The Treasury released a bizarre one-page report on the GOP tax bill, and it's already getting shredded
- The Treasury Department released a report arguing that the GOP economic agenda would eventually pay for the cost of the Republican tax bill.
- The report made a number of large assumptions about economic growth.
- That led many economic and tax experts to question its validity.
The Treasury Department on Monday released a one-page report that argued the GOP 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 report from the Treasury concluded that the Republican tax bill, the Tax Cuts and Jobs Act (TCJA), would be paid for by increased economic growth that would result from the bill's policy changes and additional actions that have been suggested by the Trump administration.
The one-page analysis claims the tax bill and other economic policies would raise $1.8 trillion in revenue. That would make up for the $1.5 trillion that the tax legislation is projected to add to the federal deficit.
The analysis comes with several caveats
The Treasury report assumes a 2.9% annual GDP growth rate over the next 10 years from President Donald Trump's budget when calculating the increased revenue. The 2.9% rate would represent a significant increase from the 2.2% annual GDP growth rate the Treasury's Office of Tax Policy originally expected over that period.
In addition, the growth rate from the budget assumes not just that the tax bill passes, but also positive economic and revenue effects from other policies the Trump administration wants to pass.
Therefore, the report does not back up the claim that the tax bill would "pay for itself." Rather, it says the assumed growth rate from the budget that includes boosts from a yet-to-be-released infrastructure package and other policy changes would be enough to make up the lost revenue from the tax bill.
Scott Greenberg, a senior analyst at the conservative-leaning Tax Foundation, compared the assumption of additional policy changes to a manufacturing company.
"Manufacturing company: Hey look, this new plant in Tennessee will definitely turn a profit, if we count the revenues we assume we're going to get from our factory in Kentucky, which we haven't built yet," Greenberg tweeted.
It conflicts with most independent analyses
The Treasury report conflicts with analyses from nearly every independent, nonpartisan group, as well as the Joint Committee on Taxation, which operates as an official scorekeeper for Congress.
An analysis from the University of Pennsylvania's Penn-Wharton Budget Model released Monday said the Senate TCJA would only boost GDP by 0.5% to 1% over its first 10 years. The model said the bill would add $1.5 trillion to $1.8 trillion in new deficits over that timeframe "even under assumptions favorable to economic growth."
The JCT found the tax bill would boost the economy by 0.8% over the first 10 years after the bill was passed and generate $1 trillion in new deficits even when factoring in economic growth.
"Treasury has released a one pager which will be used by tax cut advocates to claim that the tax cut pays for itself," tweeted David Kamin, a New York University law professor and former economic adviser to President Barack Obama. "It's a joke and no substitute for the career staff running the full macro model they have to analyze effects."
An 'embarrassing joke'
Jacob Leibenluft, a senior adviser at the left-leaning Center on Budget and Policy Priorities and former deputy director of the National Economic Council, had a similar reaction.
"This document is a tacit admission that Treasury's career tax experts have no analysis showing the tax plan pays for itself - but written in a way to confuse people who can't or won't read between the lines," he tweeted.
Former Council of Economic Advisors Chairman and Harvard Kennedy Professor Jason Furman called the report an "embarrassing joke."
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, tweeted "no one should believe this study."
Senate Minority Leader Chuck Schumer also blasted the report in a statement, saying it used "fake math."
"The latest Treasury 'analysis' is nothing more than one page of fake math," Schumer said. "It's clear the White House and Republicans are grasping at straws to prove the unprovable and garner votes for a bill that nearly every single independent analysis has concluded will blow up the deficit and generate almost no additional economic activity to make up for it."