TCR Brief: Trump Administration Says Congress’ Accountants Got The Impact Of The Tax Bill All Wrong. Their Proof: Because We Say So!
On the eve of passage of the Senate’s version of tax cuts, the bipartisan Joint Committee on Taxation came out with a shocking report: even with solid economic growth, the bill would still balloon the federal deficit by $1-trillion. That number briefly froze the bill in its tracks, until Republicans ultimately decided to ignore it.
Now the Treasury Department says those numbers are all wrong anyway. Why? Because they fail to use numbers the White House made up to project economic growth.
If you use those, instead of resulting in a $1-trillion deficit, abracadabra, it’s a $300-billion surplus!
In other words, while Congress assumes annual economic growth of 1.9%, the Treasury Department just dials it up to 2.9%, arguing the additional growth — wait for it — will come from the tax bill paying for itself.
Trump’s folks say half the additional growth they’re counting on will come from lower corporate taxes that will result in corporations using that money to hire more people and build new factories. And half will come from similar economic stimulus as the result of tax cuts for pass-through businesses. And then even more will come from cutting regulations, cutting welfare and spending on infrastructure.
Immediately we noticed what’s either a big flaw, or deliberate deception in the Treasury’s numbers: a footnote in the one-page report says they’re relying on the White House’s 2018 budget estimates. Problem with that is the White House was figuring on an even deeper corporate tax cut to 15%, instead of the 20% currently on the table (and it could end up being 22%). So if those are the numbers they’re still using, they’re already way off.
But never mind, because the message is clear and unchanging: the tax bill will pay for itself, because it will pay for itself. In other words, because we said so…
Of course, since these are all projections, anyone could end up being right. At the same time, that’s why we have nonpartisan offices within the legislative branch, so they aren’t swayed by the politically motivated assumptions of a President with a penchant for hyperbole. Trump BTW recently told a cabinet meeting (not people at a rally) “I see no reason why we don’t go to 4, 5, even 6%”. Imagine how good the numbers would look then!
Here are the 2 reports side by side. Congress’ Joint Committee on Taxation. Trump’s Treasury Department.
Note the difference between the exhaustive economic calculations in the JCT’s report vs. the broad assertions of the Treasury report, with zero specifics to back them up.
(This story originally appeared in “The Chaos Report” Newsletter. Subscribe at https://thechaosreport.com/subscribe/?scr=Medium)
