Republicans in Congress were desperately hoping that the Joint Committee on Taxation wouldn’t have time to perform a dynamic estimate of their tax bill before they passed it. But the JCT wonks put in some overtime and got the job done. Yay wonks! Here’s the result:
- Over ten years, the tax bill will increase the deficit by $1 trillion rather than $1.4 trillion.
This means that the deficit hawks no longer have any excuse for pretending that the tax cut will supercharge the economy so much it will pay for itself. JCT applied the dynamic fairy dust, but it was nowhere near enough.
As for growth, Republicans were going around saying that all they needed was 0.4 percent higher GDP each year and everything would be great. JCT projects instead that the bill will increase GDP by a little less than 0.1 percent each year.¹
I doubt that this means the bill is in danger of not passing. It just means the deficit hawks have to come up with a different excuse for voting for it.
¹I think. The actual JCT wording is that the tax bill would increase output “by 0.8 percent on average throughout the ten-year budget window.” This is oddly ambiguous. It obviously doesn’t mean 0.8 percent per year, but neither does it mean that GDP is 0.8 percent bigger by the end of ten years (“the increase in output is expected to be smaller towards the end of the budget window”). Truthfully, I’m not really sure precisely what it means, but I think it probably translates into roughly the equivalent of an additional growth of about 0.1 percent per year.