Trump Tax Cuts Mostly Pay For Themselves | Power Line

Trump Tax Cuts Mostly Pay For Themselves | Power Line:
"Investors Business Daily has an excellent editorial on the macroeconomic effects of the recently-enacted tax reform bill. It highlights, once again, the peril of uncritically parroting top-line Congressional Budget Office analyses:

When the Congressional Budget Office released its updated budget forecast, everyone focused on the deficit number. But buried in the report was the CBO’s tacit admission that it vastly overestimated the cost of the Trump tax cuts, because it didn’t account for the strong economic growth they would generate.

Among the many details in the report, the one reporters focused on was the CBO’s forecast that the federal deficit would top $1 trillion in 2020, two years earlier than the CBO had previously said.

And, naturally, most news accounts blamed the tax cuts. “U.S. budget deficit to balloon on Republican tax cuts” is how Reuters put it in a headline.

Of course they did! But Reuters will never headline, “Republican tax cuts fuel economic growth.”

But there’s more to the story that the media overlooked.

First, the CBO revised its economic forecast sharply upward this year and next.

Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3% — a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%.

“Underlying economic conditions have improved in some unexpected ways since June,” the CBO says.

“Unexpectedly!” as Glenn Reynolds likes to say..."