Bottom line
Not supported then, still not supported later.
The earlier verdict is preserved: on the official scores of the conference agreement, the plan did not pay for itself over FY2018-2027 T4 T5 T6. CBO's April 2018 estimate, on its own 11-year window with feedback and debt service, also has the act adding to deficits, by about 1,900 billion R1.
Actual FY2018 and FY2019 receipts cannot by themselves prove a tax cut self-financing. They were 3,328.7 and 3,462.2 billion R2, a little below CBO's April 2018 projections. What receipts would have been without the law is never observed, and other policies and the economy changed too.
- Estimate modeled effect of a law
- Projection forecast of a future total
- Observed reported actual total
- Conditional scenario depends on assumed growth
- Derived from estimates arithmetic done here
- Observed minus projection forecast error
Change the evidence focus
Both columns stay on the page. The focused evidence is highlighted, the rest is marked out of focus, and the summary below switches.
Showing all evidence.
The whole reveal in four lines
- Estimate December 2017, conference agreement: JCT -1,456.0 billion conventionally and -1,071.4 billion with feedback over FY2018-2027 T4 T5.
- Estimate April 2018, enacted act: CBO about +1,900 billion of added deficits over FY2018-2028, with feedback and debt service R1.
- Observed Receipts were 3,328.7 billion in FY2018 and 3,462.2 billion in FY2019, below CBO's April 2018 projections by -9.3 and -27.8 billion R2 R1.
- Actual 2018-2019 receipts cannot by themselves prove a tax cut self-financing.
Focus: projected law effect
Estimate Two estimates, two windows, compared side by side and never subtracted.
- JCT, published , FY2018-2027 (10 years)
- -1,071.4 billion budget balance with feedback; feedback offsets 26.4 percent of the conventional cost T5
- CBO, published , FY2018-2028 (11 years)
- about +1,900 billion of added deficits including about 600 billion of debt service; feedback lowers the primary deficit increase by 30.6 percent R1
Both point the same way: after feedback, the law adds to deficits.
Focus: observed receipts
- FY2018 (ended Sep 30, 2018)
- Projection 3,338 versus Observed 3,328.7 billion: error -9.3 billion (-0.28 percent)
- FY2019 (ended Sep 30, 2019)
- Projection 3,490 versus Observed 3,462.2 billion: error -27.8 billion (-0.80 percent)
Nominal receipts rose +133.5 billion from FY2018 to FY2019. That rise cannot by itself prove the tax cut paid for itself: what receipts would have been without the law is not observed R2.
Column 1, frozen at the cutoff
What was knowable on
Only sources published on or before the cutoff (T1 to T7). Every number is a projection against a baseline; no full fiscal year under the law had been completed.
Verdict then Preserved from the earlier analysis
Not supported. On the official scores of the final conference agreement, the plan does not pay for itself over FY2018-2027.
Conference agreement: official scores
- JCT conventional net budget effect, 10 years-1,456.0 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T4
- JCT conventional net budget effect, FY2018-135.7 billion nominal dollars, fiscal year 2018Estimate FY2018; published ; Source T4
- JCT conventional net budget effect, FY2019-280.0 billion nominal dollars, fiscal year 2019Estimate FY2019; published ; Source T4
- JCT conventional effect, FY2018 and FY2019 combined-415.7 billion nominal dollars, 2-year total (-135.7 + -280.0)Derived from estimates FY2018-2019; Source T4
- JCT added revenue from higher output+451 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T5
- JCT added interest from higher rates-66 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T5
- JCT macroeconomic effects, table total+384.6 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T5
- JCT net budget effect with macroeconomic feedback-1,071.4 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T5
Table total governs; the rounded text arithmetic gives -1,071.
- JCT conventional plus macro effects-1,071.4 billion nominal dollars, 10-year total (-1456.0 + 384.6)Derived from estimates FY2018-2027; Source T4 T5
- Share of JCT conventional cost offset by feedback26.4 percent of the 10-year conventional cost (384.6 / 1456.0 x 100)Derived from estimates FY2018-2027; Source T4 T5
- CBO and JCT conventional deficit increase1,455 billion nominal dollars, 10-year totalEstimate FY2018-2027; published ; Source T6
Positive here means a larger deficit, the opposite sign convention from the JCT table.
Senate Finance plan: a different bill, a conditional scenario
Treasury scored the Senate Committee on Finance plan, not the conference agreement, and assumed real growth of about 2.9 percent a year instead of 2.2 percent. These figures are never combined with the conference scores above.
- Treasury static score, Senate Finance plan, current law-1,500 billion nominal dollars, 10-year totalConditional scenario FY2018-2027; published ; Source T1
- Treasury growth revenue if real growth averages 2.9 percent+1,800 billion nominal dollars, 10-year totalConditional scenario FY2018-2027; published ; Source T1
- Treasury net receipts change in that scenario+300 billion nominal dollars, 10-year totalConditional scenario FY2018-2027; published ; Source T1
- Treasury scenario arithmetic, Senate Finance plan+300 billion nominal dollars, 10-year total (-1500 + 1800)Conditional scenario FY2018-2027; Source T1
On the quotation: no source in the packet has Secretary Mnuchin saying the plan would pay for itself. In April he said an earlier blueprint would be paid for by growth and by cutting deductions, and that Treasury could pay for most of the plan T7.
Column 2, later evidence
What later CBO projections and Treasury receipts establish
CBO estimate and projections published R1. Observed fiscal-year receipts published R2.
Verdict now With later evidence
Still not supported. CBO's April 2018 estimate, which includes economic feedback and debt service, has the act adding about 1,900 billion to deficits over FY2018-2028. Observed FY2018 and FY2019 receipts came in slightly below CBO's April 2018 projections. Higher nominal receipts do not show the law paid for itself.
Projected law effect: CBO, 11 years, FY2018-2028
A new estimate on a different window, with macroeconomic feedback and all debt service. It is compared with the 10-year JCT figures, never subtracted from them.
- CBO: act's increase in total deficit, with feedback and debt service+1,900 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO: primary deficit increase, with feedback+1,300 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO: debt-service increase, with feedback+600 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO primary plus debt service, with feedback+1,900 billion nominal dollars, 11-year total (1300 + 600)Derived from estimates FY2018-2028; Source R1
- CBO: primary deficit increase, before feedback+1,800 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO: debt-service increase, before feedback+450 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO primary plus debt service, before feedback (sum not stated by CBO)+2,250 billion nominal dollars, 11-year total (1800 + 450)Derived from estimates FY2018-2028; Source R1
- CBO: feedback lowers the primary deficit by550 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO: feedback raises debt service by+100 billion nominal dollars, 11-year totalEstimate FY2018-2028; published ; Source R1
- CBO feedback, net change in deficit-450 billion nominal dollars, 11-year total (-550 + 100)Derived from estimates FY2018-2028; Source R1
- Share of CBO pre-feedback primary deficit offset by feedback30.6 percent of the 11-year pre-feedback primary deficit increase (550 / 1800 x 100)Derived from estimates FY2018-2028; Source R1
- Gap: stated 1,300 minus (1,800 - 550)50 billion nominal dollars, 11-year total (1300 - (1800 - 550))Derived from estimates FY2018-2028; Source R1
CBO's words are rounded ('about', 'roughly'); the gap reflects rounding, not a missing piece.
- Gap: stated 600 minus (450 + 100)50 billion nominal dollars, 11-year total (600 - (450 + 100))Derived from estimates FY2018-2028; Source R1
Receipts: projected in April 2018, observed later
Totals for all federal receipts under every law in force. They are not effects of the tax law.
- CBO April 2018: actual FY2017 revenues3,316 billion nominal dollars, fiscal year totalObserved FY2017; published ; Source R1
- CBO April 2018 projection: FY2018 revenues3,338 billion nominal dollars, fiscal year totalProjection FY2018; published ; Source R1
- Treasury: observed total budget receipts, FY20183,328.7 billion nominal dollars, fiscal year totalObserved FY2018; published ; Source R2
- FY2018 forecast error: observed minus CBO April 2018 projection-9.3 billion nominal dollars, fiscal year 2018 (3328.7 - 3338)Observed minus projection FY2018; Source R2 R1
- FY2018 forecast error, percent of projection-0.28 percent of projected FY2018 revenues (-9.3 / 3338 x 100)Observed minus projection FY2018; Source R2 R1
- CBO April 2018 projection: FY2019 revenues3,490 billion nominal dollars, fiscal year totalProjection FY2019; published ; Source R1
- Treasury: observed total budget receipts, FY20193,462.2 billion nominal dollars, fiscal year totalObserved FY2019; published ; Source R2
- FY2019 forecast error: observed minus CBO April 2018 projection-27.8 billion nominal dollars, fiscal year 2019 (3462.2 - 3490)Observed minus projection FY2019; Source R2 R1
- FY2019 forecast error, percent of projection-0.80 percent of projected FY2019 revenues (-27.8 / 3490 x 100)Observed minus projection FY2019; Source R2 R1
- Observed nominal change in receipts, FY2018 to FY2019+133.5 billion nominal dollars, year-over-year change (3462.2 - 3328.7)Observed FY2018 to FY2019; Source R2
- Observed nominal change, percent+4.0 percent of FY2018 observed receipts (133.5 / 3328.7 x 100)Observed FY2018 to FY2019; Source R2
- Nominal change, FY2017 (CBO actual) to FY2018 (Treasury observed)+12.7 billion nominal dollars, year-over-year change (3328.7 - 3316)Observed FY2017 to FY2018; Source R1 R2
Cross-source: a CBO-reported FY2017 actual against a Treasury FY2018 figure from a different document and vintage. Indicative only.
- CBO: actual FY2017 revenues, share of GDP17.3 percent of GDPObserved FY2017; published ; Source R1
- CBO projection: FY2018 revenues, share of GDP16.6 percent of GDPProjection FY2018; published ; Source R1
- CBO projection: FY2019 revenues, share of GDP16.5 percent of GDPProjection FY2019; published ; Source R1
Actual FY2018 and FY2019 receipts cannot by themselves prove a tax cut self-financing. The no-law counterfactual is unobserved, and other policies and the economy changed in the same years.
Publication dates, fiscal years and estimate windows
Publication dates are when a document appeared. Fiscal years run October 1 to September 30. Each mark links to its source.
Why the 10-year and 11-year estimates are compared, not subtracted
| Estimate | Published | Window | Feedback | Debt service | Figure |
|---|---|---|---|---|---|
| JCT conventional T4 Estimate | FY2018-2027, 10 years | No | Excluded | -1,456.0 balance | |
| JCT macroeconomic T5 Estimate | FY2018-2027, 10 years | Yes | Only -66 from higher rates | -1,071.4 balance | |
| CBO letter T6 Estimate | FY2018-2027, 10 years | No | Excluded | +1,455 deficit | |
| CBO appendix R1 Estimate | FY2018-2028, 11 years | Yes | Included, about 600 | about +1,900 deficit |
- Different windows: JCT and the December CBO letter cover 10 fiscal years (FY2018-2027); the April 2018 CBO appendix covers 11 (FY2018-2028).
- Different scope of interest: the JCT conventional score excludes debt service; the JCT macro table includes only about 66 billion of interest from higher rates; CBO's 1,900 includes all projected debt service, about 600 billion.
- Different baselines and vintages: JCT's December 2017 present-law baseline versus CBO's April 2018 baseline.
- Different sign conventions: JCT reports a lower budget balance as negative; CBO reports the deficit increase as a positive magnitude.
What can be compared: direction, and each estimate's own feedback share. JCT's feedback offsets 26.4 percent of its conventional cost T4 T5; CBO's feedback lowers its pre-feedback primary deficit increase by 30.6 percent R1. Each share is computed inside one estimate.
Receipts: forward projection versus observation
CBO's April 2018 projections for FY2018 and FY2019 were forward projections made before either year was complete; they already included the act. Treasury's Financial Report gives total budget receipts (cash basis) for completed fiscal years FY2018 and FY2019.
| Fiscal year | CBO projection | Observed | Observed minus projected | Percent |
|---|---|---|---|---|
| FY2017 | Actual, as reported by CBO | 3,316 R1 | Not applicable | Not applicable |
| FY2018 | 3,338 R1 | 3,328.7 R2 | -9.3 | -0.28 |
| FY2019 | 3,490 R1 | 3,462.2 R2 | -27.8 | -0.80 |
CBO 'revenues' in its budget tables and Treasury 'total budget receipts' both measure fiscal-year federal budget receipts; the packet does not reconcile them line by line, so small definitional or vintage differences cannot be ruled out.
A forecast error measures how far the total came in from a projection that already assumed the act. It is not an estimate of the act's effect.
Actual FY2018 and FY2019 receipts cannot by themselves prove that a tax cut paid for itself. The no-law counterfactual is unobserved, and other policies and the economy changed in the same years, so a rise in nominal receipts does not isolate the effect of a single law.
What remains unknown
- What FY2018 and FY2019 receipts would have been without the act; this is modeled, never observed.
- How much of the FY2018 to FY2019 nominal rise came from inflation, income growth and employment that would have occurred anyway.
- Effects of other enacted policies and economic conditions in the same years, which a total receipts figure does not separate.
- Timing shifts: expensing and phase-ins move receipts between years (Treasury's own memo says gains come mainly in later years), so two early years cover a small part of a 10 or 11 year window.
- Debt-service effects, which depend on interest rates and on the counterfactual debt path.
- Any definitional or vintage differences between CBO revenues and Treasury Financial Report receipts.
- Receipts after FY2019, which are outside this packet.
Different bills, different populations
- Treasury's December 11, 2017 memo scored the Senate Committee on Finance plan, not the conference agreement; it only asserts the House plan would not be materially different.
- JCT and CBO scored the conference agreement for H.R. 1, the bill that became the act.
- CBO's April 2018 appendix estimates the enacted act within its own April 2018 baseline.
- Total federal budget receipts reflect every law in force, the economy, inflation and timing, not one law.
Sources
Knowable by December 22, 2017
- T7 Steven Mnuchin defends President Trump's tax-cut plan. CBS This Morning, published .
- T3 Remarks by Treasury Secretary Steven T. Mnuchin before the International Franchise Association’s Franchise Expo West. U.S. Department of the Treasury, published .
- 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, published . archived copy.
- T2 Treasury Releases Analysis of Revenue Estimates Associated with Administration Economic Policies. U.S. Department of the Treasury, published .
- T6 Cost Estimate for the Conference Agreement on H.R. 1. Congressional Budget Office, published . archived copy.
- T4 Estimated Budget Effects of the Conference Agreement for H.R. 1 JCX-67-17. Joint Committee on Taxation, published .
- T5 Macroeconomic Analysis of the Conference Agreement for H.R. 1 JCX-69-17. Joint Committee on Taxation, published .
Later
- R1 The Budget and Economic Outlook: 2018 to 2028. Congressional Budget Office, published . archived copy.
- R2 Financial Statements of the United States Government for the Fiscal Years Ended September 30 2019 and 2018. Bureau of the Fiscal Service, published .