New projections from Congress’s official legislative scorer show deficit levels will explode if the Trump tax cuts are made permanent and not simply extended.
In response to a inquiry from Ways and Means Committee member David Schweikert (R-Ariz.), the Congressional Budget Office (CBO) found Friday that keeping the 2017 tax cuts in place and holding other budgetary policies steady would cause debt levels to reach 214 percent of gross domestic product (GDP) in 2054.
That’s “47 percentage points higher than in the long-term baseline projections” released last March that are based on a 10-year extension of the cuts, the CBO said.
CBO’s original projection found that public debt would be 166 percent of GDP if the cuts are extended compared to the current level of 99 percent.
Schweikert also asked the CBO to consider the deficit effects if interest rates were 1 percent higher than in earlier projections. In that case, the total public debt would be 250 percent of GDP in 2054.
Schweikert has broken from many Republicans on the accounting methods that should be used for the tax cut extensions that are now under consideration.
Republicans in the Senate want to use a “current policy baseline” that assumes the Trump tax cuts will simply be extended. Under this baseline, extending the cuts beyond 2025 would not add to the deficit. CBO estimates extending all of the tax cuts set to expire at the end of 2025 would add $4.7 trillion to deficits over the next 10 years.
Schweikert and some other Republicans have rebuked this accounting assumption as intellectually fraudulent since it assumes current policies continue into the future when they’re actually expiring in U.S. law.
The CBO analysis from Friday does not weigh in on the “current policy” versus “current law” baseline question.
Treasury Secretary Scott Bessent blasted CBO accounting methodologies this week, escalating the controversies around budgetary accounting involving the official scorer to a new level by calling them “crazy.”
“Shame on me,” he said on the All In podcast. “I was in the investment business for 35 years. I talked very confidently that ‘CBO scoring says this.’ And it turns out I didn’t know you-know-what about CBO scoring. When you’re on this side of the wall, you realize how crazy it is.”
Bessent went on to criticize congressional reconciliation rules, which avoid the Senate filibuster and under which the current Republican tax extensions are being advanced, for requiring that revenue changes need to be renewed while “spending never has to get renewed.”
