Posted on 06/06/2025 5:37:54 PM PDT by NoLibZone
According to the Congressional Budget Office (CBO), President Donald Trump's "big, beautiful bill" would cut taxes by $3.7 trillion while raising deficits by $2.4 trillion over a decade.
The CBO makes projections based on information provided by Congress when considering legislation that includes spending and taxes. But is it always right?
Not according to Larry Kudlow. During his show on Thursday, Kudlow outlined how the Congressional Budget Office missed projections related to the 2017 Tax Cut and Jobs Act, Trump’s signature bill in his first term.
"The current cost of the 2017 tax cuts should be zero. Why should they be zero? Because they actually produced more revenues, $2.3 trillion more revenues than CBO estimated over the past seven years," Kudlow said.
He added, "So current policy shouldn't be scored. The deficit impact should be neutral. Now, I believe there will be a growth dividend which may be debatable, but if I plug in 3% growth instead of the CBO's lowball 1.8%, then I actually get $4 trillion worth of additional revenues for purposes of deficit reduction."
Kudlow continued, offering up some caveats, but noting the CBO’s estimates rely on GDP of 1.8%, which is a low figure.
(Excerpt) Read more at foxbusiness.com ...
Reagan's tax cuts increased revenues.
The problem is Congress spent it all. And then some.
Trump’s tax cuts will do the same thing. It will spur economic activity which will increase revenue to the Treasury.
And then the Uniparty will spend that money. And then some.
Class dismissed.
Why do we even have a CBO when our country will be $40 trillion in debt in a couple years? The GOPe/uniparty/dems will spend every dime of ours they can as they pay no mind, you’d think that the redistribution of wealth was in the Constitution or something they way they steal from us at will.
The CBO implies that tax cuts result in revenue decreases.
Reagan’s tax cuts increased revenues.
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Not particularly correct. If you do your own investigation into the 1970s and 1980s you will find that the tax cuts of the 1980s did essentially nothing WHEN POPULATION GAIN AND INFLATION IS PROPERLY IN THE MATH. Even with mildly lower rates, of course you get more revenue if there are more people paying taxes at yearly inflation increases.
Now that being said, the CBO should not be scoring the extension of the 2017 tax cuts against expiration. It should be scoring them against current law, which includes them. They do not expire until 2017 (and this is because the GOP could not get them to pass at all without the expiration date).
So, the 2017 tax level should score as zero. As for Kudlow stating that tax revenues rose over the 8 years, well of course they did. Biden had 9% inflation. Salaries increased via inflation so of course more taxes were paid.
err . . . they do not expire until Sept this year
So start paying down the debt. Priority one.
We are facing $40 Trillion debt. $2.4 Trillion deficit. $175 Trillion unfunded liability. 122% debt to GDP. No balanced budgets. Printing money whenever they want. Increasing “debt ceiling” every year. Congress gave DOGE the ginger. Our credit rating is falling. China owns our debt. This is fiscal insanity by the uniparty.
Why aren’t these people fired, if not brought up on charges of fraud, for getting things so wrong? They clearly can’t do their jobs, and might be criminally influencing elections by knowingly using their official positions to spread known falsehoods while acting in the official capacity.
Great post.
I watched this man some: Louis Rukeyser
American journalist and columnist.
Ok but where is GDP growth included in your calc? You ASSUME that growth comes from population growth it appears, but that seems a very NARROW view of what happened. So the lower taxes didn’t stir economic output even though I lived through it. Damn, it my lying eyes again.
It doesn’t have to be my calculations. You can do them yourself. The 1970s had a certain level of tax rate and generated a certain amount of revenue. It also had inflation. And it also had GDP growth. Then the 80’s
Arrived.
The point is that shallow analysis finds increased tax revenue in an environment with lower tax rates. Correct analysis examines additional variables. I happened to go through this somewhat recently and found that in the 1980s, inflation was in decline after Volker spiked interest rates, but it still had a residual value and an average of about 4.5% per year. That explained most of the increase in tax revenue.
Labor unions had pay contracts with text that specifically said it was tied to the CPI. This became a vicious circle and was one of the reasons why Paul Volker how to spike interest rates so sharply. But that inflation also generated more tax revenue because pay was higher each year. Even with the lower rate, a modestly lower rate, you got more text revenue because salaries were higher. And there were more people paying it.
As for the question of where does GDP growth come from, the equation is well known and I think I may have even put it in this thread. Consumption, government spending, investment, and the net of exports and imports. That’s the equation. A lot of people don’t like the equation but that’s the equation that defines GDP. If you have population gain you will have an increase in consumption. You don’t have an inflation impact on that number because it is supposed to be inflation adjusted. The consumption increases if there are more people buying stuff, and government spending tends to go up to serve more people if they exist beyond the fact that Congress will always try to buy votes with increased spending.
Again, there are more variables than just one and some of those variables are more definitive than just tax rates.
Predicting the future is not reality then or now. The CBO’s record of “accuracy” is laughable as they have to make too many assumptions based on “historic” and incomplete data. It’s just like picking stocks in that history is no predictor of the future except that human nature never changes, but most everything else does in ways no one can truly predict.
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