At some point, the lies that you tell and the lies that you live do catch up to you. For Republicans, one of those lies came home to roost Thursday night, at a very inopportune moment.
For years, one of the defining myths of the conservative movement has been that tax cuts would pay for themselves by generating huge amounts of economic growth, so much growth that you wouldn’t believe how much growth.
Of course, it didn’t happen when Kansas tried it recently on the state level; it didn’t happen when George W. Bush tried it with massive tax cuts during his first term, turning a budget surplus into large deficits. And as much as conservatives try to deny it, it also didn’t happen during the Reagan years, when initial tax cuts created such huge holes in the budget that President Reagan was forced to sign some of the biggest tax increases in American history to repair the damage they had done.
Nonetheless, faith in the myth has persisted, and has helped drive support for the $1.4 trillion tax cut that the Republican Party is trying to push through Congress. The White House Council of Economic Advisors, for example, predicts that passage of that bill “would generate an increase in GDP of between 3 and 5 percent in the long run,” which if true would be substantial. Treasury Secretary Steve Mnuchin also predicts that the tax cut would pay for itself with new growth, and has said repeatedly that his department was working on an analysis that would prove it.
“In our models, we believe there will be $2.5 trillion of growth,” Mnuchin said on CNN back on Nov. 12. “And we’re happy to go through the numbers. We’re happy to give the details. We want full transparency to the American public.”
Happy to go through the numbers. Happy to give the details… Oddly, though, the Treasury Department has never produced that much-promised analysis, and there’s no sign of it coming anytime soon. Maybe Mnuchin has been lying by saying the analysis was underway; maybe the finished product produced an outcome that he and others in the Trump administration didn’t like and have refused to release. The inspector general of the Treasury Department has now begun investigating which explanation holds water.
Here’s another odd thing: Under Republican prodding, the Congressional Budget Office and the Joint Committee on Taxation have finally begun producing economic analysis that take alleged growth into account. That so-called “dynamic scoring” report for the Senate tax-cut bill was released late Thursday, and you know what?
It didn’t predict an additional 5 percent growth as a result of the bill, as the White House had suggested. It didn’t predict even 3 percent growth, the bottom end of the range predicted by the White House.
It predicted additional GDP growth of 0.8 percent over the next decade.
It also didn’t predict that the tax plan would pay for itself. Not by a long shot. It found that even after accounting for growth, the bill would result in an increase in the national debt of more than $1 trillion. And instead of job growth so dynamic that it would force wages higher, it predicted a mere 0.6 percent increase in the number of American jobs. Even that increase, it said, would be temporary.
So there you have it: Hundreds of billions of dollars in tax cuts to the wealthy and to corporations that are already reporting record-high after-tax profits. Tens of millions of tax savings each year for President Trump alone. An increase of the debt of more than $1 trillion.
And a small, 0.8 percent increase in GDP to show for all that.
Of course, Republicans will still go ahead and vote for this bill — desperation can drive people to do very stupid things. But their lie has been exposed and the fig leaf has been torn away.