Does the tax plan pay for itself over fiscal years 2018 to 2027?

What the Secretary actually said, by date

A search of every packet text for "pay for itself" or "pays for itself" returns 0 matches. His closest firsthand words date from April 2017 and concern an earlier blueprint, months before the conference agreement existed.

1. April 27, 2017. CBS This Morning interview transcript (firsthand) T7

   this is going to be paid for by economic growth and by a reduction of many, many deductions in special interest.

   Refers to: April 2017 administration blueprint, before the Senate Finance plan or conference bill existed. Says the blueprint would be paid for by growth and by eliminating deductions, not by growth alone.

2. April 27, 2017. same interview, answer on deficits T7

   we'll be comfortable that we can pay for most of the plan

   Refers to: April 2017 administration blueprint. Qualifies the claim to most of the plan.

3. November 2, 2017. remarks as prepared for delivery; not evidence of exact spoken words T3

   An additional one percent of growth adds over two trillion dollar of revenues to pay down our debt.

   Refers to: general growth claim; no plan, baseline or period specified. A rule of thumb about growth, not a score of any bill.

4. December 11, 2017. quotation in Treasury press release T2

   We are pleased to release an analysis demonstrating the revenue impact of the Administration’s economic agenda. The Administration has been focused on tax reform and broader economic policies to stimulate growth, which will generate significant long-term revenue for the government

   Refers to: the Treasury Office of Tax Policy memo on the Senate Finance plan and broader agenda. His quoted words say growth will generate significant revenue; the $1.8 trillion figure is in the release body, and neither says the plan pays for itself.

5. December 11, 2017. Treasury memo, Office of Tax Policy T1

   Models the Senate Finance plan, not the conference agreement. Not a statement by the Secretary.

6. December 15, 2017. CBO cost estimate, conference agreement T6
7. December 18, 2017. JCT conventional estimate, conference agreement T4
8. December 22, 2017. JCT macroeconomic analysis, conference agreement T5

Two different questions: an executive scenario and a legislative score

The two documents share a "0.7" that means different things. Treasury's is 0.7 ppT1 more growth every year for ten years. JCT's is a GDP level about 0.7%T5 higher on average. They are not the same assumption, and Treasury's scenario does not describe the bill that passed conference.

Ten-year amounts side by side

Billions of dollars summed over FY2018-2027. Left of zero means less revenue or a larger deficit. Treasury's bars measure receipts for a different bill under an assumed growth path; the conference bars are official estimates. They are shown together for scale, not as one model.

Test a hypothetical: how much growth revenue would close the gap?

Choose a hypothetical amount of growth-driven revenue. The tester adds it to JCT's fixed conventional score of -$1,456.0BT4 and subtracts JCT's interest cost of $66BT5. It never changes the recorded JCT result of -$1,071.4BT5.

Reconciling the conference numbers

Published totals versus rounded arithmetic

JCX-67-17's ten annual cells sum to -$1,453.9BT4, but the published 2018-2027 total is -$1,456.0BT4; the five-year cells sum to -$1,073.6BT4 against a published -$1,074.0BT4. JCT notes that details may not add due to rounding, so the published totals are used throughout.

In JCX-69-17 the text rounds the macroeconomic effect to +$385BT5 (+$451BT5 of revenue less $66BT5 of interest); Table 1 shows +$384.6BT5, giving a net of -$1,071.4BT5. The rounded text arithmetic gives -$1,071.0BT5. Same model, different rounding.

Revenue versus net budget effect

CBO reports a revenue reduction of about $1,649BT6 and an outlay reduction of $194BT6, so the deficit rises by $1,455BT6. JCT's -$1,456.0BT4 is a net budget effect that includes outlay effects; it is not a pure receipts loss and is not the same figure as CBO's revenue-only reduction. The $1BT6 magnitude gap between JCT's $1,456.0BT4 and CBO's $1,455BT6 is not explained in the packet. Excluding $27BT6 of off-budget payroll-tax revenue, on-budget deficits rise $1,482BT6.

Treasury's own arithmetic

-$1,500BT1 static plus +$1,800BT1 growth revenue equals +$300BT1. Treasury also cites JCT's +$408BT1 of growth receipts for the Senate Finance plan, which leaves about -$1,000BT1 on a current-law basis. Treasury's current-policy static score of about -$1,000BT1 assumes expiring provisions are renewed and is not comparable with JCT and CBO's current-law scores, so it is excluded.

Treasury expects approximately half of this 0.7% increase in growth to come from changes to corporate taxation. We expect the other half to come from changes to pass-through taxation³ and individual tax reform, as well as from a combination of regulatory reform, infrastructure development, and welfare reform as proposed in the Administration’s Fiscal Year 2018 budget. T1

These increased receipts are primarily collected in the last five years, as full expensing creates growth in early years but results in a deferral of collection of taxes. T1

The two calls

Conference agreement: not supported

Not supported. On the official scores of the final conference agreement, the plan does not pay for itself over FY2018-2027. Conventionally JCT scores it at -$1,456.0BT4. Its macroeconomic analysis finds +$451BT5 of revenue from higher output, partly offset by $66BT5 of extra interest on the debt, a table net of +$384.6BT5. The result with feedback is still -$1,071.4BT5: growth offsets about 26.4%T5 of the conventional cost, or 31.0%T5 counting revenue alone before interest. CBO and JCT's conventional estimate shows revenues -$1,649BT6, outlays -$194BT6 and a deficit increase of $1,455BT6, and does not include macroeconomic feedback.

Treasury scenario: conditional, and about a different bill

Conditional. Treasury's memo shows receipts exceeding the static loss only for the Senate Finance plan and only if real growth averages about 2.9% a year instead of 2.2%. T1 Its high-growth case (+0.7 ppT1 a year) yields +$1,800BT1 of growth revenue against a -$1,500BT1 current-law static score, a net of +$300BT1 in receipts. Treasury attributes about half of that extra growth to non-corporate changes and to regulatory reform, infrastructure and welfare reform proposals that are not in the tax bill. Its own lower-growth sensitivity (+0.35 ppT1 a year, about +$1,000BT1) implies a net of about -$500BT1. The memo omits interest costs, gives no annual path and does not score the conference agreement. The Secretary's release restates the +$1,800BT2 figure without the conditions.

Scores are not receipts

Every dollar figure is a projected change against a baseline projection. None is an observed total of federal receipts, and no FY2018-2027 receipts had been observed as of December 22, 2017. Treasury's phrase 'total receipts ... increasing by $300 billion' means receipts above the baseline projection, not observed receipts. T1 T5

What the packet does not contain

• A Treasury score of the final conference agreement; the memo covers the Senate Finance plan and only asserts the House plan would not be materially different.
• Treasury's year-by-year receipts path, model documentation and assumptions beyond one page; the memo says gains come primarily in the last five years but gives no annual figures.
• Interest-cost (debt service) effects in the Treasury scenario.
• How much of Treasury's assumed growth comes from the tax bill alone rather than from regulatory, infrastructure and welfare proposals.
• JCT's year-by-year macroeconomic estimates; the packet carries only Table 1 totals for FY2018-2027.
• The provision-level outlay effects inside JCT's net total, and CBO's full Tables 1 and 2.
• Any CBO macroeconomic (dynamic) estimate of the conference agreement.
• Effects after FY2027, and the provisions behind the FY2026-2027 swing in JCT's annual path.
• Observed receipts: as of December 22, 2017 no FY2018-2027 outcomes exist; all figures are projections against baselines.
• Exact spoken wording of the November 2, 2017 remarks (packet text is as prepared for delivery), and any statement by the Secretary on the JCT or CBO conference scores.

Numeric source ledger

All dollar amounts are billions of nominal dollars summed over FY2018-2027 unless stated. JCT tables report negative numbers for effects that reduce the budget balance; CBO reports magnitudes in words (revenue reduction, outlay decrease, deficit increase), which this file converts to explicit signs per figure. Comparisons use current-law (JCT: present-law) baselines. Treasury's current-policy static score is recorded but excluded from the comparison.

Sources and access notes

T1. Analysis of Growth and Revenue Estimates Based on the U.S. Senate Committee on Finance Tax Reform Plan

U.S. Treasury Office of Tax Policy, December 11, 2017. Official source. Access copy.
Access note: Original Treasury link redirects; original one-page PDF archived. Packet file: treasury.txt.

T2. Treasury Releases Analysis of Revenue Estimates Associated with Administration Economic Policies

U.S. Department of the Treasury, December 11, 2017. Official source.
Access note: Official dated release including direct Secretary quotation. Packet file: treasury.txt.

T3. Remarks by Treasury Secretary Steven T. Mnuchin before the International Franchise Association’s Franchise Expo West

U.S. Department of the Treasury, November 2, 2017. Official source.
Access note: As prepared for delivery; not evidence of exact spoken wording. Packet file: treasury.txt.

T4. Estimated Budget Effects of the Conference Agreement for H.R. 1 JCX-67-17

Joint Committee on Taxation, December 18, 2017. Official source.
Access note: Table net total on PDF page 8. Packet file: scores.txt.

T5. Macroeconomic Analysis of the Conference Agreement for H.R. 1 JCX-69-17

Joint Committee on Taxation, December 22, 2017. Official source.
Access note: Introduction and budgetary effects PDF pages 3 and 7 to 9. Packet file: scores.txt.

T6. Cost Estimate for the Conference Agreement on H.R. 1

Congressional Budget Office, December 15, 2017. Official source. Access copy.
Access note: Original cbo.gov protected by HTTP 403; original signed CBO PDF retrieved. Packet file: scores.txt.

T7. Steven Mnuchin defends President Trump's tax-cut plan

CBS This Morning, April 27, 2017. Official source.
Access note: Firsthand interview transcript; earlier blueprint not final conference bill; quote both paid for and most qualifications. Packet file: interview.txt.