Extend the Tax Cuts? Sure, but Don’t Expect ‘Big, Beautiful’ Growth – The American Spectator | USA News and PoliticsThe American Spectator

President Donald Trump and many of his allies in Congress are making grand claims about the economic growth they say will result from the recently proposed “One Big Beautiful Bill.” Trump has accused critics of not understanding the budget proposal, “especially the tremendous GROWTH that is coming.” A closer examination of the economic realities involved reveals that these claims are dramatically overstated.
I have no objections on principles to extending the expiring provisions of the 2017 Tax Cuts and Jobs Act. Allowing these cuts to expire would deliver some measure of pain to the economy and add to our troubles. Tax hikes at a time when individuals and businesses are expecting tax stability would undoubtedly depress investment, employment, and overall economic confidence. Americans are already getting a huge tax hike because of Trump’s tariffs.
However, making a sound case for maintaining the current tax structure is fundamentally different from making the case that it will bring about substantial new growth. It’s largely a defensive move. Realistically, the economic boost will be modest at best.
In fact, the administration and congressional supporters of this bill admit that much without realizing it. On the Senate side, lawmakers argue that the fiscal cost of extending the 2017 tax cuts should be measured against today’s tax code rather than against the code to which we would revert if the cuts automatically expire. They argue that assuming the cuts will be extended reflects the common expectation among taxpayers and markets.
But if markets already expect extensions, then making the tax cuts permanent cannot generate significant additional economic growth. The growth that can be achieved by these tax cuts has largely been realized. Merely continuing with lower rates doesn’t unleash many new incentives or productivity.
In addition, the budget legislation does lots more than extend the 2017 tax cuts. In fact, about 25 percent of the bill consists of different ta…