>The Trump administration insists that the OBBB would reduce borrowing. But that is true only if you assume that tax cuts during Mr Trump’s first term, which were due to expire at the end of this year, are already permanent (even though they were costed as temporary measures the first time around). Preliminary analysis by the Committee for a Responsible Federal Budget (CRFB), a think-tank, estimates that the House version of the bill would add $3trn to America’s public debt over the next ten years, using normal accounting methods. The Senate version, which among other changes proposes higher relief from state and local taxes, is even costlier (see chart 1).
>Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s GDP by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.
>Despite Mr Trump’s talk of helping the least well-off, the bill’s biggest beneficiaries would be the rich. Analysis of the House version by scholars at the University of Pennsylvania suggests that Americans earning less than $16,999 would lose about $820 a year—a 5.7% reduction in median income for that group. The richest 0.1%, earning more than $4.3m, would gain $390,000, a 2.8% increase.
>One way the House and Senate bills cut spending is to cut programmes that benefit poorer Americans. Food stamps or, to give the programme its full title, the Supplemental Nutrition Assistance Programme (SNAP), is one such programme. Analysis of the House bill by the Commonwealth Fund, a think-tank, shows that this would particularly affect some states where Mr Trump won very high shares of the vote, such as Mississippi.
>The biggest change to social policy, though, is in health insurance. Through a mixture of tax changes and cuts to Medicaid, health insurance for the poor, the number of Americans without health insurance will rise. The Congressional Budget Office estimates that the House bill would increase the number of uninsured Americans by nearly 12m by 2034.
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https://preview.redd.it/cbcpf449ocaf1.jpeg?width=865&format=pjpg&auto=webp&s=9e78d8477a50ba25f47fcc5849a9db847a36c764
>The Trump administration insists that the OBBB would reduce borrowing. But that is true only if you assume that tax cuts during Mr Trump’s first term, which were due to expire at the end of this year, are already permanent (even though they were costed as temporary measures the first time around). Preliminary analysis by the Committee for a Responsible Federal Budget (CRFB), a think-tank, estimates that the House version of the bill would add $3trn to America’s public debt over the next ten years, using normal accounting methods. The Senate version, which among other changes proposes higher relief from state and local taxes, is even costlier (see chart 1).
https://preview.redd.it/wsa4hd9aocaf1.jpeg?width=970&format=pjpg&auto=webp&s=58610d1690c3bce65a82e758973394ab7aa429f2
https://preview.redd.it/ty0dt6xaocaf1.jpeg?width=949&format=pjpg&auto=webp&s=e2787594fbd814d91deecb6b4aad1a2f118f6d96
>Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s GDP by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.
https://preview.redd.it/z1wrcjlbocaf1.jpeg?width=830&format=pjpg&auto=webp&s=8a9322c951c47df9fe897e331240822dd912bbf6
https://preview.redd.it/4jczaq7cocaf1.jpeg?width=803&format=pjpg&auto=webp&s=1e00ce9382377d9f00ac376fa9fe7487d0ea0371
https://preview.redd.it/ilhoay2docaf1.jpeg?width=1783&format=pjpg&auto=webp&s=a48e51000a06fa4fc34b4112a2bcc780e3844b5c
>Despite Mr Trump’s talk of helping the least well-off, the bill’s biggest beneficiaries would be the rich. Analysis of the House version by scholars at the University of Pennsylvania suggests that Americans earning less than $16,999 would lose about $820 a year—a 5.7% reduction in median income for that group. The richest 0.1%, earning more than $4.3m, would gain $390,000, a 2.8% increase.
https://preview.redd.it/nhhqj7sdocaf1.jpeg?width=847&format=pjpg&auto=webp&s=426ea10edb4ebda7cc284178453b4810870fae54
>One way the House and Senate bills cut spending is to cut programmes that benefit poorer Americans. Food stamps or, to give the programme its full title, the Supplemental Nutrition Assistance Programme (SNAP), is one such programme. Analysis of the House bill by the Commonwealth Fund, a think-tank, shows that this would particularly affect some states where Mr Trump won very high shares of the vote, such as Mississippi.
https://preview.redd.it/i8nw7wgeocaf1.jpeg?width=910&format=pjpg&auto=webp&s=a6a35439deffb980e8acf467e7ae3a07d16f3f10
>The biggest change to social policy, though, is in health insurance. Through a mixture of tax changes and cuts to Medicaid, health insurance for the poor, the number of Americans without health insurance will rise. The Congressional Budget Office estimates that the House bill would increase the number of uninsured Americans by nearly 12m by 2034.
https://preview.redd.it/1oocsa2focaf1.jpeg?width=883&format=pjpg&auto=webp&s=db9d980614b8d36d2d4253a0afb06b7b723570d3
https://preview.redd.it/tcuke8rfocaf1.jpeg?width=995&format=pjpg&auto=webp&s=01a22ff852ee246f4e278367060b4d8f8b5e18a3