Treasury Secretary, Steven Mnuchin, repeatedly stated that the $1.5 trillion tax overhaul would pay for itself through economic growth and that a Treasury Department analysis would provide evidence of this. However, the administration never produced such an analysis.
What Happened: Treasury Secretary, Steven Mnuchin, repeatedly stated that the $1.5 trillion tax overhaul would pay for itself through economic growth and that a Treasury Department analysis would provide evidence of this. However, the administration never produced such an analysis. In fact, economists within the Treasury Department’s Office of Tax Policy were barred from working on full analyses of the proposed tax plans and instead were instructed to work on analyses related only to specific provisions.
Why it Matters: Barring experts from conducting timely and useful analyses prevents decision-makers from making policy choices based on the best available science. The analyses promised by Secretary Mnuchin could have been particularly critical for a decision to pass, or not pass, the Senate version of tax reform.
Treasury secretary, Steven Mnuchin, said that over 100 people were “working around the clock on running scenarios for us” to produce an analysis that would provide evidence that Congress’s proposed $1.5 million tax reform would pay for itself through great economic growth. However, no comprehensive analysis of the tax plan was produced even though such information was critical to the Senate’s vote to pass, or not pass, tax reform. Treasury economists stated that they were being barred from conducting such comprehensive analyses of the tax plan and that the analyses Secretary Mnuchin described did not exist. Instead of working on comprehensive analyses of the tax plan, Treasury economists reported that they were working on analyses related to specific provisions included in Congress’s proposed tax reform plan.
A comprehensive analysis of Congress’s proposed tax plan was needed to provide evidence that the $1.5 trillion tax overhaul would pay for itself through economic growth as other studies showed it would not. The nonpartisan Joint Committee on Taxation, the Penn Wharton Budget Model, and an analysis conducted by the Tax Foundation all showed that Congress’s proposed tax reform would not grow the economy enough to meet the costs of the plan. A University of Chicago survey also showed that 41 of 42 economists did not agree that Congress’s tax plan would lead to a surge in economic growth, in fact all economists surveyed agreed that the plan would increase the U.S. deficit. Austin Goolsbee, President Obama’s chief economist wrote in regard to the survey’s question about whether or not Congress’s tax plan would increase economic growth, “Of course not.” “Does anyone care about actual evidence anymore?”
On December 11, 2017 the Treasury Department released a one-page analysis of the Senate’s version of the tax plan that showed the plan would pay for itself through stimulating economic growth. And even though the Treasury Department conceded that their analyses were based on optimistic models, many economists criticized the analysis and said that the Trump administration was misleading the US public.
The Senate passed this sweeping tax reform on December 19, 2017 without considering any comprehensive analyses of the plan by the Treasury Department’s economists, and in lieu of the consensus of expert economists outside the government that the plan would not pay for itself through economic growth as promised by Secretary Mnuchin. According to the Congressional Budget Office, Congress’s tax reform will hurt the poor and middle class the most. It is vital that economists and scientific experts are allowed to do their jobs to provide the best evidence available to the people who are making critical decisions that affect the health and safety of the public. In this case, the Senate would have had the evidence needed to make a more informed decision that would potentially benefit, not harm, the people most in need in our country.