. He may or may not hold one of the other views as well. He expressed neither in your link, but that doesn't mean that he doesn't believe them.