Analysts: Senate bill would add $1T to debt

One of the most controversial aspects of President Donald Trump’s tax plan is how much it costs. Republicans approved adding up to $1.5 trillion to America’s debt to pay for tax cuts for businesses and individuals, but they argue that the price tag won’t be nearly that high because the plan will unleash a lot more economic growth.

For weeks, experts across the political spectrum have made predictions, with Republicans heralding the biggest growth estimates and Democrats holding up the worst ones.

Now Congress’ official estimators have weighed in: The Senate GOP bill will add $1 trillion to the debt after accounting for economic growth generated by the tax cuts. The estimate from the Joint Committee on Taxation, a nonpartisan group of experts, was released Thursday afternoon as lawmakers hotly debated the tax bill on the Senate floor.

The Joint Committee on Taxation found that the Senate GOP tax plan would cause the U.S. economy to grow about 0.8 percent faster over the next decade than it would have without the bill. But that amount of growth only covers about a third of the costs, far short of what is needed to be revenue-neutral tax reform.

Republican leaders had originally intended to vote on the Senate bill before the Joint Committee on Taxation’s final cost estimate was released, but the committee rushed to get the analysis done hours before the vote. Several Republicans senators, including Sen. Bob Corker, R-Tenn., have raised serious concerns about how much the tax plan would add to the debt. He wanted to see the nonpartisan estimate.

“Everyone has known from Day 1 this is very important to me,” Corker said.

Corker is not the only person worried about America’s $20 trillion debt rising even higher. Wall Street bank Goldman Sachs put out a warning Thursday that the U.S. debt is on track to hit unsustainable levels in the coming years. That note followed on the heels of testimony from Federal Reserve Chair Janet Yellen, who cautioned that the country’s growing debt is “the type of thing that should keep people awake at night.”

The White House originally argued that the tax cuts would pay for themselves, but almost all independent economists and forecasters said it wouldn’t go that far. The Joint Committee on Taxation estimate ended up aligning closely with the findings of the independent groups like the Tax Foundation, the Tax Policy Center and the Committee for a Responsible Fiscal Budget.

Some Republicans tried to downplay the Joint Committee on Taxation forecast, arguing no one can truly know how much growth will come from the tax cuts.

“We can debate the exact growth that will result this bill, but we can all agree that this will help to grow the economy if we’re following basic economic theory,” said Sen. Rob Portman, R-Ohio, on Wednesday night.

Democrats continue to argue the Senate bill pays for large corporate tax cuts by forcing the American people to pay a substantial price.

“It fills our children and grandchildren’s boats with additional debt. They are losers,” said Sen. Richard Blumenthal, D-Conn.

Goldman noted that the debt is already at the highest level since 1950 as a fraction of the economy (the so-called debt-to-GDP ratio).

“The tax reform bill and spending increases that are making their way through Congress should increase the deficit further, raising it from 3.2% of GDP in 2016 to 5.1% in 2021,” Goldman wrote.