UPDATE: The reality that the huge losses in revenue from cutting taxes by $1.5 trillion will not be made up automagically by increased revenues resulting from the economic growth spurred by the tax cuts undercuts literally decades of insistence by Republicans that this is a workable policy. And it also throws Rep. Mike Coffman of Colorado’s own contention about the House’s version of the legislation into disarray. Coffman’s words here are quite simply wrong:
The Tax Foundation (TF), a respected nonpartisan think tank, expects the bill to lead to 3.5% higher GDP over the long run, generating economic growth that will increase federal tax revenue by nearly a trillion dollars over a decade, adding, “depending on the baseline used to score the plan, current policy or current law, the new revenues could bring the plan close to revenue neutral.”
Aside from the dubious claim that the bill would, in the worst case, increase the deficit by $1.5 trillion…
Sorry, Rep. Coffman, but as it turns out that idea isn’t so dubious. The right-leaning Tax Foundation’s analysis of the House bill was not corroborated by other research–and the only people who ever seriously believed this tax cut plan would ever be “revenue neutral” either didn’t look at the bill or didn’t care to look honestly at it.
Case in point.
One of the most oft-repeated talking points for Republicans about their tax plan is that it would create so much growth in the economy that it would pay for itself over time. This is a favorite soundbyte designed to make Republicans feel better about the fact that they are promoting legislation that would increase the national debt by more than a trillion dollars.
Republicans have made a very big deal pitching their tax reform plan as an elixir for economic growth.
But a new nonpartisan analysis of the Senate tax bill suggests that while it will spur some additional economic growth, it won’t be nearly enough to compensate for the full cost of the bill’s provisions, which include tax cuts for businesses and individuals.
Here’s why this is such a problem for Republicans, as Steve Benen writes for MSNBC:
Senate Republicans intend to cut taxes by about $1.4 trillion, and once their plan is fully implemented, they’ll leave a $1 trillion hole in the federal budget.
Ordinarily, GOP officials respond to reports such as these by insisting that the numbers are misleading because they failed to take “dynamic scoring” into account. In other words, Republicans believe that to get an accurate assessment of tax plans, one must account for the fact that tax cuts super-charge the economy, which means more growth, which means more revenue, which means a lower overall price tag.
But that argument doesn’t work today: the Joint Committee on Taxation, which is the official congressional scorekeeper on tax bills, relied on dynamic scoring in its analysis.
The JCT played the game by Republican rules, and the regressive tax plan is still $1 trillion short. The claims Republicans are making to justify their tax breaks are, according to Congress’ official accounting, wrong. [Pols emphasis]
It’s not yet clear whether this new report from JCT will impact the decision of Congressional Republicans to move forward on their tax plan, but this just got a lot more complicated for diehard conservatives who insist that cutting the federal budget is a fundamental imperative. No Republican can vote for this plan and simultaneously claim that they are still “fiscal conservatives” concerned about adding to the national debt.
As it turns out, 2+2 does not equal 5.