The U.S. Treasury Department produced a one-page document Monday that it described as an "analysis of growth and revenue estimates" based on the Senate tax bill, but economists quickly dismissed the document a political statement, not a rigorous economic study.
The 470-word report says only that the combined impact of President Donald Trump's economic agenda -- including a regulatory rollback -- and tax cuts would drive enough growth to increase tax revenue by $300 billion over the next decade. Various other analyses have found that the tax cuts alone would increase federal deficits by as much as $1 trillion.
The document, which the department calls a "white paper," doesn't look at the tax plan in isolation. Instead, it merely adopts the administration's projections of 2.9 percent average annual growth, a number that's based on various policy goals.
As such, the Treasury report is "a restatement of their budget" rather than a macroeconomic score of the tax plan, said Douglas Holtz-Eakin, a conservative economist with the American Action Forum. Holtz-Eakin was among a group of economists who wrote to Treasury Secretary Steven Mnuchin last month to support the notion that the tax plan would boost growth substantially.
House and Senate lawmakers are currently working to craft compromise legislation with a goal of sending it to Trump before Christmas.
"You have to view this as a political document, not an economic document," said Stephen Stanley, chief economist at Amherst Pierpont Securities and a former researcher at the Federal Reserve bank in Richmond, Va. "The work should be viewed as advocacy rather than academic work."
Stanley added that he's "sympathetic to the concept that the tax package could boost growth and bring in additional revenue." But "I would not be as aggressive as the administration," he said.
The growth projections in the White House budget were crafted in part based on some different tax provisions from the ones Congress is currently considering. For example, it called for ending "the burdensome alternative minimum tax" and a 3.8 percent tax on capital gains and dividends -- though the Senate bill wouldn't repeal either levy.
In addition, White House Budget Director Mick Mulvaney said in April that the administration's growth estimates of about 3 percent were based in part on a list of tax principles it released that month, a list that included setting the corporate tax rate at 15 percent. The Senate bill would set that rate at 20 percent -- down from the current 35 percent -- and make that change in 2019, not immediately.
A Treasury Department spokesman didn't respond to a request for comment.
Using the administration's growth projections, the document said Trump's economic policies would lead to $1.8 trillion in new revenue over a decade, more than offsetting the Senate tax plan's nearly $1.5 trillion revenue cost.
The projections say that about half the boost in growth would come from corporate tax cuts, while the other half would come from changes to pass-through businesses, individual tax cuts and "a combination of regulatory reform, infrastructure development, and welfare reform as proposed" in the administration's 2018 budget.
An analysis released by Congress' official scorekeeper, the Joint Committee on Taxation, previously found that the Senate tax bill would generate enough economic growth to lower its revenue cost by only about $458 billion over a decade.
After accounting for interest rates, the growth figure would fall to $407 billion, according to the Joint Committee on Taxation. That would leave a 10-year revenue loss of roughly $1 trillion. A spokesman for the tax-writing Senate Finance Committee criticized the study, which came out a day before the chamber voted to approve the bill, as "incomplete" because the Senate bill was "evolving."
The bill's backers, including Mnuchin, have argued the tax plan would pay for itself through robust economic growth resulting from the cuts -- but several analyses have emerged countering that argument.
A report that was also released Monday by the Urban-Brookings Tax Policy Center, an independent group, found that after accounting for larger economic effects, the Senate plan would reduce its revenue loss by about $186 billion over a decade -- adding almost $1.3 trillion to the deficit over that time.
"We acknowledge that some economists predict different growth rates," the Treasury Department said in its document.
Mnuchin drew criticism last month after a media report said his department hadn't completed an analysis of the GOP tax plan that the secretary had been promising for months. Mnuchin has said repeatedly that he has more than 100 people at the agency working on economic models that will support his assertions that the proposed tax rewrite would give the middle class a big tax cut and boost the U.S. economy.
The department's inspector general has opened an investigation into whether political considerations have interfered with the promised analysis. The inspector general's office said Monday that the review will continue.
Information for this article was contributed by Toluse Olorunnipa, Lynnley Browning and Steve Matthews of Bloomberg News.
A Section on 12/12/2017