The Joint Committee on Taxation just released its macroeconomic analysis of the Senate tax plan. On the whole, it estimates a total of $400 billion in increased revenue from growth, which offsets $1.4 trillion in additional deficits, bringing revenue loss to around $1 trillion.
The report estimates that the proposed plan would lead a 0.8 percent rise in GDP relative to the current framework. The committee predicts that the increase in labor supply that would contribute to this will decline or even reverse after the individual cuts sunset in 2025.
Would making these cuts permanent be the best solution? While the cuts seem to spur some GDP growth, they also lead to massive deficits. Over the next ten years, the estimates show annual ratios such as $246 billion in revenue loss to $39 billion in additional revenue from growth. It continues along these lines until the sunset of individual rate cuts.
After this, the plan is in the black; however, it seems unlikely to me that Congress would leave a vote-loser like a pending tax hike on the books without extending it, which would dig the deficit hole once more.
It is difficult to see this as anything but extremely fiscally irresponsible.