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November 30, 2017 04:05 PM UTC

Report: The Republican Tax Plan Does NOT Pay for Itself

  • 16 Comments
  • by: Colorado Pols

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.

The big news out of Washington D.C. this afternoon comes from a Joint Committee on Taxation analysis that in no uncertain terms blows the “pays for itself” idea out of the water. As CNN explains:

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.

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16 thoughts on “Report: The Republican Tax Plan Does NOT Pay for Itself”

  2. Republicans’ Tax Lies Show the Rot Spreads Wide and Runs Deep

    https://www.nytimes.com/2017/11/30/opinion/republican-tax-lies-fed.html

     

    Mnuchin said his department had a study showing great effects on growth; that was a lie. Donald Trump says the bill is “not good for me”; that’s a lie. Senator John Cornyn said, “This is not a bill that is designed primarily to benefit the wealthy and the large businesses”; that was a lie. Senator Bob Corker said he wouldn’t support a plan “adding one penny to the deficit”; that was a lie.

    In other words, this whole process involves a level of bad faith we haven’t seen in U.S. politics since the days when defenders of slavery physically assaulted their political foes on the Senate floor.

    1. So what will it take to clean out the rot? The answer, basically, is overwhelming electoral defeat. Until or unless that happens, there’s no telling how low the G.O.P. will sink.

      Republicans deep down sense they may only have 1 to 3 years to "Fuck America, Yeah!", thus the rush to pass crippling legislation to realize their Dystopian fantasy vision of the future that they hope can never be overturned.

      1. I thought this too.  They are like a 'Smash and Grab' bunch of robbers who want to get away with the loot before the cops arrive.  Why else would they attempt to ram through major legislation without any hearings or witnesses?  Fuckers.

  3. My favorite in the rhetoric is:

    "the tax plan as it is laid out will only cost $1.4 billion"

         "What about the tax increases on 80% of the people after 2022 or so?"

    "Well, no future Congress would really allow those taxes to rise."

         "So, with that change in the tax plan, how much will it cost?"

    [crickets …. ] because the answer calculated by several groups is OVER $2 Trillion.

  5. Fiscal conservative?  What the hell is that?  Eight years of G.W. Bush and the GOP running up huge deficits to pay for bogus wars, then another eight years of Obama and the Dems spending trillions in stimulus for an anemic "recovery", and now we're at 20 trillion in debt and counting.

    Finding a "fiscal conservative" in Washington is about as rare as finding a congressman who can keep their pants zipped.

    2. I think the stimulus spending was $800B. I'm willing to see facts which differ. Personally, I advocated with Bennet to do a second round equal to the first. It worked.

  6. This is the time that Voo-Doo will finally work! 

    The righties on #COpolitics twitter feed promise! It will "UNLEASH" the American economy and RICHES will rain down in bigly trickles, filling in the deficit like a magic beanstalk of growth! 

    Its how "supply (side) and demand" works. Supply your donors with more wealth, ignore the demands of the masses you're screwing. 

     

  7. Perhaps Allyn can answer this:  why is there a need for any fiscal stimulus that "gets the economy going and creates new jobs?"  The economy is generally considered to be at or near full employment, despite there being pockets still of high unemployment. The bigger problem is not enough jobs; rather, it is finding trained persons to fill job vacancies. The stock markets are at all time highs. Corporate earnings are good.

    I'll add that the corporate tax rate is too high when compared to other OECD countries. Perhaps a bill to repatriate some of the trillions of dollars held overseas would be a better direction here. Back to you, Allyn

     

    1. Since a third of the stock market is held by foreigners, lowering the corporate tax rate would result in 1/3 of the tax break flowing out of the country.

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