Top tax economist says the GOP bill is 'crazy' and 'stupid'

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Martin Sullivan, an economist and longtime federal tax analyst, told Business Insider the GOP tax bill was "crazy" and "stupid."
Sullivan said the rushed process Republicans are using to try to pass the bill was wasteful and could hurt the legislation in the long run.
He said the bill was unlikely to produce substantial economic gains.

Martin Sullivan, the chief economist at the nonprofit researcher Tax Analysts, says he is normally reserved about policy. But he is making an exception for the Republican tax legislation that's rapidly moving through the GOP-controlled Senate.

"I'm usually pretty calm about policy — I tend to try and avoid using words like 'crazy' or 'stupid,' because I'm a pretty even-keeled guy, but those words apply here," Sullivan told Business Insider on Wednesday.

Sullivan, formerly a staff economist at both the US Treasury and the Joint Committee on Taxation, has a reputation for his research on taxes. Kevin Hassett, now the head of President Donald Trump's Council of Economic Advisers, said in 2013 that Sullivan "goes wherever the facts and the economics lead him."

In a column on Monday, Sullivan characterized the bill, called the Tax Cuts and Jobs Act, and the process Senate Republicans are using to try to pass it as "waste, fraud, and abuse."

He pointed to the fact that Republicans have for years asked the nonpartisan Joint Committee on Taxation, the official congressional scorekeeper, to analyze tax legislation using dynamic scoring, allowing the committee to factor in economic growth projections when analyzing a bill's effect on the federal budget deficit.

But Senate Republicans are aiming to vote on their tax bill within days of the committee's score, which is expected as soon as Wednesday. Sullivan said that constituted a waste of "millions of dollars and thousands of hours" for the committee.

Sullivan said Republicans were most likely rushing the process because the committee's score would show that the tax bill would provide only small economic benefits, undercutting one of the GOP's main arguments for the legislation.

"It's likely that when the JCT's estimates are released, it will show very little positive impact on economic growth from the bill," Sullivan said. "And I would agree with that."

In his column, Sullivan describes a few other reasons he thinks the economic impact will be muted.

"Stimulus effects are likely to be minimal because the economy is already near full employment and the tax cuts are strongly tilted away from low-income households that would spend more than their well-off brethren," Sullivan wrote. "In addition, supply-side effects from lower marginal rates will be small because statutory rate cuts are small (or in some cases nonexistent)."

The largest reason for a muted economic impact, however, is that Republicans are advancing the tax bill without any input from Democrats, Sullivan said.

This phenomenon creates uncertainty, he said, because Democrats could try to change the tax code if they regained control of Congress or the White House. That, in turn, means businesses are unlikely to invest in long-term projects that could boost the US economy.

"Any CEO that is planning on this being permanent and investing like it is has their head in the sand," Sullivan told Business Insider.

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