Senate Republicans’ tax-rewrite plan would fall well short of covering its $1.5 trillion cost through additional economic growth as many lawmakers have promised, a new official analysis shows.
In an eagerly awaited report, the nonpartisan Joint Committee on Taxation said the plan would boost the economy, but not by nearly as much as Republican predict. It sees the plan boosting growth by 0.8 percent over the next decade, which it said would throw off $407 billion in additional revenue.
That would reduce the cost of the GOP plan to about $1 trillion, although lawmakers are only using the analysis for informational purposes, not as a way of making their tax math work.
The JCT estimate is particularly important to Sen. Bob Corker (R-Tenn.), a key swing vote in the Senate, because he’s said he won’t vote for any plan that increases the deficit, once the economic effects and some accounting adjustments are taken into consideration.
Republicans have argued their plan will end up not costing anything, despite its official $1.5 trillion cost, because of additional growth. Some Republicans, including Treasury Secretary Steven Mnuchin, have argued it would go beyond paying for itself and actually reduce the deficit.
Democrats seized on the report.
“The score ends the fantasy of magical growth, about unicorns and growth fairies,” said Sen. Ron Wyden (D-Ore.), the ranking member of the Finance committee. “The facts are now in — the Republican plan loses a trillion dollars.”
Republicans said JCT was low-balling the benefits of their plan, but emphasized the report found it helping the economy.
“The score demonstrates that there is economic growth generated by tax cuts and, really, what we’re just talking about is how much,” said Senate Majority Whip John Cornyn (R-Texas).
Though Republicans have changed Congress’ budgeting rules to incorporate so-called dynamic scoring, which takes account of economic growth, they’ve run into procedural hurdles that have kept them from actually using it in the Senate, so the new analysis is only being used for illustrative purposes. They can’t tap that $407 billion JCT says their plan would generate.
In a workaround, Republicans agreed last month to cut taxes by $1.5 trillion because they said that’s how much they believed dynamic scoring would generate in extra cash were they able to use it.
House Republicans approved their draft of the tax plan before an analysis of its economic effects was ready.
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