Trump Tax Plan Called “Biggest Pro-Growth Cut Since Reagan”

Quote of the Day:

The latest Trump tax cut plan would be a steroid injection for the U.S. economy. Bravo to the White House and congressional leaders for packaging the biggest pro-growth tax cut since Reagan.

–Stephen Moore  in the Washington Times

Stephen Moore, who has advised President Trump on taxes, might have some quibbles–he'd prefer business tax rate to be 15 percent rather than the 20 percent in this plan–but overall he is enthusiastic that, if enacted, the Republican plan could spur economic growth.

But there are pitfalls ahead, especially for a GOP that has embarrassed itself thrice over for not being able so far to repeal and replace ObamaCare. One particular pitfall is the Congressional Budget Office, inevitably described as "non-partisan," which will score the bill.

Moore writes:

The GOP controls every agency and committee of Congress. They are enabling the CBO and Joint Tax Committee — both of which they are supposed to run — impede their policy goals? Either put people in charge of these agencies who are favorable to the policies or use outside scorekeepers who are more accurate. The CBO did severe damage to the GOP’s Obamacare repeal agenda with negative, misleading and often error-prone reports.

We know from Obamacare, the Reagan tax cuts, the Kennedy Tax cuts, the Clinton capital gains tax cuts and so many other historic changes in policy that the CBO and JTC often aren’t even in the right Zip code in predicting responses to big policy changes.

For example, the budget scorekeepers said that the Clinton capital gains cut in 1997 would lose tens of billions in revenues. Instead, as Dan Clifton of Strategas, an investment consulting firm, has shown, the tax cut raised tens of billions in tax collections and helped balance the budget. They also overestimated the increase in revenue by $525 billion from President Obama’s tax increases in 2008/2009. When President Reagan’s tax cuts were fully phased in in January 1983, CBO real GDP grew 12 percent over the next 18 months. If CBO had instant replay, these referees would be overturned and then fired.

This is not a plea for biased scorekeepers — just accurate referees.

Moore also says that Republicans should do a better job of tying economic growth the lower taxes.

Avik Roy has long maintained that the CBO scores, which have been used to undo Republican proposals, are biased and misleading.