Change of Subject with Eric Zorn

Actual experts confirm that the GOP tax plan is a dud

Eric Zorn
Contact ReporterChange of Subject

“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.

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.

The Initiative on Global Markets at the University of Chicago Booth School of Business oversees a panel of experts in order to explore “the extent to which economists agree or disagree on major public policy issues.”

The initiative’s website notes that the panel “was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States.”

The panel, which is periodically polled via email, “includes Nobel laureates, John Bates Clark Medalists, fellows of the Econometric society, past presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession.”

Thirty-eight of them responded recently to two 10-year predictions based on the rough outlines of the ever-shifting Republican plan to permanently and dramatically cut business taxes while temporarily cutting personal taxes.

1. By 2027, the plan will result in a substantial increase in the U.S. gross domestic product.

Only one expert agreed, while 22 disagreed and 15 expressed uncertainty.

2. By 2027, the plan will result in a substantial increase in the national debt as a percentage of GDP.

None of the experts disagreed, while 37 agreed and the one who expressed uncertainty in his initial response later said he’d misread the question and made the panel unanimous in its agreement.

In May, 37 out of 37 panel respondents disagreed with the proposition that Trump’s tax-cut plans would pay for themselves with increased growth.

In September, Bloomberg polled a different panel of 26 economists and found 21 of them predicting that, despite the Trump administration’s gaudy claims that tax cuts will turbocharge the economy and close the budget gap, the deficit will increase over the next 10 years.

The nonpartisan Penn Wharton Budget Model team at the University of Pennsylvania’s graduate business school earlier this month predicted that national-debt increases of between $1.4 trillion and $1.6 trillion by 2027 under the Senate Republicans’ Tax Cuts and Jobs Act will not be offset by modest GDP increases of between 0.3 percent and 0.8 percent compared to what we’d see without the tax changes.

A similar projection by the nonpartisan Tax Policy Center in Washington estimated additional GDP growth at 0.3 percent in 2027.

Meanwhile, the Congressional Budget Office, staffed with nonpartisan nerds with keen senses of economics, this week has offered more brutal news for the GOP: The latest Senate tax plan will indeed add $1.4 trillion to the debt over the next decade, says the CBO, will almost immediately hurt those earning less than $30,000 and, by 2027, will leave those earning less than $75,000 a year less well off. And this doesn’t even figure in CBO estimates that the plan will result in 13 million Americans losing health insurance.

The rich, meanwhile, of course, would get richer.

Bruce Bartlett, director of the Joint Economic Committee of Congress under President Ronald Reagan and one of the architects of “supply-side” economics, now acknowledges the folly of his ways. “Virtually everything Republicans say about taxes today is a lie,” he wrote in a USA Today op-ed in September. “Tax cuts and tax rate reductions will not pay for themselves; they never have. Republicans don’t even believe they will; they are just excuses to slash spending for the poor when revenues collapse and deficits rise.”

It doesn’t require a specialized “sense of economics” to see who’s going to get hurt most should these hastily considered, donor-driven Republican fantasies become law. Just a little common sense.

[email protected]

Twitter @EricZorn

Copyright © 2017, Chicago Tribune
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