Trump is counting on economic growth to offset his tax cuts. But his big, beautiful bill likely wouldn't deliver, experts say

President Donald Trump and congressional Republicans are promising that their sweeping tax and spending cuts package will usher in an era of historic economic growth.
'This is going to be jet fuel,' House Speaker Mike Johnson said on NBC's 'Meet the Press' earlier this month. 'The reason we call it the Big, Beautiful Bill is because it is a tremendous pro-growth package entwined in this legislation that is going to make everybody's incomes go up.'
But a multitude of economic experts across the ideological spectrum doubt that's going to happen. In fact, many argue that the Trump agenda megabill that narrowly passed the House last month would provide even less economic oomph than his 2017 Tax Cuts and Jobs Act – and the jury is still out on how much economic growth that earlier tax cut package spurred.
While independent estimates vary somewhat, most find that the House-passed package would only give a small nudge to economic growth and fail to offset its trillions of dollars of tax cuts.
The reason: The 'Big, Beautiful Bill' wouldn't provide substantial long-term corporate tax relief, which drives economic expansion.
The Senate version, a portion of which was released Monday, would make several business tax provisions permanent, which would increase the bill's economic growth potential but also its cost. But the two chambers would still need to hammer out their differences on these and other provisions. And growth estimates for the Senate bill have yet to be released.
The megabill's main focus is to extend the roughly $4 trillion in TCJA individual tax cuts that are set to expire at the end of this year. The House-passed package would also expand some of the measures, such as a four-year enhancement to the child tax credit, and aims to fulfill several of Trump's campaign promises, including temporarily eliminating taxes on tips, overtime and auto loan interest.
On the corporate tax side, the package would restore a tax break from the 2017 package that allowed businesses to fully write off the cost of equipment in the first year it was purchased. The incentive has been phasing out since 2023.
Also, the legislation would once again allow businesses to write off the cost of research and development in the year it was incurred. The TCJA required that companies deduct those expenses over five years, starting in 2022.
The two provisions would expire after 2029.
The bill would also allow companies to immediately deduct the cost of constructing or making improvements to certain types of buildings, including manufacturing plants, through 2028.
These corporate tax breaks would prompt businesses to invest and expand in the next few years, but the incentives are temporary and won't prompt long-term economic growth, said Will McBride, the Tax Foundation's chief economist.
What's missing is the massive business tax break – the permanent reduction of the corporate tax rate from 35% to 20% – contained in the TCJA, which some experts argue drove the economic growth in that package.
According to the right-leaning Tax Foundation, the tax provisions in the House-approved bill would boost the economy 0.8% over about three decades – compared to its estimate of 1.7% for the 2017 bill. Increased revenue from economic growth would offset about 22% of the current bill's tax cuts.
Still, the package would increase the federal budget deficit by $1.7 trillion over 10 years, even taking its roughly $1.5 trillion in spending cuts into account.
'We look at the bill and kind of shrug our shoulders and say, 'You could have done better on growth',' said Daniel Bunn, the foundation's president.
Similarly, the Penn Wharton Budget Model forecasts that the overall House bill would give a 0.4% boost to the economy by 2034, but the deficit would grow by $3.2 trillion over that period. Penn Wharton estimates that the deficit impact would increase when taking the economic effects into account because some lower-income households would reduce their hours worked to requalify for Medicaid coverage and some higher-income people would work less because of their gains from the bill's tax breaks.
The Trump administration argues that these independent analyses are wrong.
'So called 'experts' panning The One, Big, Beautiful Bill, without a smidge of self-awareness, should remember that they made these same exact gloomy predictions about President Trump's tax cuts during his first term,' Kush Desai, a White House spokesman, said in a statement to CNN, adding that the TCJA 'helped usher in historic job, wage, investment, and economic growth.'
The Congressional Budget Office has yet to release its analysis that takes the House package's economic impact into account. A separate CBO analysis forecasts the bill would increase the deficit by $2.4 trillion over a decade, not accounting for economic growth.
One way to boost the economic growth potential of the package would be to make the business tax breaks permanent, some experts say. The Senate Finance Committee version of the bill calls for making several of the provisions permanent.
For instance, the temporary corporate tax breaks for equipment and for research and development would cost $60 billion over a decade, but making them permanent would increase the price tag to $507 billion, according to the Committee for a Responsible Federal Budget estimate, which was calculated prior to the Senate Finance Committee proposals were released.
Penn Wharton forecasts that making permanent the temporary business tax provisions and other time-limited measures in the House bill would increase the deficit after taking the economic impact into account. Higher levels of federal debt can reduce incentives for private investment, which typically spurs more economic growth.
Providing subsidies for new commitments is a much more efficient way to encourage growth than cutting the corporate rate since companies only get the benefit if they invest, said William Gale, co-director of the Urban-Brookings Tax Policy Center.
'Making the investment provisions permanent would be a pro-growth move relative to almost anything else in the bill,' Gale said, though the increase in deficit and other measures in the legislation could negatively affect private investment.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

32 minutes ago

• Yahoo

Comtech Rejoins iCERT, Deepening Commitment to Public Safety Innovation

Renewed Membership Reinforces Public Safety Commitment and Expands Advocacy Platform CHANDLER, Ariz., June 20, 2025--(BUSINESS WIRE)--Jun. 20, 2025-- Comtech Telecommunications Corp. (NASDAQ: CMTL) ("Comtech" or the "Company"), a global communications technology leader, today announced that its Terrestrial & Wireless Networks ("T&W") business segment has rejoined the Industry Council for Emergency Response Technologies, Inc. ("iCERT"). Founded in 2005, iCERT is a commercial sector trade association that brings together leading technology companies to drive innovation, shape effective policy, and promote open standards that improve public safety and emergency response. This return to iCERT is part of a series of strategic moves by the T&W business segment, including the launch of Allerium Mira - a cloud-native call handling platform designed to simplify complexity and support evolving 9-1-1 needs. Together, these efforts reflect a renewed commitment to public safety and essential service providers, backed by the same trusted team, proven solutions, and industry-wide support. "We're excited to collaborate with iCERT as it expands its focus on key issues and innovations in emergency communications," said Susan Ornstein, Senior Director of Legal & Regulatory Affairs of Comtech T&W, who joined the association's board of directors earlier this month. "Under its new leadership, iCERT is amplifying the voice of its members on public policy issues and engaging partner associations like NASNA, NENA, and APCO to advance shared priorities across the public safety community. Together with iCERT, Comtech is well positioned to address pressing public safety and regulatory matters, and advocate for federal funding, legislation, and FCC policy updates." "Few organizations have meant as much to me throughout my career as iCERT," said Jeff Robertson, President of Comtech T&W. "Twenty years ago, I worked alongside two industry visionaries to establish this organization with the shared goal of fostering collaboration between the public and private sectors. I was privileged to serve as iCERT's inaugural executive director and have remained a strong advocate of its mission throughout my career. Seeing our company rejoin the iCERT community is especially meaningful. Comtech is committed to delivering results that help communities become safer, more connected, and resilient, and iCERT is a vital partner in advancing that work." "iCERT stands committed to propelling public safety forward, facilitating collaboration among its member base and industry stakeholders, and creating an environment that fosters innovation and progress," said Don Brittingham, Interim Executive Director of iCERT. "Members like Comtech play a vital role in strengthening the organization's depth and breadth of experience across the full public safety call flow. I am excited to welcome Jeff Robertson and his team back to iCERT and look forward to empowering public safety together." About Comtech Comtech Telecommunications Corp. is a leading provider of satellite and space communications technologies; terrestrial and wireless network solutions; Next Generation 9-1-1 (NG9-1-1) and emergency services; and cloud native capabilities to commercial and government customers around the world. Through its culture of innovation and employee empowerment, Comtech leverages its global presence and decades of technology leadership and experience to create some of the world's most innovative solutions for mission-critical communications. For more information, please visit About iCERT iCERT—The Industry Council for Emergency Response Technologies—is the only industry trade association focused exclusively on emergency response technologies and related equipment, systems, and services. iCERT is dedicated to improving public safety through innovation. For more information, please visit Forward-Looking Statements Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results and performance could differ materially from such forward-looking information. The Company's Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings. View source version on Contacts Investor Relations Maria Ceriello631-962-7102investors@ Media Contact Jamie

Yahoo

33 minutes ago

• Yahoo

Federal judge blocks Trump effort to keep Harvard from hosting foreign students

WASHINGTON (AP) — A federal judge on Friday blocked the Trump administration's efforts to keep Harvard University from hosting international students, delivering the Ivy League school another victory as it challenges multiple government sanctions amid a battle with the White House. The order from U.S. District Judge Allison Burroughs in Boston preserves Harvard's ability to host foreign students while the case is decided, but it falls short of resolving all of Harvard's legal hurdles to hosting international students. Notably, Burroughs said the federal government still has authority to review Harvard's ability to host international students through normal processes outlined in law. Harvard sued the Department of Homeland Security in May after the agency abruptly withdrew the school's certification to host foreign students and issue paperwork for their visas, skirting most of its usual procedures. The action would have forced Harvard's roughly 7,000 international students — about a quarter of its total enrollment — to transfer or risk being in the U.S. illegally. New foreign students would have been barred from coming to Harvard. The university said it was experiencing illegal retaliation for rejecting the White House's demands to overhaul Harvard policies related to campus protests, admissions, hiring and more. Burroughs temporarily had halted the government's action hours after Harvard sued. Less than two weeks later, in early June, President Donald Trump tried a new strategy. He issued a proclamation to block foreign students from entering the U.S. to attend Harvard, citing a different legal justification. Harvard challenged the move, saying the president was attempting an end-run around the temporary court order. Burroughs temporarily blocked Trump's proclamation as well. That emergency block remains in effect, and Burroughs did not address the proclamation in her order Friday. 'We expect the judge to issue a more enduring decision in the coming days,' Harvard said Friday in an email to international students. 'Our Schools will continue to make contingency plans toward ensuring that our international students and scholars can pursue their academic work to the fullest extent possible, should there be a change to student visa eligibility or their ability to enroll at Harvard.' Students in limbo The stops and starts of the legal battle have unsettled current students and left others around the world waiting to find out whether they will be able to attend America's oldest and wealthiest university. The Trump administration's efforts to stop Harvard from enrolling international students have created an environment of 'profound fear, concern, and confusion,' the university said in a court filing. Countless international students have asked about transferring from the university, Harvard immigration services director Maureen Martin said. Still, admissions consultants and students have indicated most current and prospective Harvard scholars are holding out hope they'll be able to attend the university. For one prospective graduate student, an admission to Harvard's Graduate School of Education had rescued her educational dreams. Huang, who asked to be identified only by her surname for fear of being targeted, had seen her original doctoral offer at Vanderbilt University rescinded after federal cuts to research and programs related to diversity, equity and inclusion. Harvard stepped in a few weeks later with a scholarship she couldn't refuse. She rushed to schedule her visa interview in Beijing. More than a month after the appointment, despite court orders against the Trump administration's policies, she still hasn't heard back. 'Your personal effort and capability means nothing in this era,' Huang said in a social media post. 'Why does it have to be so hard to go to school?' An ongoing battle Trump has been warring with Harvard for months after the university rejected a series of government demands meant to address conservative complaints that the school has become too liberal and has tolerated anti-Jewish harassment. Trump officials have cut more than $2.6 billion in research grants, ended federal contracts and threatened to revoke Harvard's tax-exempt status. On Friday, the president said in a post on Truth Social that the administration has been working with Harvard to address 'their largescale improprieties" and that a deal with Harvard could be announced within the next week. 'They have acted extremely appropriately during these negotiations, and appear to be committed to doing what is right,' Trump's post said. Trump's administration first targeted Harvard's international students in April. Homeland Security Secretary Kristi Noem demanded that Harvard turn over a trove of records related to any dangerous or illegal activity by foreign students. Harvard says it complied, but Noem said the response fell short and on May 22 revoked Harvard's certification in the Student and Exchange Visitor Program. The sanction immediately put Harvard at a disadvantage as it competed for the world's top students, the school said in its lawsuit, and it harmed Harvard's reputation as a global research hub. 'Without its international students, Harvard is not Harvard,' the lawsuit said. The action would have upended some graduate schools that recruit heavily from abroad. Some schools overseas quickly offered invitations to Harvard's students, including two universities in Hong Kong. Harvard President Alan Garber previously said the university has made changes to combat antisemitism. But Harvard, he said, will not stray from its 'core, legally-protected principles,' even after receiving federal ultimatums. ___ Collin Binkley has covered Harvard for nearly a decade — most of the time living half a mile from campus. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at Collin Binkley And Albee Zhang, The Associated Press

Fox News

34 minutes ago

• Fox News

Issa floats constitutional amendment to let Congress, SCOTUS remove president after Biden health 'cover-up'

Rep. Darrell Issa on Friday suggested that the House should consider taking up a constitutional amendment to make it easier to remove a president who is unable to perform the job in response to the alleged cover-up of former President Joe Biden's declining mental state. Issa, R-Calif., who is a member of the House Judiciary Committee, said that actions taken by Biden administration officials to keep Americans in the dark about his health show that the provisions in the 25th Amendment may be insufficient. That amendment allows the Vice President and the Cabinet to remove a president from his role if he is "unable to discharge the powers and duties of his office." "The initiation was always intended to be the vice president and the cabinet based on the assumption that they would take their oath and their observation seriously and that they were closest to the president to know if that event was needed," Issa told Fox News. "It now looks as though their impartiality can be questioned." Issa added: "If that's the case, the other two branches need to be brought in in some way into the process of asserting that the president may be unable to perform his duties and determining that in a fair and, if necessary, public way." The other two branches in this case would likely be Congress and the Supreme Court. Issa's comments come as the House Oversight Committee is set to interview three Biden administration officials next week about the former president's decline. Former Domestic Policy Council Director Neera Tanden will meet with the committee Tuesday. Former Assistant to the President and Senior Advisor to the First Lady Anthony Bernthal will meet with the committee Thursday. Former White House Physician Dr. Kevin O'Connor will testify under subpoena on Friday. The committee also has interviews scheduled with former administration officials Annie Tomasini and Ashley Williams. And it's seeking interviews with several officials in the Biden inner circle, including former Chief of Staff Ron Klain and former Senior Advisor to the President for Communications Anita Dunn. Also among the questions investigators will have is whether any Biden officials used the autopen to authorize executive actions without the president's permission. The results of that investigation, according to Issa, could help inform exactly how to write this potential constitutional amendment. "What Chairman Comer is doing is extremely important because he's basically doing the fact-finding for the Judiciary Committee, which is going to undoubtedly take up a possible amendment to the 25th Amendment," Issa said. There is a very high threshold to amend the Constitution – a two-thirds vote in each chamber and ratification by three-quarters of states. So, if an amendment does materialize from the Judiciary Committee, it would face a tough road to make it through Congress, even with unified Republican control. But Issa says it's worth making an effort to improve the system. "Since it didn't work, we have to ask, is there another way to make it work better in the future?" he asked.