Democrats Can’t Tackle Real Reform Either

The Bigger Story

In a recent post, I contrasted tax reform based on public finance principles with the current Republican-backed “One Big, Beautiful Bill,” which would expand special tax breaks for select interest groups and types of income, largely neglect working-class families, impose significantly higher interest costs on Americans for the foreseeable future and jeopardize the economy by adding substantially to the national debt.

Here, however, I want to explore why the Democrats largely remain on the sidelines, with no elected member of Congress willing to present what might be a reasonable alternative. The issue extends far beyond tax reform. Eager to regain lost voting constituencies, the Democrats limit their current strategy to opposing the Trumpian chaos and finding better ways to market themselves for the next election.

In a recent post, David Brooks of the New York Times suggests that’s not enough, and Democrats need a zeitgeist for a new era. While I agree that both parties mainly live in the past, it’s less a matter of imagination than fear that prevents Democrats and Republicans from offering any sustainable vision.

Certainly, Republicans currently fear offending President Trump by offering an alternative, but this is not an issue for Democrats today, nor was it for Republicans before Trump’s time. To understand their mutual, long-standing reluctance to adapt to the modern age, one must consider the developments that led to our budget morass, with the tax reform process in 2025 being only the latest in a long series of missteps.

The bottom line is that Democrats find themselves in the same predicament as Republicans. Neither party can acknowledge that both have put promises into the law that they cannot fulfill, as that would mean informing large segments of the population that today’s combination of low taxes and high automatic spending growth is unsustainable. Targeting only specific groups, whether the wealthy by Democrats or Medicaid recipients by Republicans, won’t resolve the issue. When only one party admits the full scope of the problem while the other does not, the honest party appears less generous to taxpayers and fears losing elections. It’s a classic prisoner’s dilemma. In simple terms, “if you lead, you lose.”

However, the cost to the public increases by more than just the extra interest charges on the debt. Those who have fallen behind, particularly the working class and youth—especially those who are not college-bound—will continue to be left behind.

In other words, at its core, legislators today have the budgetary responsibility to break past promises in a way that makes spending and tax policy more efficient, fair, and sustainable. Yet Every dollar of revenue today and in the foreseeable future has already been allocated or promised to the public before Congress appropriates even a dime or extends past tax cuts. Congress has no room to allocate resources to any new and major agenda as long as it sustains current law.

You need to understand that this is not just a Trump-led phenomenon, and it won’t end merely when he completes his current term of office, any more than it ended when Biden defeated Trump in 2020. This situation has persisted for decades. Unsustainable, built-in spending growth was institutionalized in legislation dating back to the 1960s and 1970s and has been compounding on an ever-larger base while also receiving further legislative boosts. While Democrats largely claim credit for the spending growth, the Republican Party was not to be outdone. Every Republican president who regained the White House since 1980 immediately advocated for a large tax cut, emphasizing lower rates for capital income. They almost always claimed that the tax cuts would pay for themselves, which, of course, has not occurred.

Politicians like to distribute funds, increase spending, and cut taxes. They win elections by telling us what they do for us, frequently concealing the costs that future generations will bear and that upcoming Congresses must address.

The Tax Cuts and Jobs Act of 2017 was just one of many examples. Although Congress made some efforts to offset many temporary cuts with future increases, the situation reached a critical point in 2025 when those temporary cuts end. Thus, unless Congress extends those tax cuts for 2026 and beyond, much of the public will see their average tax rates rise in 2026 compared to 2025. However, extending the tax cuts will exacerbate rising deficits, debt, and interest costs.

Aside from some additional giveaways proposed by President Trump, including those for older Americans and people who earn tips, the choice between continuing on the current path—along with all the additional borrowing it entails—or taking away something promised to households by past Congresses largely explains the quandary facing today’s elected officials. However, it’s not much different from what has happened over several decades: spending increases and tax cuts, both old and new, are not offset by spending cuts and tax increases.

Returning to the Democrats’ larger dilemma, they want to attract voters from working-class, Black, Hispanic, young, and other demographic groups that they have lost. However, as long as their past commitments, primarily to groups already favored, consume more than the anticipated revenue growth, they cannot serve these neglected groups better. Like Republicans, they strive to be Santa Claus, not Scrooge, but Santa has long ago emptied his sack.

Meanwhile, the public has grown so accustomed to this pampering that we vote out those who are honest with us.

Many of my colleagues in the budget community believe that only a crisis will compel our elected representatives to act responsibly. However, I am not convinced that a crisis can spur the needed action unless the public starts to see a vision of a better future. Congress largely ignored long-term funding for its actions, much less fundamental budget reform, during the last two major crises—the Great Recession and COVID-19.

Genuine reform almost always requires challenging what conventional wisdom considers unbreakable political constraints. Today, the only “vision” that can logically work, with numbers that truly add up, is one that makes room for something new and better by no longer pretending that the nation can sustain a level of promises unprecedented in our nation’s history.

And that requires a level of honesty and forthrightness that neither political party today can offer.