No doubt, the trained professionals in the Treasury Department were embarrassed to see such a shoddy, rankly partisan document under their department’s name. Chalk it up to the further denigration of truth and destruction of the reputation of our federal government. Yesterday, Business Insider reported:
The Treasury Department on Monday released a one-page report arguing that the Republican tax bill’s cost would eventually be paid for by economic growth, but it triggered backlash from experts who said it contained serious errors and significant assumptions. …
The Treasury report assumes that gross domestic product, the most widely used measure of a country’s economy, would increase by an average of 2.9% annually in the US over the next 10 years.
That rate, taken from President Donald Trump’s proposed budget, is much greater than the 2.2% annual GDP growth rate the Treasury’s Office of Tax Policy expected over that period before Trump took office. The growth rate from the budget assumes not just that the tax bill and some other Trump administration proposals will pass, but that the policies will add nearly a percentage point to the US’s annual GDP growth.
Even with the phony growth numbers the tax cuts do not pay for themselves, as Republican lawmakers have been misrepresenting.
Treasury’s report is what you’d expect from a low-rent anti-tax group with little concern for accuracy. “The Treasury report conflicts with analyses from nearly every independent, nonpartisan group as well as from the Joint Committee on Taxation, which operates as an official scorekeeper for Congress,” the Business Insider story says. In other words, it is unreliable and a stain on the Treasury Department, which until this crew, had maintained its reputation by staying somewhat above-the-political-fray. This document was widely criticized from economists on the left and the right, an unusual feat.
Meanwhile, Penn Wharton Budget Model’s (PWBM) is out with an updated reporting, containing both a “static and dynamic analysis of the Senate Tax Cuts and Jobs Act (TCJA), as passed by the Senate on December 2, 2017.” It concluded, “Even with assumptions favorable to economic growth, the Senate TCJA increases debt by over $1.5 trillion dollars over the next decade.”
The numbers are quite alarming:
By 2027, under our standard economics assumptions, GDP is projected to be between 0.5 percent and 1.0 percent larger, relative to no tax changes. Debt increases between $1.8 trillion and $1.9 trillion, inclusive of economic growth.
By 2040, GDP is projected to be between 0.4 percent and 1.2 percent larger under our baseline assumptions, and debt increases by $2.6 to $3.1 trillion.
Additional sensitivity analysis indicates that even under assumptions favorable to economic growth, by 2027, GDP is projected to be between 1.0 percent and 1.9 percent larger, and debt increases between $1.5 trillion and $1.8 trillion. …
By 2027, GDP is between 0.5 percent and 1.0 percent larger than current policy in that year. However, this initial boost fades over time as more debt accumulates. By 2040, GDP is between 0.4 percent and 1.2 percent larger than current policy in that year.
It says something that the administration can only defend its bill with specious numbers and disreputable analysis.
The so-called moderate Republicans and the self-described deficit hawks who rely on phony talking points (e.g. tax cuts pay for themselves) run the risk of losing their own credibility as honest brokers and effective policymakers. When they say the bill pays for itself, they are actually peddling claims more unrealistic than the administration’s. What kind of “moderate” relies on worse exaggerations than the truth-challenged administration? What kind of deficit hawk will pass off a budget-buster as fiscally responsible?
It might be too late for the Treasury Department to gets its credibility back, but moderates like Sen. Susan Collins (R-Maine) and deficit hawks like Sen. Jeff Flake (R-Ariz.) have time to relook at the numbers, consider their own credibility and decide if justifying a vote on a rotten bill with phony figures is why they came to Washington.