Economists Skeptical of Trump Tax Plan

In Economy, Taxes On

But a range of economists, both conservative and liberal, are highly skeptical that a tax cut is the cure for what ails the economy. They say Mr. Trump has little opportunity to increase economic growth in the next few years because the economy is already growing about as fast as it can. The government’s focus, they say, should be on raising the economy’s speed limit, for example, by encouraging investments that increase productivity.

Indeed, by some estimates, Mr. Trump’s plan could reduce economic growth — although such estimates necessarily involve a large dollop of guesswork because the administration has provided few details.

“I don’t think any of this should be thought of as increasing short-term growth,” said Douglas Holtz-Eakin, an economist and former director of the Congressional Budget Office who now runs the American Action Forum, a conservative think tank. He said he remained hopeful, however, that congressional Republicans would push for a different set of changes that could improve the nation’s long-term economic prospects.

Mr. Trump has repeatedly promised a large tax cut for individuals and corporations, aimed at stimulating economic growth, emulating the Republican administrations of Ronald Reagan and George W. Bush. In recent interviews, Mr. Trump has told Bloomberg News that “we need a stimulus” and The Economist that “we have to prime the pump.”

But the benefits are likely to be limited, in part because the nation’s economic circumstances are different now than in the early 1980s or the early 2000s. The recession that began in 2007 was long and deep, but it has been followed by one of the longest periods of uninterrupted growth in American history.

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