- Paul Ryan on Wednesday said “nobody knows” whether Republicans’ tax bill would pay for itself, after GOP leaders argued for months that it would.
- Most major analyses show that the bill would not pay for itself.
At the outset of the Republican push to overhaul the US tax code, GOP leaders said reform would boost economic growth, help the middle class, and – importantly for the fiscal future of the US –pay for itself.
But on Wednesday, with Congress on the edge of finally passing the massive tax bill, House Speaker Paul Ryan suggested he was not so sure about the last of those promises. Ryan was asked on NBC’s “Today” show whether the tax bill would increase the deficit or would pay for itself through economic growth.
“Nobody knows the answer to that question, because that’s in the future, but what we do know is that this will increase economic growth,” Ryan said.
The GOP acknowledges that the “static” impact of the tax bill – the addition to the debt with no economic-growth assumptions – will be just under $US1.5 trillion. The question is whether the bill could grow the economy enough to make up the gap with new tax revenue.
While Republican leaders argued it would, every major independent analysis of the bill, known as the Tax Cuts and Jobs Act, showed that it would grow the federal debt over the next 10 years even when accounting for that increased growth.
Major analyses predicted that the bill would be a modest boost for the US economy, increasing the US gross-domestic-product growth anywhere from 0.08 percentage points a year to about 0.35 points a year. But, none of the models show the growth being enough to pay for the bill.
The right-leaning Tax Foundation, which is aggressive in its growth assumptions, estimated that the final bill would add $US448 billion to the deficit over the next decade. The Tax Policy Center estimated that the debt increase would be closer to $US1.2 trillion. The official congressional scorekeeper, the Joint Committee on Taxation, said that even with the growth, the bill would add $US1 trillion in new debt.
A much-maligned report from the Treasury Department said the tax bill would need to be coupled with other economic policies to make up for the new debt.
Ryan eventually pivoted to another way to make up for the new debt the bill would add: spending cuts.
Watch Ryan’s response here:
This tax cut is going to cost 1.6 trillion dollars more to the deficit- are you saying that the growth we’re going to get from this tax cut will equal what we get from the deficit?
Speaker Ryan: "Nobody knows the answer to that question." pic.twitter.com/fCtWT8AQ3S
— NBC News (@NBCNews) December 20, 2017
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.