The Senate Republican tax bill will not pay for itself through economic growth, Congress’ official group of tax experts said Thursday as the GOP sought to vote the measure through the upper chamber.
Instead, the Tax Cuts and Jobs Act would add more than $1 trillion to federal deficits over the next 10 years, the Joint Committee on Taxation found, even after accounting for the possibility that the tax cuts could spur faster economic growth.
The tax bill would increase growth, the group found, increasing gross domestic product by 0.8 percent on average over the decade. That faster growth would bring in $400 billion, a significant amount but not nearly enough to offset the $1.4 trillion tax cut.
Oregon senator Ron Wyden, the top Democrat on the Finance Committee said that the analysis should lead Republicans to scrap there bill and rewrite it. "The independent referee has essentially contradicted this array of unicorn, magic growth, fairy analysis for what would be produced by this legislation" from Republicans, he said. The Trump administration has claimed that the bill will pay for itself through growth.
Republicans dismissed the official score.
A Republican spokeswoman for the Finance Committee said that the report's findings are "curious and deserve further scrutiny," citing unnamed "leading economists" who have said that the bill will significantly boost the economy.
Thursday’s “dynamic score” from the committee could damage Republican support for the bill. Sen. Bob Corker of Tennessee has said that he won’t vote for a bill he thinks would add to deficits, and others have suggested they may vote no out of fear for the government’s finances.
To win over senators worried about deficits, Republicans have sought to add a “debt trigger” to the bill. The exact mechanism of the trigger has not been revealed, but the basic premise is that the tax cuts would be scaled back in the case that revenue failed to grow according to plan.
Whether that provision would be enough to win over Corker and other senators is a big question following Thursday’s analysis.
The Joint Committee on Taxation score of the bill found that it would increase growth by lowering income and business taxes, encouraging people to work more and businesses to invest more.
The bill's growth effects, though, would weaken after years 2025, when the individual tax cuts phase out. Republicans set the tax breaks to expire in order to limit the revenue cost of the bill on paper, although they say that future congresses will reinstate the cuts.
Another factor in the analysis limiting the growth spurred by the tax cuts is the assumption that the added deficits will raise interest costs, as the government borrows more. In turn, higher interest rates would make private financing for business investments more expensive, slowing investment.