It doesn’t involve an inappropriate tweet or casual racism, but Alan Rappeport’s scoop about the Trump administration lying about its own internal analysis of the Republican tax plan deserves to go down as one of the most shocking stories of 2017. And the mild-mannered headline “Ahead of Vote, Promised Treasury Analysis of Tax Bill Proves Elusive” doesn’t come close to doing it justice.
Here’s the issue. For months now, Treasury Secretary Steve Mnuchin has been saying that his team will release a “dynamic” analysis of the Republican tax plan that will reveal its growth-boosting effects to be so incredible that they put deficit worries to rest. On September 28, he even said that his in-house analysis indicated the bill would reduce the deficit by $1 trillion rather than increase it.
That’s never seemed remotely plausible to me, but it’s clear that a lot of Republicans on Capitol Hill are counting on something in that neighborhood coming true to make the plan workable.
Rappeport reports that Mnuchin’s just been making it up:
Mr. Mnuchin has promised that Treasury will release its analysis in full. Yet, just one day before the full Senate prepares to vote on a sweeping tax rewrite, the administration has yet to produce the type of economic analysis that it is citing as a reason to pass the tax cut.
Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned. An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a “dynamic” analysis showing that the tax plan would be paid for with economic growth because one did not exist.
It’s of course difficult to prove things beyond any possible doubt in a field like economics. But common sense says that if there were any kind of remotely plausible way to generate an analysis that said this tax plan would pay for itself — or even come close to paying for itself — the Republican Party would find some way to produce the actual analysis. They haven’t produced such an analysis because there’s no way to generate one that’s remotely plausible.
The big tax cut for business owners and heirs to large fortunes will, in the long run, be paid for by people who are not business owners or heirs to large fortunes.
It may be paid for through the long-term middle-class tax increases that are laid out in the bill. Or it may be paid for through large cuts to Social Security, Medicare, Medicaid and other social programs. Or it may be paid for through higher interest rates that raise the cost of new investment to deliver a tax windfall to old capital.
But there is a big tax cut coming for people who own businesses and for people who stand to inherit fortunes worth more than $11 million. And there will be a price for that.