GOP searches for proof tax plans will pay for themselves
WASHINGTON — Republican leaders keep insisting that their plans to cut taxes by $1.5 trillion over the next decade will not add to the national debt — yet economic analyses of the Senate and House proposals keep predicting that the plans will do just that.
The disconnect is prompting House and Senate Republican leaders and the Trump administration to hunt down — and promote — more optimistic forecasts, even if they exclude large parts of the tax bills from their analyses or assume growth-boosting features that are not, in fact, in the bills.
“When you’re in a political organization, you’re constantly model shopping,” said Kent Smetters, a former economic adviser in President George W. Bush’s administration, who is now faculty director of the Penn Wharton Budget Model at the University of Pennsylvania.
Republican leaders have said the tax cuts they are planning will essentially pay for themselves. Lawmakers gave themselves, via their 2018 budget resolution, space for $1.5 trillion in revenue losses from tax cuts, but they have promised those losses will be offset by increased economic growth spurred by the tax overhaul. Finding a model that supports the ambitious economic growth projections is critical to their ability to pass a tax cut along party lines.
The House and Senate bills have been introduced and amended at a rapid clip, and economists are only now beginning to plug their details into sophisticated models that predict how much additional growth the cuts might produce. So far, every dynamic analysis that scrutinizes the full details of the bills and factors in economic growth finds that those plans would add at least $500 billion and as much as $1.7 trillion to the deficit.
In an interview Friday, Sen. Mitch Mcconnell of Kentucky, the majority leader, said “we’re confident that the $1.5 trillion gap would be filled” by economic growth. Mcconnell said the tax bill would add 0.4 percentage points to annual economic growth, though he did not cite a specific analysis suggesting that assertion. “So we believe this is a responsible budget and a responsible tax reform,” he said.
Speaker Paul Ryan of Wis-