The Treasury Department on Monday argued in a one-page analysis that the economic growth produced by Trump administration policies would increase tax revenue by about $1.8 trillion over 10 years, enough to pay for tax-cut legislation.
“The Administration has been focused on tax reform and broader economic policies to stimulate growth, which will generate significant long-term revenue for the government,” Treasury Secretary Steven Mnuchin said in a statement.
The department’s analysis assumes a 2.9-percent growth rate, which was the rate projected by Trump’s fiscal 2018 budget. The department compared that rate to previous projections of 2.2 percent growth in gross domestic product.
The Treasury Department said that it expects half of the 0.7-percentage point increase in the growth rate to come from changes to the corporate tax code, while the other half would come from tax changes for individuals and pass-through businesses as well as from regulatory reform, infrastructure investment and welfare reform.
While tax legislation looks likely to be enacted by the end of the year, Congress has not yet taken up major infrastructure and welfare-reform legislation and it’s unclear whether measures on such topics would be enacted.
“This 0.7% increase in the annual real growth rate results in an increase in tax revenues during the 10-year period of approximately $1.8 trillion,” the Treasury Department said in its paper. Since the tax-cut legislation is expected to add about $1.5 trillion to the deficit before accounting for economic growth, the department is predicting that Trump’s economic agenda will ultimately increase revenue on net over 10 years by $300 billion.
The paper was quickly criticized by Democrats and former Obama administration officials.
“The latest Treasury ‘analysis’ is nothing more than one page of fake math,” Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement. “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.
“Let’s be clear: no amount of fake math can change the fact that the Republican tax bill will be a boon to the wealthiest Americans and largest corporations all while increasing taxes for millions of middle-class families and leaving 13 million Americans without healthcare,” he added.
Sen. Ron Wyden (D-Ore.), the ranking Democrat on the Finance Committee, said in a statement that the “phony math” used to calculate Treasury’s budget “would make Bernie Madoff blush.”
“It’s no more than a thinly veiled attempt by the Trump administration to cover up an economic agenda that showers corporations with goodies while taking money and health care away from those who need it most,” he added.
“What an embarrassing joke,” tweeted Jason Furman, who served as chairman of President Obama’s Council of Economic Advisers.
“Treasury has released a one pager which will be used by tax cut advocates to claim that the tax cut pays for itself. It’s a joke and no substitute for the career staff running the full macro model they have to analyze effects,” tweeted David Kamin, a former economic adviser to Obama who is now a professor at New York University’s law school.
Congress’s nonpartisan tax scorekeeper, the Joint Committee on Taxation, has estimated that the tax bill passed by the Senate Finance Committee would add about $1.4 trillion to the deficit over 10 years before accounting for economic growth and about $1 trillion to the deficit after taking growth into account.
–This report was updated at 12:00 p.m.
Read Treasury growth memo by kballuck1 on Scribd