President Donald Trump has elevated his tax cuts to an act of biblical proportions, misleadingly claiming at a White House speech Friday that they triggered an “economic miracle.”
Also on Friday, the president’s top economics aide, Larry Kudlow, appeared on the Fox Business Network to address one of the major problems with the tax cuts — that they’ll heap more than $1 trillion onto the national debt. Kudlow falsely countered that the budget deficit was falling because of growth generated by the tax cuts. The deficit is actually rising.
A look at the statements and the fact:
TRUMP: “Six months ago, we unleashed an economic miracle by signing the biggest tax cuts and reforms …the biggest tax cuts in American history.”
THE FACTS: The president is exaggerating, if not being outright deceptive.
Rather than achieving a miracle, his tax cuts have helped stoke additional growth in an economic expansion that was already approaching its tenth year. The additional growth is largely fueled by government borrowing, as the federal deficit rises because of the tax cut. The pace of growth is expected to taper off after next year, according to the Congressional Budget Office, the Federal Reserve and outside analysts.
And while the $1.5 trillion worth of tax reductions over the next decade are substantial, they’re far from the largest in U.S. history as a share of the overall economy. The Trump tax cut ranks behind Ronald Reagan’s in the early 1980s, post-World War II tax cuts and at least several more, according to the Committee for a Responsible Federal Budget, which advocates for deficit reduction.
Trump proudly went through a list of economic achievements that build on the progress begun under former President Barack Obama. The 3.8 percent unemployment rate and the historically low level of requests for jobless aid are both the result of a steady and gradual recovery from the worst economic meltdown since 1929.
Several hundred companies responded to the tax cuts by paying workers bonuses or hiking hourly wages, but any significant income growth has yet to surface in the overall economy.
The tax cuts have added on average $17 a month to people’s incomes, according to an analysis by Ernie Tedeschi, head of fiscal policy analysis at the investment firm Evercore ISI and a former Treasury Department economist. The analysis is based off consumer spending, income and inflation data released Friday.
That $17 monthly gain is helpful, but it’s far from miraculous.
KUDLOW: “As the economy gears up, more people working, better jobs and careers, those revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly.”
THE FACTS: Nope.
Since the fiscal year started in October, Treasury Department reports show the federal government has recorded a $385.4 billion deficit, a 12 percent jump from the same period in the previous year.
The Congressional Budget Office was even more blunt in a long-term assessment released Tuesday.
It estimates that the national debt — the sum of yearly deficits — will be $2.2 trillion higher in 2027 than it had previously forecast, largely a consequence of Trump’s 10-year, $1.5 trillion tax cut. The size of the debt could be even higher if provisions of the tax cut that are set to expire are, instead, renewed.
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