Top Republicans on Thursday downplayed the idea that their tax cut plan would increase the budget deficit and the national debt, and predicted that faster economic growth would keep overall government tax revenues stable.
The plan calls for lower rates for people and companies, and Republicans and President Trump said the change would help people keep more of their money. While most details haven’t been finalized yet — such as which tax rates apply to which income levels, and the top tax rate on the wealthy — some were already predicting lower federal tax revenues once the cuts take effect.
For example, the Committee for a Responsible Federal Budget estimated Wednesday that the GOP plan to lower tax rates and eliminate many deductions would increase the national debt by $2.2 trillion over the next decade.
Demian Brady, research director at the National Taxpayers Union, told the Washington Examiner he would be “surprised” if dramatic tax cuts would lead to a revenue increase for the government, even if the effects on economic growth are considered.
But key Republicans argued Thursday morning that cutting taxes would boost economic growth, and that this growth would be more than enough to offset revenue lost by lowering tax rates.
House Ways & Means Committee Kevin Brady, R-Texas, said on MSNBC Thursday that estimates of a rising national debt are “not right.”
“What isn’t being analyzed is that one, we get strong economic growth as we did with President Kennedy and President Reagan working with Democrats on tax reform.” he said.
Rep. Mark Meadows, R-N.C., who leads the House Freedom Caucus, agreed that more economic growth is likely under the GOP plan, and that this growth would help offset lost federal revenues. However, Meadows indicated that it might take longer than the traditional 10-year budget window to see these effects.
“You can make a very compelling case that over the next 15 years, if we’re really aggressive and bold on reducing these tax rates, not only for individuals but for small businesses and corporations, that what you can do, as long as you don’t grow the government along with that, is balance over a 15 year period,” he said on MSNBC.
Republicans hope to pass their tax plan under budget reconciliation rules, and that will require them to pass a measure that doesn’t increase the deficit over the next decade. But there has been some talk about whether to expand that 10-year window, a move that could make it easier to justify the plan.
Regardless of the timeframe, Republicans seem prepared to justify the cuts by estimating the impact those cuts will have on the economy, and then estimating the additional offsetting revenue created by that growth.
Meadows argued Thursday that growth is the only way the U.S. will ever pay down the $20 trillion national debt.
“As long as we have a plan to pay it off over a longer period of time, I think the debt’s fiscally responsible,” he said. “But we do know that we’re not going to get out of this deficit … on an anemic economic growth of 1.8 [percent]. We’ve got to get it to 3 percent or better.”
