House Democratic Leader Nancy Pelosi says the Republican tax plans will be a “job-killer,” but most economic analyses of the plans suggest, on balance, modest job growth.
The government’s nonpartisan Joint Committee on Taxation has not yet completed its analysis of the plans’ effect on employment. But several outside groups have run analyses that show modest net job gains from the GOP tax plans.
For example, Moody’s Analytics forecasts the plans will create in the range of 500,000 to 600,000 net new jobs over 10 years — though it says that comes at a steep cost to the nation’s debt.
The business-backed Tax Foundation’s analysis of the Senate plan concludes it would result in 925,000 additional full-time equivalent jobs over 10 years.
A spokesman for Pelosi says the House Democratic leader was “talking about the perverse incentives the Republican bill creates for corporations to ship more American jobs overseas.” The spokesman cited, in part, the work of Jared Bernstein, formerly a member of President Obama’s economic team.
In an op-ed for the Washington Post, Bernstein says the Republican plan is “likely to lead to more outsourcing of U.S. jobs and a larger trade deficit.” Specifically, he believes working-class factory workers would take a hit.
But Bernstein told us “most conventional scores” of the GOP plans show slightly higher GDP growth leading to what Bernstein called “minimal job growth, but a net plus.” Bernstein said the point of his op-ed was that the plan is “likely to lead to job loss (relative to a baseline) in manufacturing.”
Wildly divergent claims about the tax plans’ effect on jobs have been coming from opposite sides of the political aisle.
In comments on Nov. 27, President Donald Trump assured that the tax changes “will bring jobs.” Later, he added, “It’s going to mostly benefit people looking for jobs more than anything else, because we’re giving great incentives.” A day earlier, on NBC’s “Meet the Press,” Pelosi offered the opposite take on the Republican tax plan, saying “it’s going to be a job-killer.”
Eric Toder, co-director of the Tax Policy Center, warns people not to put much stock in such projections either way.
“Most comments on either side of the political divide about how tax proposals would affect jobs either plus or minus are bogus,” Toder told us via email. “Overall employment depends on total demand for goods and services in the U.S. economy which is largely determined by monetary policy. Fiscal stimulus can increase employment during times of high cyclical unemployment, but in today’s low unemployment economy probably has very little effect. However, the tax bill, by increasing the deficit, may provide a temporary employment boost in the short run. And changes in the relative tax treatment of different activities will raise employment in some industries and lower it in others.”
As we said, neither side can cite direct evidence for the effect on jobs from a government analysis. The government’s nonpartisan Joint Committee on Taxation has yet to weigh in on the plans’ effect on employment.