Extending the Trump Tax Cuts Is a Good Idea. But It Won’t Deliver ‘Big, Beautiful’ Economic Growth.
President Donald Trump and many of his allies in Congress are making grand claims about the economic growth they say will result from the recently proposed “One Big Beautiful Bill.” Trump has accused critics of not understanding the budget proposal, “especially the tremendous GROWTH that is coming.” A closer examination of the economic realities involved reveals that these claims are dramatically overstated.
I have no objections on principles to extending the expiring provisions of the 2017 Tax Cuts and Jobs Act. Allowing these cuts to expire would deliver some measure of pain to the economy and add to our troubles. Tax hikes at a time when individuals and businesses are expecting tax stability would undoubtedly depress investment, employment, and overall economic confidence. Americans are already getting a huge tax hike because of Trump’s tariffs.
However, making a sound case for maintaining the current tax structure is fundamentally different from making the case that it will bring about substantial new growth. It’s largely a defensive move. Realistically, the economic boost will be modest at best.
In fact, the administration and congressional supporters of this bill admit that much without realizing it. On the Senate side, lawmakers argue that the fiscal cost of extending the 2017 tax cuts should be measured against today’s tax code rather than against the code to which we would revert if the cuts automatically expire. They
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