Nonpartisan federal agency says proposal to overhaul tax code would leave result in debt at 97 percent of GDP.
A newly released Republican tax plan would increase the national debt by $1.7 trillion by 2027, the nonpartisan Congressional Budget Office (CBO) said Wednesday.
CBO Director Keith Hall said the national debt would be equal to 97.1 percent of gross domestic product in 10 years in a letter to congressman Richard Neal, a Democratic member of the House Ways and Means Committee currently pouring over the proposed legislation.
That estimation is 5.9 percent higher than the CBO’s projection of what the ratio of debt to GDP would be under current conditions.
The Tax Cuts and Jobs Act bill was announced last week and received praise from Republicans in Congress and President Donald Trump as a way to simplify the tax code and allow businesses to create more jobs.
Critics, however, have charged that the more than 400-page bill is a giveaway to corporations and the wealthiest Americans.
Kevin Brady, chairman of the House Ways and Means Committee, announced amendments to the bill this week. The CBO projections were based on those amendments.
“The staff of the Joint Committee on Taxation determined that provisions in the Chairman’s amendment would increase deficits over the 2018-2027 period by $1.4 trillion (not including the macroeconomic effects of enacting the legislation),” Hall wrote. “By CBO’s estimate, additional debt service would boost the 10-year increase in deficits to $1.7 trillion.”
Brady and fellow Republicans have said their proposals would add no more than $1.5 trillion to the debt.
Republicans have charged that the “macroeconomic effects” that would result from the bill -- more jobs and higher earnings – would offset any increase to the national debt, but they have not provided much evidence for the claim.
At an event Wednesday morning prior to the release of the CBO’s report, House Speaker Paul Ryan said Republican losses in several off-year state elections the previous night put more pressure on the party’s plan to overhaul the tax code.
Passing the legislation, he said, would “bear fruit politically, but most importantly, it's going to help people”.