For many months now, Treasury Secretary Steve Mnuchin has promised that his department would release a detailed analysis of the Republican tax plan, which would presumably justify his prediction that the legislation would pay for itself through economic growth. This began to seem a bit doubtful as the bill-writing process dragged on and no forecast emerged. Then, last month, things took a turn for the embarrassing when the New York Times reported that Treasury had not actually done any detailed economic modeling on the plan, even though Mnuchin had at one point claimed he had 100 staffers working on it.
I guess Mnuchin decided to try to salvage his dignity, because today, more than a week after the Senate passed its bill, Treasury finally released … something. It’s a single-page document that purports to forecast the Senate bill’s impact on federal revenues and U.S. growth. But it doesn’t do that, really. Instead it reads like a lame gag—as if someone decided to prank all the wonks demanding hard numbers with one of those springy snakes that jumps out of a Pringles can. You click on a PDF expecting some semblance of analysis and instead get a page of blather barely one step up from a big green dollar sign scrawled in crayon.
Let’s start with a little background. Earlier this year, the White House released a budget that assumed its economic plans would boost economic growth to an average of almost 3 percent per year over a decade. As many noted, this was deeply unrealistic, both because the U.S. is facing major economic headwinds like the mass retirement of baby boomers, and because many of Trump’s policies are unlikely to turbo-charge growth the way he’s vowed.
The memo Treasury released Monday states that it “modeled the revenue impact of higher growth effects, using the Administration projections of approximately a 2.9% real GDP growth rate over 10 years contained in the Administration’s Fiscal Year 2018 budget.” In other words, it didn’t actually analyze how the Senate’s plan would influence the economy. Instead, it just recycled administration assumptions from back in May, before the bill was even written. The one-pager then goes on to predict that half the increase in growth will come from corporate tax cuts, with “the other half to come from changes to pass-through taxation and individual tax reform, as well as from a combination of regulatory reform, infrastructure development, and welfare reform as proposed in the Administration’s Fiscal Year 2018 budget.” Why does Treasury expect all this? It’s unclear, and it’s not obvious what economic modeling, if any, they’ve actually done.
There is one slightly interesting thing about this document: It sort of concedes that tax cuts might not pay for themselves. Treasury says the tax cuts should cost $1.5 trillion total. If you only count new tax cuts, and not the cost of extending expiring breaks, it falls to $1 trillion. Meanwhile, the document says Trump’s whole economic plan—including regulatory changes—would increase growth enough to create $1.8 trillion in new tax revenue. But the growth from corporate tax reductions would only add about $1 trillion—enough to pay for the new tax Republicans are teeing up, but not the extenders. Long story short, the document isn’t quite saying Mnuchin was wrong when he claimed tax cuts would be self-financing. But it isn’t clearly saying he was right either.
The big question here—to me, at least—is why this thing exists at all? What is the point of releasing an obvious propaganda piece that doesn’t unambiguously support the administration’s propaganda? Did Mnuchin just feel like he needed to publish something in order to scrape some his credibility back off the pavement? Is it indeed a passive-aggressive jab at the wonk class? Does it even matter? Does anything, really?