Trump’s Tax Cuts Did Not Work As Planned (And Made America’s Debt Worse)

The policy discussion surrounding passage of the tax cuts was not as serious as it should have been. The promises made at the time that the tax cuts would increase economic growth enough to pay for themselves were disappointing, disingenuous, and damaging. Proponents claimed that if we could merely get annual gross domestic product (GDP) 0.4 points higher on a sustainable basis — a seemingly small amount — the additional revenues would pay for the tax cuts. While mathematically true, this would in fact be a huge jump in growth, and in the face of the demographic headwinds in the US, it is not anywhere near plausible. Proponents were not deterred by the fact that organizations from the Joint Committee on Taxation to the Tax Policy Center to the Penn Wharton Budget Model all showed the tax bill cost at least $1 trillion over 10 years, even after economic growth. When Treasury Secretary Steven Mnuchin claimed the tax cut would reduce the deficit by a trillion dollars, the conversation went from massively misleading to completely removed from economic reality. (Ultimately, the Congressional Budget Office estimated the largest growth effects of 0.3 percent would appear in the first two years and, on average, the growth rate boost over the decade would be only 0.06 percent.)

In addition to silly claims about growth, throughout this process members of Congress were briefed by experts who stuck to the preferred talking points and obfuscated the real policy tensions, and the process was driven by a political desire to get the tax bill done on an incredibly short timetable, rather than to get it done right. No matter where one falls on the spectrum of liking the tax cuts, they would probably acknowledge the policy discussion around the topic did not rise to the level it should have for such a significant piece of legislation. It is difficult to know who of the lawmakers who voted for the bill fell for the massive exaggerations and who just used them as convenient cover. But the entire discourse, along with the legislation passing on a purely partisan vote, has led to further loss of trust, finger pointing, and hyper-partisanship in Congress.

Article URL : https://www.yahoo.com/news/trumps-tax-cuts-did-not-121500344.html

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