×

Senate tax bill would fall $1 trillion short of paying for itself after economic growth, congressional analysis says

  • The Senate tax cuts would fall $1 trillion short of paying for themselves over a decade, according to a congressional analysis.
  • The Senate bill would boost GDP by about 0.8 percent over a decade, the report says.

The Senate tax plan would add more than $1 trillion to federal deficits over a decade even after economic growth is taken into account, a congressional analysis estimated Thursday.

The projection from the Joint Committee on Taxation — the official congressional scorekeeper — undercuts the White House argument that tax reductions will effectively pay for themselves. The Trump administration and other Republicans have argued that economic growth sparked by cuts will cancel out lost revenue.

The JCT report comes only hours before an expected Senate vote to overhaul the American tax system. Multiple Republican senators have expressed concerns about blowing up federal deficits with tax cuts. At least three of those senators — Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma — are seeking a "trigger" to automatically raise taxes if economic growth does not generate as much revenue as Republicans hope.

The plan would add about $1.4 trillion to deficits through 2027 before economic growth. It would modestly increase gross domestic product by 0.8 percent over that period, the JCT projected. Including additional debt service, that increased output would boost revenues by about $400 billion.

Therefore, the legislation would still fall about $1 trillion short of paying for itself.

It is not clear if the projections will change any senators' stances on the legislation. Republicans can only lose two of 52 votes and still pass the bill with a simple majority under special budget rules, if no Democrats or independents vote for it.

A spokesman for Lankford said the projections do not change his "concerns about deficit implications of tax reform." He said negotiations about the revenue-raising mechanism are still ongoing.

Protesters demonstrate near the full Senate budget committee markup of the tax reform legislation on Capital Hill November 28, 2017 in Washington, DC.
Getty Images
Protesters demonstrate near the full Senate budget committee markup of the tax reform legislation on Capital Hill November 28, 2017 in Washington, DC.

Sen. Ron Wyden, D-Ore., the ranking member on the Senate Finance Committee, quickly seized on the JCT score Thursday.

"The growth fantasy is over," he said on the Senate floor.

Sen. John Thune, R-S.D., the third-ranking Senate Republican, said the analysis showed "good news" in that it projected higher growth from tax cuts. He contended that growth estimates should be higher than the JCT projected.

Sen. Chuck Grassley, R-Iowa, also told CNBC that he believes the committee's growth projections are conservative.

Julia Lawless, a spokeswoman for the GOP-majority Senate Finance Committee, said in a statement that the analysis does not capture the changes senators were making to the plan Thursday. She added that "the findings of the JCT are curious and deserve further scrutiny."

Treasury Secretary Steven Mnuchin has repeatedly promised an analysis showing that the tax cuts will pay for themselves, according to The New York Times. Such a report has not surfaced yet.

WATCH: Majority of Americans not buying corporate tax cut promises