The Republican economic agenda will generate enough growth to pay for tax cuts being hammered out on Capitol Hill this week, the U.S. Treasury said Monday.
The Treasury said a combination of tax cuts, regulatory reform, welfare reform, and infrastructure development would change the long-run annual growth rate from a previous assumption of 2.2 percent to 2.9 percent. That forecast comes from the Trump administration’s budget.
That additional growth would generate more than enough revenue to pay for the tax cuts. Over a ten-year period, the move from 2.2 percent growth to 2.9 percent growth would generate $1.8 trillion in additional tax revenue, enough to cover the $1.5 trillion in tax cuts with $300 billion left over. This means that even if the tax cuts sets to expire in 2025 under the GOP proposals were made permanent or extended, there still would be no additional debt created by the tax overhaul.