Two months ago, U.S. Sen. Todd Young said he wouldn’t support a tax reform bill that increased the federal deficit and said he was skeptical about overestimating the potential for economic growth that tax changes alone could create.
But now, Young is defending his vote for the Republican bill—signed into law by President Donald Trump last week—even though several outside analyses say it could cost the federal government upwards of $1.5 trillion over a decade. Indiana’s senior senator, Joe Donnelly, a Democrat, voted against the bill.
Young said he believes the tax bill “is going to give a major boost to our economy, creating an environment that’s ripe for jobs and small business growth.”
In a statement to IBJ, Young did not specifically address the bill’s impact on the deficit. Neither did Young’s spokesman when asked specifically about it, speaking instead in generalities.
“In the end, [Young] determined that the economic activity that will be spurred by tax reform, regulatory reform, and other job-boosting policies will lead to greater economic growth, more jobs, and higher wages for the next 10 years and beyond,” said the senator’s spokesman, Jay Kenworthy.
But Young told IBJ in October that “we can’t assume unreasonable rates of economic growth or we’re being fiscally irresponsible. … My own party needs to be realistic with what can be accomplished through tax reform alone.”
He also told IBJ then that he wouldn’t vote for a tax reform bill that would raise the deficit, stating he wasn’t willing to “blow a hole in the budget.”
However, when pressed in October, Young did not say specifically what criteria or analysis he’d use to determine whether the bill increased the deficit. He said then that he would rely on multiple sources and engage experts, including pitting “some economists against one another.”
Young’s spokespeople did not respond to a question about whether Young believed the opinions of several outside groups—including the Tax Foundation, the Joint Committee on Taxation, and the Committee for a Responsible Federal Budget—that the new tax law will raise the deficit from $448 billion on a dynamic basis over a decade to $1.47 trillion on a static basis over a decade. Static scoring does not take into account economic changes that a bill could create, while dynamic scoring tries to take those into consideration in an analysis.
Instead, Kenworthy said “Senator Young consulted with several eminent economists prior to voting for the Senate tax bill.”
And Kenworthy passed along a letter that nine economists and Republican fiscal gurus wrote to Treasury Secretary Steven Mnuchin and was published in the Wall Street Journal. He also included another Wall Street Journal column published by economist Martin Feldstein in support of tax reform.
The letter to Mnuchin states in part that increased growth “would lead to greater taxable income and federal tax revenues, which would reduce the static cost of lost federal tax revenue from the reform.”
And the Feldstein column estimates that national income could rise by $500 billion as a result of the bill.
“That boost in future gross domestic product outweighs the adverse effect of the $1.5 trillion increase in the national debt,” according to Feldstein.
However, Young’s team would not clarify on the record whether the senator accepts the $1.5 trillion national debt figure and had also judged that potential GDP growth outweighed an increase in the federal deficit.
Young’s team maintains that growth over time will keep the U.S. competitive and reduce debt.
Go to Source
Powered by WPeMatico