Senate Tax Bill Would Add $1 Trillion to the Deficit, Congressional Analysts Say

Senate Tax Bill Would Add $1 Trillion to the Deficit, Congressional Analysts Say

iStockphoto/The Fiscal Times

The Senate tax bill looks increasingly likely to pass, even if it’s still not clear exactly what will be in it.

However, as Republican leaders sought to lock down the 50 votes they need, Congress’s Joint Committee on Taxation may have just complicated their path. The JCT issued an analysis that found that, even accounting for the economic growth the tax plan would generate, the tax cuts would still add $1 trillion to the deficit over 10 years.

JCT said that while the Tax Cuts and Jobs Act would add about 0.8 percent to GDP and that extra growth would generate additional tax revenues of $458 billion over 10 years, the tax cuts themselves would reduce revenues by $1.4 trillion, and interest on the additional debt would cost another $50 billion. The net result is a tax overhaul that falls well short of paying for itself.

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The JCT findings are in line with other mainstream analyses of the GOP plan, none of which has found that the tax plan will pay for itself. Even so, a spokesperson for Senate Finance Committee Republicans essentially dismissed the analysis, calling it “curious” and “incomplete” because the Senate bill was still evolving. And the Tax Foundation, a conservative group working on its own score of the Senate bill, said the newest numbers were “likely underestimating the economic growth spurred by this tax bill.”

Senate Republicans have very little margin for defections among their 52-member caucus, but even if two undecided deficit hawks in the Senate find the JCT analysis troubling enough to withhold their support, Republicans may be able to round up the votes they need anyway.