Taxes

Analysis: The GOP Tax Plan Will Add $1.9 Trillion to the Debt After Growth

JM Ashby
Written by JM Ashby

The Wharton School of Business at the University of Pennsylvania has released the most brutal analysis of the GOP tax bill to date and this is amuses me for a very particular reason.

According to the school's analysis, the GOP tax cut bill as it is written will add up to $1.9 trillion to our deficits over the next 10 years.

More importantly, they say this will happen even if you include phantom economic growth.

By 2027, under our standard economics assumptions, GDP is projected to be between 0.5 percent and 1.0 percent larger, relative to no tax changes. Debt increases between $1.8 trillion and $1.9 trillion, inclusive of economic growth.

By 2040, GDP is projected to be between 0.4 percent and 1.2 percent larger under our baseline assumptions, and debt increases by $2.6 to $3.1 trillion.

Additional sensitivity analysis indicates that even under assumptions favorable to economic growth, by 2027, GDP is projected to be between 1.0 percent and 1.9 percent larger, and debt increases between $1.5 trillion and $1.8 trillion.

Obviously, the disparity between this analysis and the joke released by Treasury Secretary Steve Mnuchin this morning couldn't be wider. Mnuchin's analysis says the GOP tax cut bill will pay itself with even less economic growth than what the Wharton School projects.

If you consider the possibility that the Wharton School's projections for economic growth are too generous, their analysis would clearly be far more bleak.

Now, I said this amuses me for a particular reason and the reason is this: the Wharton School is the school Donald Trump himself allegedly "studied" at.

  • muselet

    The Wharton School’s analysis will have precisely zero effect on, well, anything. The Rs in Congress will figure out some way to make the tax bill coming out of conference even worse, the opinions and advice of Ds and economists and not-insane people will be ignored, and Donald Trump will rage-tweet about Wharton, the Ds and objective reality.

    And when the economy crashes, the Rs will blame the Ds for not negotiating in good faith on taxes, and our glorious news media will stroke their chins and murmur High Broderist platitudes about both sides.

    Convince me I’m wrong, I dares ya.

    –alopecia

    • JMAshby

      Right now I have no idea what the conference committee is going to produce. It seems like there’s a lot of opposition to various provisions and a tight fiscal window to fit it all in. There’s been little chatter on it, at least not anything I can post here, and I think it’s because no one has any idea. Whatever it is, I don’t think they’re going to pass something before Christmas. There’s going to be another possible government shutdown next week and that’s soaking up a lot of bandwidth.

  • Badgerite

    What the Wharton analysis points up is that this is a tax cut that is not needed and will actually harm the economy.
    It will make a small fraction of the population richer. But that is only if they don’t break the system entirely and it seems to me with these people, that is a distinct possibility.

  • I bet Wharton gave Trump the degree just to get rid of him.

    • ninjaf

      I think I read somewhere that he doesn’t actually have a degree from there. If memory serves, if someone is a student at the University of Pennsylvania, then they can take classes at Wharton. And I think that is all he has actually done.

      • Still….U of PA didn’t accept me as a HS senior (97.5 GPA)…but they let the Shitgibbon in…Maybe they deserve to have their name forever more associated with him.

        • ninjaf

          I imagine there is a Trump wing or building somewhere on campus from right around the time li’l Donnie boy was seeking admission.

    • Draxiar

      I’m hoping trump gets the third degree from Mueller University.