If You Like Massive Deficits, You'll Love OBBB

One of the arguments that is made on behalf of the passage of the One Big Beautiful Bill Act is that if we go back to the 2017 Trump tax cuts, there were improvements in both employment and the level of GDP growth.

While this is certainly the case, that is only part of the picture.

Those tax cuts added $1.5 trillion to $1.8 trillion to the federal deficit. In other words, they added to the debt in a non-trivial way.

And so what will happen if the OBBB passed by the House makes it through the Senate, where it is modified around the edges, and is signed into law?

According to the non-partisan Tax Foundation, which has been looking at taxes for 85 years, if the expiring 2017 Tax Cuts and Jobs Act (TCJA) measures are extended, which is an objective of the OBBB, “Long-run GDP would be 1.1% higher.”

Huzzah!

Except for something else. (And I don’t mean the tariffs, which are expected to decrease US GDP growth, so that’s a whole other issue of an unwillingness to look at figures.)

The Tax Foundation reckons the TCJA extension “would decrease federal tax revenue by $4.5 trillion from 2025 through 2034.”

And of that figure, the 1.1% GDP increase would offset “$710 billion, or 16%, of the revenue losses.”

That means $3.79 trillion in the hole. That’s $421 billion for each of the nine years.

Now there is something else about taxes that need to be taken into account.

Thanks to the clever boots of DOGE, some 11% of the workforce of the IRS were eliminated. According to the Treasury Inspector General for Tax Administration, the biggest hit was to tax auditors: 31% of the revenue agents got the axe or otherwise left. DOGE plans to eliminate up to 40% of IRS employees by year’s end.

Let’s not be naïve about this. Tax auditors look for discrepancies in tax returns. Certainly, some of those are simple mistakes. And some of them are, well, deliberate efforts made to keep from paying what is due, a.k.a., cheating.

If Bob, who works at Home Depot in the lumber department, or Betty, who operates a three-chair salon, gets audited, odds are the amounts of money involved are the stuff of Optima Tax Relief commercials.

The real money is in the complicated filings of individuals and corporations who can provide demi-serious and absolutely serious monies to the federal coffers.

But by minimizing the number of IRS auditors, the likelihood of those monies being collected is reduced.

Realize the auditors earn an average $93,000 and the return on investment for that is probably a solid multiple, especially for those who can analyze the complicated cases.

So we will have reduced revenues coming into the government and a reduced number of people whose job it is to make sure the monies that are owed makes it to the government.

It used to be that Republicans cared about things like deficits and making sure that people paid their fair share.

Now it seems that they are dazzled by the promise of a Golden Age without having the slightest notion of how that’s achieved in the real world.

Macaulay is pundit-at-large for The Hustings.