On Thursday the U.S. Senate delayed until Friday a vote on their version of a Republican inspired tax reform plan, the Tax Cut and Jobs Act, that includes 1.4 trillion in deficit spending tax cuts over a decade and carries with it the elimination of the individual mandate from the Affordable Care Act or Obamacare, requiring Americans to purchase health insurance.
Deficit hawks in the Republican party such as Sen. Bob Corker (R-Tennessee) and Sen. Jeff Flake (R-Arizona) have voiced concerns about the Senate Republican plan to approve 1.4 trillion in deficit spending to fund tax cuts for corporations and Americans with no guarantees that the large tax cut package will generate enough economic growth to offset the widening increase with deficit spending.
Many Senate Republicans that have come out in support of their tax reform plans are skeptical of the static scoring model used by the Congressional Budget Office (CBO) and often claim it doesn’t provide a more comprehensive dynamic score that weighs the longer -term macro effects which the tax cuts could provide across the broader economy which has the potential to boost tax receipts and generate more tax revenue.
A new dynamic macroeconomic analysis of Senate version of the Tax Cut and Jobs Act released yesterday by the Joint Committee on Taxation, which works closely with the Congressional Budget Office (CBO), estimates that Senate tax reform proposal would increase the level of economic output, as measured by GDP, by 0.8 percent on average over a decade, and only increase revenues by $458 billion over the same period.
Meanwhile, the amount of interest on servicing the U.S. national debt is expected to grow to $51 billion over the same budget window, resulting in an aggregate net revenue gain of $407 billion.
The Joint Committee on Taxation reports that on average, employment is projected to increase by 0.6 percent relative to baseline levels during the budget period.
However, when calculating the sunset of the individual tax provisions, which is expected to begin in 2025, the increase in employment is expected to decline.
On Thursday OPEC member countries agreed to amend the Declaration of Cooperation and impose oil production cuts through December 2018 while keeping the window open for further adjustments in June 2018 based on prevailing market conditions and the progress that is made with the rebalancing of the oil market.
Non-OPEC member Russia has agreed to follow through with OPEC’s amended Declaration of Cooperation through 2018 and will report to the OPEC -non- OPEC Conference.
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