The Republican Tax Cut Had No Effect on Growth

A couple of years ago Robert Barro predicted that the Republican tax bill would increase GDP by 1.1 percent in 2018 and 2019. A reader asks:

I’m curious what the official numbers ended up being and you seemed like a guy who could find out and might care to.

Nothing simpler! Growth clocked in at 2.9 percent and 2.3 percent in those two years. So Barro is right only if he initially projected growth of 1.8 percent and 1.2 percent without the tax cut.

That seems unlikely. My best guess, based on both GDP figures and a few other things is that the Republican tax cut, remarkably enough, had virtually no effect on growth. I’m not sure how they managed that since lower taxes should stimulate growth, but apparently Republicans can even screw up a tax cut these days.

Then again, the best way to make a tax cut effective is to give less of it to the rich and more of it to the middle class. If the real goal here was merely to make the rich a little richer, then it worked great and Republicans didn’t screw up anything.

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