On Monday, the U.S. Treasury Department finally released its analysis of the GOP tax plan: a single page report that essentially concedes the analysis by the Joint Committee on Taxation is correct.
According to the Treasury analysis, the tax plan will cost an estimated $1.5 trillion dollars, while raising only $408 billion in revenue, leaving the country $1 trillion in the hole. This eviscerates any notion that the GOP plan will pay for itself, as previously suggested by administration officials like chief economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin.
The Treasury Department also took its analysis one step too far, assuming 2.9 percent economic growth over the next decade, without providing any actual analysis for it. A Treasury memo released on Monday “modeled the revenue impact of higher growth effects, using the Administration projections of approximately a 2.9% real GDP growth rate over 10 years contained in the Administration’s Fiscal Year 2018 budget.”
The 3 percent growth projected by the Trump administration’s 2018 fiscal year budget has been debunked and labeled a “fantasy” numerous times.
The Treasury Department memo further confirms what a number of institutions, such as the non-partisan Tax Policy Center, the Penn Wharton Budget Model, and the conservative Tax Foundation, have said in recent weeks: that the GOP tax plan will not pay for itself. According to a University of Chicago survey, 37 out of 38 economists don’t believe the plan will spur enough growth to pay for itself either.
So what’s the point in releasing a document that doesn’t even support what the administration has been promising? Considering the Treasury Department’s inspector general opened an inquiry into why the department had not yet released its analysis to the public — as it had promised it would — officials had to release something, even if it was difficult to explain the numbers they came up with.
Mnuchin spent months talking about a formal Treasury analysis, only to have The New York Times report in November that no such analysis actually existed, according to an economist in the Treasury department.
“Either the Treasury Department has used extensive taxpayer funds to conduct economic analyses that it refuses to release because those analyses would contradict the Treasury Secretary’s claims, or Secretary Mnuchin has grossly misled the public about the extent of the Treasury Department’s analysis,” Sen. Elizabeth Warren (D-MA) wrote in a letter to the Treasury’s inspector general. “I am deeply concerned about either possibility.”
With the GOP tax bill passed in the House and Senate, and now in conference committee, Republicans will have to reconcile their differences and hash out a final plan that will have to be passed again by the House and Senate. There are a number of disputes that have yet to be resolved in order for Republicans to snag a solid 51 votes, the most important of which being the deficit.
For every tax analysis published, support for the bill from deficit hawks like Sens. Bob Corker (R-TN) and Jeff Flake (R-AZ) wanes. Sen. Susan Collins (R-ME), who was instrumental in voting against the GOP’s failed attempts at dismantling the Affordable Care Act, has also expressed a hesitancy to vote for the bill if it includes a repeal of the individual mandate.