- Treasury Secretary Steven Mnuchin once again claimed that the GOP tax law would pay for itself.
- Almost every independent analysis of the tax law projects that the law will increase the deficit.
- Government agencies like the Congressional Budget Office and the White House’s Office of Management of Budget have shown the tax law will add to the deficit.
Treasury Secretary Steven Mnuchin on Tuesday fell back on a dubious claim about the federal deficit to defend the GOP tax law, insisting the budget-busting measure will “pay for itself.”
During an interview with CNBC, Mnuchin was asked about recent trends in tax receipts – income taxes received by the federal government. In his answer, the Treasury secretary pointed to a long-held Trump administration claim that the tax law that was implemented in January will pay for itself because of economic growth.
“So our tax plan was really designed to stimulate the economy and get growth,” Mnuchin said. “So we’re humming along on where projections are and as I’ve said at 3% economic growth this tax plan will not only pay for itself but in fact create additional revenue for the government.”
The idea that the GOP tax law would pay for itself, or even bring down the federal deficit, has been a consistent talking point from Mnuchin andTrump administration officials since the release of the bill in the fall of 2017.
But every major analysis by independent government agencies and outside groups directly contradicts Mnuchin’s assessment.
The Congressional Budget Office, a nonpartisan research agency for Congress, projected in April that the GOP tax law will add $US1.9 trillion to the federal budget deficit between 2018 and 2028, even incorporating increased economic growth from the law.
According to the CBO’s report, the tax law will result in substantially lower revenue than previously projected, while spending is expected to continue rising.
The CBO also estimated that the US will face annual budget deficits of $US1 trillion or more by 2020 unless there are significant legislative changes.
Even the White House Office of Management and Budget, in a July report on the budget, found that the tax bill will substantially add to the federal deficit in the years to come.
Part of the split between Mnuchin and nearly every independent analysis is that he maintains that the economic boost from the tax law will be sustainable over the long-term.
But the independent analyses have found that the tax law would help push up economic growth in the short-term but then fade away or even become a drag on growth. As the growth boost fades, so too would the revenue increase from a stronger economy.
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