Washington, D.C. — A new analysis from the Center for American Progress finds that tax legislation proposed by congressional Republicans would significantly increase the federal debt by trillions of dollars over the next decade, even with the largest cuts in history to Medicaid and the Supplemental Nutrition Assistance Program. The bill, if implemented, would make the economy weaker and American households worse off.
More specifically, the analysis finds that:
- The legislation could result in higher inflation and drive up interest rates, resulting in lower wage growth and sapped earnings for American workers.
- The reconciliation package as written in the House collectively would increase the federal debt by $2.7 trillion over 10 years and would drive federal debt to a hefty 125 percent of the gross domestic product (GDP) in a little less than 10 years. This type of increase in debt would sap wage growth and leave Americans poorer than they otherwise would be. If the expiring provisions of the bill are instead made permanent, federal debt would increase by $4.5 trillion over 10 years and would leave debt above 200 percent of GDP by 2055.
- Proponents of the legislation rely on budget gimmicks to suggest this legislation would not drive up the federal debt. Some members in the majority have even called one of the gimmicks “economic fraud,” as the data show that extending the expiring tax giveaways from the Tax Cuts and Jobs Act would increase the debt by trillions of dollars.
- Estimates from the Congressional Budget Office found that incorporating the macrodynamic impact of extending the Trump tax cuts would make the cost of the bill more expensive, not less.
“Make no mistake: This legislation is deeply fiscally irresponsible policy and should outrage deficit hawks. Congressional Republican reconciliation plans would take away critical support from low-income Americans all to give tax giveaways to the richest Americans,” said Alan Cohen, senior fellow at CAP and author of the analysis.
Read the analysis: “Congressional Republicans’ Tax Legislation Would Massively Increase Federal Debt, Even With Enormous Spending Cuts” by Alan Cohen.
For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].