Following its latest analysis of the GOP tax plan, the Committee for a Responsible Federal Budget says Republican lawmakers are lying to Americans about the potential for economic growth and deficit reduction.
Organization president Maya MacGuineas said the GOP plan works in reducing government debt through increased economic growth on paper because of budgetary tricks.
“It is frightening that so many members of Congress are willing to believe in fantasy economics based in no historical or mathematical reality,” MacGuineas said in a statement.
Earlier this year, the group said current tax proposals in both the House and the Senate will mean the national debt exceeds the size of the economy until at least 2028.
From MacGuineas’ analysis:
Both bills provide full expensing of investments for only five years, while the House bill also provides a $300 filer and dependent credit for five years, small business expensing for five years, and eliminates Research & Experimentation (R&E) expensing after 2022.
The Senate and House leadership haven’t provided any rationale as to why these provisions would be temporary, and the economic case for temporary expensing in the current economic environment is quite limited; it seems likely that the expiration dates are intended to artificially reduce the cost of this bill and set up a costly extension later. In light of this, the House bill’s elimination of R&E expensing after full expensing is not credible either. Ultimately, both bills rely on these gimmicks to reduce costs, but the House bill leans more heavily on them: it contains roughly $500 billion of gimmicks compared to about $100 billion in the Senate bill.
Though there are a number of differences between the bills, both would add significantly to the debt as written, and neither could be offset with economic growth alone. Instead, lawmakers will need to identify $1.4 trillion to $1.5 trillion of additional base broadening, new revenue, spending cuts, and/or modifications to the proposed tax cuts in the bills to order to make them fiscally responsible.
GOP lawmakers are touting a projected 3.3 percent economic growth rate rate under the tax proposal– but credit rating agencies are offering a less optimistic projection of 2.2 percent.