The CRFB's findings are based on an assessment by the Congressional Budget Office (CBO), which found that allowing the tax cuts to expire would significantly increase public fiscal revenues, reducing the cumulative fiscal deficit by $3.7 trillion over ten years. This potential revenue increase would mean less public borrowing, in turn stimulating private investment.
In the CBO's analysis, this would help offset the labor force reduction caused by the expiration of the tax cut policies. The CBO stated: "On net, these two effects largely offset each other, resulting in very little change in gross domestic product (GDP)."
This means that, in CRFB's view, extending the tax cut policies would also have a similar, moderate net impact on economic growth. (Jinshen)
