To bolster their claims, they are pointing to an updated budget forecast just released by the Congressional Budget Office as ‘evidence’ the tax cuts are ‘bad for America.’
As noted by Investors Business Daily, just about everyone is laser-focused on the deficit number: That the CBO forecasts the deficit would surpass $1 trillion in 2020, two years earlier than the budget analytics agency had previously claimed.
Most establishment media, which were largely silent during the Obama years when stuffed budgets doubled the national debt in eight years from roughly $9.5 trillion to around $19 trillion, blame the tax cuts for the new debt. Oh, and Republicans. Reuters is typical with this headline, “U.S. budget deficit to balloon on Republican tax cuts.”
The newswire noted:
The massive tax cuts signed into law in December, which Republicans said would pay for themselves, will balloon the U.S. deficit in years ahead, the Congressional Budget Office said on Monday, possibly hobbling President Donald Trump’s future agenda.
The Associated Press also jumped on the one-sided bandwagon:
The CBO report says the nation's $21 trillion debt would spike to more than $33 trillion in 10 years, with debt held by investors spiking to levels that would come close to equaling the size of the economy, reaching levels that many economists fear could spark a debt crisis.
There’s just one flaw in these analyses and estimates: The reality of capitalism.
As IBD noted, if you delve further into the CBO’s report you’ll discover the part where “Republicans said” the cuts would “pay for themselves.”
Buried in the data is the CBO’s “tacit admission that it vastly overestimated the cost of the Trump tax cuts because it didn’t account for the strong economic growth they would generate.”
In other words, the economic growth that Trump and the GOP promised the American people would occur to offset the government’s loss of tax revenue is occurring — and just imagine how much less the deficit would be (now that Democrats seem to finally care about it) if lawmakers on both sides would agree to cut spending instead of always increasing it.
Let’s look at the details. (Related: #MAGA! Trump FIRST prez in 50 years to decrease DEBT-to-GDP ratio.)
First of all, CBO has revised its economic forecast upward — by a lot — for this year and next. In June 2017 the budget analytical agency predicted that growth in gross domestic product would only reach two percent this year. But after seeing solid growth at three percent or above after Trump took office, the CBO is now projecting 3.3 percent growth, on average, for 2018. In addition, it boosted its growth forecast from 1.5 percent in 2019 to 2.4 percent (the latter percentage of which, given the economy’s performance thus far, seems ridiculously low as well).
“Underlying economic conditions have improved in some unexpected ways since June,” said the CBO in its recent report.
Maybe unexpected to the Left-leaning bureaucrats at CBO who seem to have little real-world economic experience — either that, or they’re so biased against Trump they refused to take into account his cuts and deregulation efforts.
But whatever: Now the agency is predicting GDP to grow $6.1 trillion more by 2027 that previously forecast. A table buried in the report shows that before accounting for economic growth the cuts would slash federal revenues by $1.69 trillion between 2018-2027.
It goes on to note that a higher GDP growth rate will produce at least $1.1 trillion in new revenues, meaning that 65 percent of the cuts are paid for. And that’s just so far.
Just wait until Trump’s economy grows by more than three percent; wait until it reaches four percent. The CBO’s gap will disappear completely and the budget will experience a net gain in revenues despite the tax cuts.
But don’t expect Congress to refund those.
See more news like this at Conservative.news.
J.D. Heyes is also editor-in-chief of The National Sentinel.