In the Congressional Research Service’s report on the economic effects of the 2017 tax bill, Senior Specialist in Economic Policy Jane Gravelle and Specialist in Public Finance Donald Marples analyzed the effects of the Tax Cuts and Jobs Act (TCJA) on output and growth. They referred to the Congressional Budget Office’s (CBO) long-term forecast that projects that the TCJA has a positive effect on GDP, particularly in earlier years.
The CBO projects that, under the TCJA, after 10 years, in 2027, GDP will be 0.6 percent larger than otherwise. This estimate of the effect of the TCJA on GDP falls within the range that PWBM projected of between 0.6 percent and 1.1 percent. PWBM’s analysis of the act shows that over the same time period debt increases between $1.9 trillion and $2.2 trillion, inclusive of economic growth. Similar to the CBO, PWBM finds that while the TCJA increases the growth rate of GDP, that boost fades over time. The additional growth is not enough to pay for the cuts.