Will The Tax Plan Generate Economic Growth?

With the passage of the the tax plan now all but a certainty, the sales job to the American public will now begin and we can expect this to last until the mid-term elections next November.   Since this site is about the search for opposing viewpoints on an any topic, we have searched for those opposing views.   This has proven to be difficult.  OneHeadlineADay.com has not been alone in that search, here is a similar attempt by the New York Times.   While there seems to be some debate as to whether or not this tax plan will spur economic growth, even conservative economists do not claim that the tax cuts will pay for themselves as Treasury Secretary Steve Mnuchin claims.  (see Yuval Rosenberg's post below)

Then there is the debate on who actual experts are.    Eric Zorn writes below about the number of economists ("actual experts") that are very skeptical of the claims about the amount of growth this plan will produce.   His article links to a detailed survey of experts across the political spectrum. 

Get used to this topic, we will be hearing about it for for the next 11 months.

Actual Experts Confirm the GOP Tax Plan is a Dud
By Eric Zorn
Chicago Tribune

“Have you no sense of economics?” demanded an angry reader, objecting to my nine-point critique last Wednesday of Republican plans to overhaul the federal tax code.

Well, I do have some sense.
The write to be shown on the left side I have a sense that economics is in part a faith-based social science in which political and ideological inclinations can distort the interpretation of the evidence. And I have a sense that economics is an extraordinarily complicated field of study that combines data analysis with psychological modeling to generate forecasts that aren’t always spot-on.

I do a lot of reading. But am I an expert? No.

It happens, though, that actual experts tend to share my skepticism about the hastily conceived tax scheme the GOP is going to try to ram through Congress on purely partisan votes in the next few weeks. <more>
Conservative Economists Say Corporate Tax Cuts Will Boost Economic Growth
By Yuval Rosenberg
The Fiscal Times

Nine distinguished conservative economists sent a letter to Treasury Secretary Steven Mnuchin laying out why they believe the GOP’s tax plan would generate additional economic growth — and additional revenue that would bring down the cost of the tax cuts.

The economists include Douglas Holtz-Eakin, Glenn Hubbard, George P. Schultz, Larry Lindsey and John B. Taylor. They write that corporate tax cuts of the sort being proposed in the House and Senate tax bills could increase GDP growth by 0.3 percentage points a year for a decade, or 0.4 percentage points if the immediate expensing of business equipment and investment was made permanent. Those projections assume that tax code changes don’t add to the deficit, but the economists add that “the impact of changes in interest rates resulting from greater investment demand and government borrowing are likely to be relatively small.” <more>

5 comments:

  1. Douglas Holtz-Eakin is a house flac. Always willing to praise any tax cuts. Is not George P Shultz a former member of Bush I? pre-Volker rule days of the wild west economics.

    But, ignore my name-calling. Let's treat the tax cut like an investment, a hedge, a bet. And ask anyone willing to sign on for "it will pay for itself" to make a fiduciary pledge to that effect. Because, in effect, such persons _are_ selling you something, but it ain't "the full faith and credit of the US government". What they're selling you is a blank check, made out to them and their friends, which you, your children and theirs get to fill in.

    You can easily see thru any such promise in that it has no commitment whatsoever.

    If the the three theological virtues, usually listed in faith, hope, and charity order, the tax plan is only long on HOPE, that's about it. On FAITH, it's asking for your faith in a group of financial insiders who've bought and paid for the current Republican leadership and a president who is filling, rather then drain the swap. On CHARITY, not something one usually expects from the government, it is exactly the opposite, full of nothing but the opposite -- MALICE -- towards most American.

    in a p.s. sort-of-way, my omission of any facts in this rebuttal are a model of the tax-plan proponents failing to address any of the serious challenges from the opponents. For example, little discussed is the estimate this plan could actually spur _foreign_, rather than domestic investment by US companies.

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    1. ==>little discussed is the estimate this plan could actually spur _foreign_, rather than domestic investment by US companies.

      Interesting note applemcg. I had not heard this before. I will need to research this further. As a PSA, here is a place one could start -- http://www.washingtonexaminer.com/foreign-investors-would-win-a-70-billion-tax-cut-with-republican-plan-report-finds/article/2638336

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  2. Given that most projections expect the tax bill to add $1.4 to $1.6 trillion to the deficit, doesn't the statement in the article "Conservative Economists Say Corporate Tax Cuts Will Boost Economic Growth" that "Those projections assume that tax code changes don’t add to the deficit..." cast serious doubt on their own projections of 0.1 to 0.4% per year boost to GDP?

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    1. Yes, Mike count me among those that are in the "this does not add up" camp.

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