It’s a marriage made in supply-side heaven (and word-play purgatory): Selma Larkey weds Frank Lee Bunk.
I’m talking about the long-awaited Treasury Department analysis, so called, of the GOP’s tax-cut package. Treasury Secretary Steve Mnuchin has long promised the tax cut will pay for itself — and that his department’s economic experts would show how.
Reality-based fiscal wonks were deeply skeptical. After all, report after report has shown the opposite: that the GOP’s tax cuts would add significantly to the national debt, with most estimates falling in the range of $1 trillion to $2 trillion over 10 years.
But certainly those trained in supply-side theology were waiting hopefully for good dough — sorry — projections from Treasury. After all, with the GOP’s Miracle-Gro economics unwatered by even one reputable evaluation, they had suffered a searing time in the policy desert. And so Treasury’s promised report shimmered on the horizon like an inviting oasis, a leafy green retreat where they could regroup and reprovision before the final vote.
Why, just a few weeks back, Speaker Paul Ryan tried to seek refuge there. Dismissing an array of gloomy revenue projections, the speaker offered this assurance: “We believe that when you look at other analysis, whether it’s going to be Treasury or the rest, that we’re right there in the sweet spot, with economic growth that gives us more revenue with where we need to be.”
On Monday, Treasury finally released its analysis. First the good news: At seven spare paragraphs, and 470 words, including footnotes, it’s a quick read.
And now the bad, at least for Republicans hoping Treasury would help them peddle their tax-cuts-pay-for-
themselves snake oil. The oasis was a mirage. Read between the lines, and Treasury, too, is saying this tax cut won’t pay for itself.
Not when scored conventionally, certainly. About the best Treasury could do there was to say the loss might be limited to $1 trillion over a decade. But what of Treasury’s dynamic analysis? After all, dynamic scoring is the mystical spirit supply-siders always summon, confident the genie of growth will grant their wishes. At first, it looked as though Treasury had saved the day by cranking up economic growth assumptions to an unrealistic 2.9 percent annually for a decade, and thereby showing that the tax cuts would generate more revenue than they’d lose. Until one read the fuller explanation about whence that growth would supposedly come: half from the corporate tax cuts. And the other half? (Warning: ledger legerdemain ahead.) From the small-business and other tax cuts, “as well as from a combination of regulatory reform, infrastructure development, and welfare reform.”
So here’s what Trump’s Treasury Department is really saying: Even under their highly optimistic annual growth assumptions, in order to generate their positive-sounding conclusion, they’ve also had to assume additional, unspecified growth effects from their policy wish list.
Noting that Treasury’s report apparently includes no sophisticated modeling of the kind that underlies legitimate budgetary scoring, Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said: “This is insulting to the process of analysis.”
“Even as propaganda, it is underwhelming,” added Len Burman, cofounder of the Urban-Brookings Tax Policy Center. “They just went into la-la land.”
Treasury’s analysis does contain this curious qualification: “We acknowledge that some economists predict different growth rates.” That, frankly, reads like the work of policy analysts who were instructed to come to a preordained conclusion but are now blinking frantically to signal that they’re being held hostage.
So now you know, courtesy of Trump’s own Treasury Department: The GOP tax-cut package has no clothes. It won’t pay for itself. Rather, it will add to the national debt. That naked truth should now be there for all but the willfully blind to see.Scot Lehigh can be reached at email@example.com. Follow him on Twitter @GlobeScotLehigh.