A study with unfavorable results for the Trump tax cuts published by a regional Federal Reserve bank contained a significant error, the bank acknowledged Tuesday.
An analysis published by the Federal Reserve Bank of San Francisco had concluded that economic growth projections for the tax law published by the Congressional Budget Office were likely overoptimistic, because tax cuts do not work as well during economic booms as they do during downturns.
Yet the analysis used the wrong Congressional Budget Office projection, referring to one that measured the effects of several laws, rather than just the tax cuts.
The finding that the tax cuts wouldn’t live up to expectations was reported by several publications, including the Washington Examiner, and cited by Democrats as evidence against the Republican-passed law.
A nonprofit group that advocates for lower deficits, the Committee for a Responsible Federal Budget, flagged the mistake, saying Tuesday that the San Francisco Fed had used the wrong CBO figures.
The San Francisco Fed’s post has been updated. It still concludes, though, that many forecasts of the economic growth generated by the tax cuts are “overly optimistic.”
