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HomeEconomyDebt projections before and after the Tax Cuts and Jobs Act (2017)

Debt projections before and after the Tax Cuts and Jobs Act (2017)


CBO debt forecasts before (CBO June 2017) and after (April 2018) December passage/signature, normalized by GDP and potential GDP.

figure 1: Public CBO forecast holdings of federal debt divided by nominal GDP as of June 2017 (blue squares) and as of April 2018 (red squares). Sources: CBO, Budget and Economic Outlook, June 2017, April 2018, BEA, and author's calculations.

This is debt normalized to CBO's estimate of potential GDP.

figure 2: The public CBO forecasts holdings of federal debt divided by nominal potential GDP as of June 2017 (blue squares) and as of April 2018 (red squares). Source: Congressional Budget Office, Budget and Economic Outlook, June 2017, April 2018, July 2023 (potential GDP) and author's calculations.

While we cannot attribute all changes in the debt-to-GDP ratio to TCJA, we do know that, using non-fantasy estimates, TCJA will blow a hole in government finances (see e.g. here). What were today's deficit hawks saying then (when the output gap was arguably quite small)? (Except CRFB, which opposed TCJA.)



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