On December 13, the non-partisan fiscal watchdog organization "Committee for a Responsible Federal Budget" (CRFB) warned in its latest analysis that extending the tax cuts that are set to expire next year will provide almost no help to economic growth.
The CRFB's findings are based on an assessment by the Congressional Budget Office, which found that allowing the tax cuts to expire would significantly increase public financial revenue, reducing the cumulative fiscal deficit by $3.7 trillion over ten years. This potential revenue growth would mean less public borrowing, in turn stimulating private investment.
In the Congressional Budget Office's analysis, this would help offset the labor force reduction caused by the expiration of the tax cut policies. The Congressional Budget Office stated: "Overall, these two effects largely offset each other, resulting in a very small change in Gross Domestic Product (GDP)."
This means that, in CRFB's view, extending the tax cut policies will also have a similar, moderate net impact on economic growth.
