The Corner

Politics & Policy

Treasury Assumes the Tax Cuts Will Work Fantastically Well

The Treasury Department asserts that a combination of tax cuts and other Trump-administration policies will raise annual economic growth by an average of 0.7 percent over the next decade, so that it runs at 2.9 rather than 2.2 percent. Half of this alleged boost to growth, it says, will come from changes to corporate taxation. Treasury provides no explanation of how it reached its 0.7 percent figure, but does explain that if you assume all this growth occurs then the federal government will end up with more revenue than it would have had without the tax cuts. I assume that the point of this one-page press release was to allow Republicans to continue to pretend that there are economists who have looked seriously at this issue and believe that their tax-cut bill will result in higher revenues over the next decade–and thus there is no need to scale it back, cut spending, or admit that deficits will be higher.

Ramesh Ponnuru — Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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