Tax plan would hardly boost growth, add trillions to deficit: study
The Republican tax plan would add more than $2 trillion to United States debt in 10 years and only boost gross domestic product by up to 0.83 percent, according to a Penn Wharton Budget Model (PWBM) analysis.
The Tuesday study built on a previous static score of the GOP bill by adding in the effects of economic growth, known as a dynamic score. Republicans have argued, variously, that dynamic scoring would help account for a third to all of the $1.5 trillion in deficit spending their bill would produce over a decade.
The Wharton study found that the current plan would reduce revenues by between $1.4 trillion and $1.7 trillion over the next decade. The study says the tax plan would also raise the federal debt between $2 trillion and $2.1 trillion over the next decade.
The Trump administration has argued that economic growth stimulated by the tax breaks would bring in enough revenue to cover most-to-all of the revenue lost by the tax cuts.
By 2040, the study found, revenues could fall as much as $4.5 trillion and debt could surge by $6.8 trillion. {mosads}
The study, conducted by President Trump’s alma mater, also calls into question Republican promises that GDP growth over the next decade would grow from an average of 1.9 percent a year to an average of 2.6 percent a year over the course of a decade. The Wharton analysis found that the economy would only grow up to 0.83 percent in total over the entire ten year period as a result of the tax bill.
By 2040, the analysis shows GDP would be up to 0.41 percent higher, or as much as 0.25 percent lower, than projected now.
“In the near term, there is a small boost to GDP, but that increase diminishes over time,” the study said.
The study ultimately shows a larger increase in the deficit than an analysis conducted on the Penn Wharton Budget Model last month, which suggested the deficit would increase by $1 trillion over the first decade.
House Republicans revealed their tax plan last week, with details calling for lowering corporate taxes, paring down the number of tax brackets and eliminating a variety of loopholes.
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