The real story: Republican pro-growth policies have successfully restored the economy and made it strong. People are back at work and earning higher wages, leading to greater revenues to reduce the deficit.
A $705 BILLION DROP IN THE PROJECTED DEFICIT THANKS TO PRO-GROWTH TAX REFORM
Thanks to economic growth, CBO sees a $705 billion drop in its deficit projections from August 2019.[i]
REVENUES INCREASING BECAUSE MORE PEOPLE ARE WORKING
CBO’s projection for payroll tax revenue shot up $106 billion from just last August, likely due to more jobs for more workers in the workforce.
MORE PEOPLE IN THEIR PRIME WORKING YEARS ARE JOINING THE WORKFORCE AT RECORD LEVELS:
Americans no longer have to sit on the sidelines and hope for a job offer to come through, thanks to the “cumulative benefits of sustained economic growth, which encourages additional workers to enter and existing workers to stay in the labor force.”
WAGES AND SALARIES PROJECTED TO RISE FROM LAST YEAR AT THE HIGHEST RATE SINCE THE EARLY 2000s:
CBO projects increasingly stronger wages and salaries in private industry while other measures of compensation pick up.[ii]
GDP PROJECTED TO DECLINE IF TCJA’S TAX CUTS EXPIRE
Lower GDP and slower GDP growth will result from allowing the expiration of TCJA’s individual tax cuts and the phaseout of bonus depreciation, according to CBO’s projections.[iii] CBO even explicitly notes that this projection would change if those provisions are made permanent.
BOTTOM LINE: CBO’s report shows that America’s economy is growing and creating jobs while generating greater revenue, and the only way forward is greater pro-growth policies.
[i] CBO, “Budget and Economic Outlook: 2020-2030” January 2020, Appendix A, Table A-1, p. 64
[ii] “CBO expects employers to continue to bid up the price of labor to recruit and retain workers, putting further upward pressure on wages and salaries and other forms of labor compensation in the coming years. In CBO’s projections, the annual increase in the employment cost index for wages and salaries of workers in private industry rises from 3.1 percent in 2019 to 3.6 percent in 2020, its highest rate since the early 2000s, and then averages 3.5 percent from 2021 to 2024. Other measures of labor compensation, such as the average hourly earnings of production and nonsupervisory workers in private industry, are also expected to pick up further in the next few years.
[iii] “[T]he scheduled expiration of certain provisions of the 2017 tax act—including the expiration of most of the provisions affecting individual income taxes at the end of 2025 and the phaseout of bonus depreciation by the end of 2026—is projected to slow real GDP growth and to lower real GDP in relation to its potential in those years. Changes in law that prevented certain provisions of the 2017 tax act from expiring would affect CBO’s forecast and cause the agency’s economic projections to change.