It's not that tax reform is economically necessary or beneficial - it's what citizens voted for in the last election, and elections have consequences.

In the United States, elections do have consequences. Last week, the Senate voted for tax reform that makes life much easier for corporations, a little easier for the richest citizens, and even less easier for the middle class. The consequences of the reform will not only be changes in specific tax rates, but also in future spending cuts. Tax cuts significantly increase the budget deficit, and the Republicans, who have a majority in Congress, will start worrying about it again immediately after the tax reform is completed.

The vote in the Senate is being called an important parliamentary victory for the Republicans – they have a small majority (52 to 48), and some of their “own” senators do not always support the faction’s leadership. However, it is not about concessions to individual senators (one received additional money for his state, another – an amendment on what would happen if the deficit grew too much, etc.) – it was not these concessions that decided the issue of tax reform. This happened a year ago, on November 8, 2016, when Americans decided that the president would be a Republican and that the House of Representatives and the Senate would retain a Republican majority. Republicans have always – at least for the past 50 years – cut taxes. (One Republican president promised this 40 years ago, did not do it, and was not re-elected for a second term.)

Tax cuts are their main issue, the thing that really holds the party together. Republicans find it easier to cut taxes because economic growth is higher on average under Democratic presidents, meaning Republican presidents start their terms with relatively calmer, more complacent citizens. Or, rather, the opposite: when Americans worry less about the economy, they elect Republicans to cut taxes.

The "economic rationale" for the current tax reform was that the tax cuts would increase growth by 3-5 percentage points in the medium term, but my quotation marks are not accidental. Not a single serious economist, even those who vote Republican (there are many economics professors) or who worked in a Republican administration, agree with these forecasts. There is no visible mechanism that, in the current conditions - the American economy is growing quite quickly, 2-3% per year, for the eighth year, unemployment is at a record low - could lead to a significant increase in growth. A significant part of the gains from the tax cuts for corporations will go to foreigners (lower tax rates will make investments more attractive), and for American workers there will be both pluses (higher wages) and minuses (fewer social programs due to reduced spending). Those who see benefits from the tax cuts - and there are many such economists - believe that the gains for most will be small. But the point is not that tax reform is economically necessary or beneficial - it is what citizens voted for in the last election, and elections have consequences.

Konstantin Sonin is a professor at the University of Chicago and the National Research University Higher School of Economics.

What do elections lead to?