Here Are 3 Reasons Why the ‘Big Beautiful Bill’ Won’t Generate 3 Percent Growth
The White House is promising that the “Big Beautiful Bill” will provide a jolt to the economy—but those expectations fail to take into account three direct consequences of the bill that independent analysts believe will sap growth in the long run.
White House press secretary Karoline Leavitt and others in the Trump administration have been touting the White House Council of Economic Advisers’ projections showing that the bill will generate 3 percent annual growth. President Donald Trump, as usual, has gone even bigger. Last month, he suggested that the tax bill could grow America’s economy by “3, 4, or even 5 times” the current levels—currently pegged at 1.8 percent by the Congressional Budget Office.
Those expectations are well in excess of what serious and independent economists expect.
The Yale Budget Lab, for example, estimates the tax bill would add just a small boost to the economy in the short run. That would be followed by decades of lower growth (relative to what would happen if the bill didn’t pass) as the negative consequences of extra borrowing take their toll.
The Yale analysis is in line with other projections by the Tax Foundation and the Penn Wharton Budget Model, both of which project less than 1 percent higher growth as a result of the bill’s passage—though neither looks as far ahead as the Yale analysis does.
Why the big difference?
The White House’s argument rests on the assumption that lower taxes will generate greater growth. That’s a well-established principle, but the problem with applying it here is that this bill isn’t lowering taxes—with the exception of some relatively small details, like abolishing income taxes on tips and overtime pay. Rather, it is extending current tax rates that were set by the bill Tr
Article from Reason.com
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