Treasury Secretary Steve Mnuchin promised the Republican tax scheme would pay for itself — but his one-page analysis shows exactly the opposite.
Republicans have consistently assured the American people their scheme to make the middle class pay for massive corporate tax breaks would not cost the government a penny, because the economy would grow to replace the lost revenue.
Donald Trump’s Treasury secretary, Steve Mnuchin, was a big proponent of this idea. He not only promised tax cuts for the rich were free — he said his department was working on a study that would prove it.
After several weeks, commentators began to question whether this study even existed, prompting an investigation by the inspector general of the Treasury into what Mnuchin’s team was doing all that time.
Now, Mnuchin has finally released his much-touted “study,” which is one page long, and says the exact opposite of what he promised:
Treasury’s Office of Tax Policy (OTP) has modeled the Senate Finance tax reform plan and overall has similar analysis to the Joint Committee on Taxation (JCT) on a static basis, with a score of approximately -$1.5 trillion on a current law basis and approximately -$1 trillion on a current policy basis.
The report goes on to say that the Senate tax bill will pay for itself, but only if the economy grows at 2.9 percent every year for a decade. This is virtually impossible, as experts estimate you would need to add forty million people to the U.S. population to get growth that high.
Even Mnuchin’s own report acknowledges the tax bill alone cannot grow the economy that much. Rather, it assumes that there will be “regulatory reform, infrastructure development, and welfare reform” that kicks in next year to make up the difference, which defeats the whole purpose of trying to study the impact of the tax cuts alone.
Essentially, underneath all the flimsy hypotheticals, Mnuchin is admitting that he lied. Like the nonpartisan Joint Committee on Taxation, the Treasury simply could not balance the math.
Republicans in Congress derided every previous report showing their plan would increase the federal deficit. But this latest is impossible to ignore. Even Trump administration officials, using the most favorable assumptions, could not support the idea that we can give the rich free money.
Mnuchin’s bluff was called. And it turned out he had no cards to play.