U.S. House Rep. Emanuel Cleaver, who represents Kansas City and Missouri’s 5th District, didn’t pull any punches in a late-October Twitter thread on last year’s GOP-led tax cuts.
In the thread, Cleaver refers to the 2017 Tax Cuts and Jobs Act as the "#GopTaxScam," blames the cuts for this year’s national deficit spike and questions the Trump administration’s assertion that the cuts will make up for resulting revenue losses by stimulating economic growth.
"What it (the 2017 tax bill) has also done is increase the national deficit by more than $100 billion. I guess tax cuts do not, in fact, pay for themselves," Cleaver wrote in one of the tweets.
Is it true that the Trump tax cuts are the cause for the recent spike in the national deficit? And what about Cleaver’s claim that the cuts won’t pay for themselves?
With the help of some experts and budget statistics, we tried to make cents — er, sense — of whether Cleaver’s statement is accurate.
There are only two ways for the national deficit to increase: increased government spending, or decreased government revenue, typically from a decline in tax collection.
Cleaver’s tweet is paraphrasing a linked New York Times article discussing the deficit spike, which in turn links to a joint statement from U.S. Treasury Secretary Steve Mnuchin and Office of Management and Budget Director Mick Mulvaney. In the statement, the Treasury Department confirms that the national deficit for fiscal year 2018 is "$113 billion more than in the prior fiscal year." So Cleaver is pretty close on the number.
What Cleaver and the Treasury don’t agree on, though, is the reason for the increased deficit.
Whereas Cleaver attributes this directly to the tax cuts, the Treasury does not explicitly name a reason. The statement does, however, acknowledge that a year-over-year increase in revenues was "partially offset by lower net corporation income tax receipts," a key effect of the Tax Cuts and Jobs Act. In fiscal year 2018, revenues were up $14 billion, and expenditures were up $127 billion, according to a table in the statement.
In previous communications, like this press memo from last December, the Treasury has promoted analyses showing that the cuts will ultimately have a net positive effect on the economy — essentially arguing that the cuts will "pay for themselves." At the time, one economist told Bloomberg that the document should be taken as "advocacy rather than academic work."
So Cleaver and the Treasury both acknowledge that the deficit is up this year, but differ on the reason as well as whether the cuts will pay themselves off.
First, we wanted to know — are the tax cuts the main reason for this year’s rise in the deficit?
"Oh yeah. Totally," said Stan Collender, former Democratic staffer for both the House and Senate Budget Committees and author of The Guide to the Federal Budget. "Revenues would have come in about $200 billion higher if not for (the cuts). You could say that the deficit would have gone down."
Marc Goldwein, Senior Vice President for the Committee for a Responsible Federal Budget, agreed. "Absence the tax cut, the deficit would have been about $100 billion lower."
Collender said that while government spending did increase in 2018, this spending caused a much smaller increase to the national debt than revenue loss by the tax cuts.
What about that whole "pay for themselves" claim being pushed by the Treasury and scorned by Cleaver? There was a consensus among the four tax policy experts PolitiFact talked to for this piece: they won’t.
"There is no reputable, long-term estimate showing that they (the cuts) will pay for themselves," said Daniel Shaviro, a professor of taxation at New York University.
A report from the nonpartisan Congressional Budget Office estimating the effects of the new tax law and spending deals passed this year featured a bar graph showing the tax laws adding $164 billion to the deficit.
Cleaver’s tweet includes two claims: one, that the tax bill is the reason for the national deficit increase to the tune of more than $100 billion, and two, that the tax cuts do not, in fact, pay for themselves.
As for the first claim, the Congressional Budget Office has cited the Tax Cuts and Jobs Act for adding $164 billion to this year’s deficit. Additionally, the four tax policy experts PolitiFact interviewed said that the cuts were responsible for adding at least $100 billion to the deficit.
As for the second claim, according to testimony from tax policy professionals, as well as previous PolitiFact reporting, there’s little to support claims that tax cuts eventually pay for themselves.
For these reasons, we rate this statement True.