The Treasury Department’s tax plan analysis is one page long. Really.
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Republicans may be close to an agreement on a final tax bill, but nobody knows for sure. What we do know, however, is that the GOP is not a fan of nonpartisan analysis that shows the bill would add at least $1 trillion to the national debt without spurring the kind of growth needed to offset that figure. The executive branch finally weighed in with its own analysis of sorts in the form a one-page summary released by the Treasury Department. Marketplace host Kai Ryssdal discussed it with Ben White, chief economics correspondent at Politico. The following is an edited transcript of their conversation.
Kai Ryssdal: Let me ask you something: Can you do analysis of a 450-page tax bill on a one sheet of paper?
Ben White: No, you can’t. That is way too short a space to analyze this giant of a change in the tax code. So the short answer there is no.
Ryssdal: The next question then is: Where do they get this stuff at the Department of Treasury to put out on the one sheet?
White: Well, usually it would be the Office of Tax Policy that would put out a large analysis of the tax proposals going through Capitol Hill right now. That’s not really what this is. The one pager says that the Office of Tax Policy within Treasury basically takes the same view on this thing as the Joint Committee on Taxation, that if you include dynamic growth effects from this it would still add around a trillion dollars to the deficit and the debt over 10 years. What they’ve added onto that is a request to the Office of Tax Policy to assume that we get close to 3 percent growth for 10 years from the tax cuts and plus all this other stuff we’re going to do on infrastructure and welfare reform and regulatory changes. What would happen then if we had all that? And that’s where they get to, “Hey, maybe this thing would pay for itself.”
Ryssdal: All right, so let’s take this apart a little bit. First of all, the 2.9 percent economic growth that the Treasury Department says we’re going to get, that is not in accordance with virtually any other substantive piece of analysis of these bills.
White: No, it’s not. Nobody who has analyzed these things, and there’s a lot of analysis out there, suggests that we’re going to bump up growth to 3 percent. Maybe you get it for a year or half a year or whatever, but you don’t get it for 10 consecutive years or 2.9 percent to be precise. That is not even close to projections for this tax bill that range anywhere from, like, 0.5 percent to 0.7 percent additional GDP over 10 years. So it’s way out of line with any other analysis of this thing.
Ryssdal: OK. The other thing you mentioned, which is item two on my list, is they’re counting on other things that the administration has talked about but not yet done. Infrastructure and welfare reform, and they do talk about deregulation, which they’ve done a bunch of there.
White: Correct, yes. They have done a bunch of deregulation, or they’re attempting to anyway, in the financial industry, the energy industry, health care industry. Some of it they’ve done, some of it they plan to do, and they count on that for an additional growth burst as well as, as you mentioned, an infrastructure plan that they’ve talked about. President Trump talked about it on the campaign trail, but they haven’t proposed anything and there’s absolutely no guarantee that even if they did, that an infrastructure plan would get through Congress.
Ryssdal: All right so here’s the bigger question then Ben: When you have the speaker of the House and substantive members of the House and the Senate saying in essence, “None of this other analysis matters, we’re going to go with our assumptions,” putting their fingers in their ears and going, “la la la la la” on objective analysis. What does that mean the next time there’s a big bill? Do we have the death of analysis here, I guess, is the question?
White: I don’t know if analysis is dead, Kai, but it’s certainly on life support after what we’ve seen in this bill, basically devaluing all nonpartisan analysis that says through empirical evidence, “This is what this bill is likely to do.” It’s likely to produce minimal growth, a lot of new debt, and Republicans just saying, as you said, sticking their fingers in their ears and saying, “We don’t care what the experts say, we don’t care what the analysis says.” And I mean, we should remember that it was Republicans’ idea in the first place to score a lot of these bills with dynamic scoring, this idea that you get a growth effect, and now they’re devaluing that. So it’s definitely knocked down the idea that we can rely on empirical analysis.
Ryssdal: Just to remind everybody, this thing comes up for a vote probably next week, right?
White: Yeah, that’s correct. The conference committee we hope, they hope, gets done this week. Sends it to the floor of both houses next week. No guarantees, they’re still arguing about a bunch of stuff, but they hope to do that.
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