00:00 Speaker A

Now for today's power player segment, time is running out for senators to reach a deal on President Trump's tax plan. The President wants the big beautiful bill on his desk before July 4th. As the deadline closes in, it's still not clear to markets what the bill's economic impact will be. The White House Council of Economic Advisors estimates growth from the new tax plan could slash up to 2.3 trillion dollars from the deficit. But the Congressional Budget Office found the mega bill would add 2.4 trillion dollars to the deficit over the next decade. Joining me now to explain that disparity, Stephen Moore, chair of the White House Council of Economic Advisors, Stephen, good to see you here. Let's start there. Uh what do you attribute that huge disparity between your projections and the CBOs?

01:25 Stephen Moore

Good morning and thanks for having me. Look, you know, the issues with the Congressional Budget Office score is that they're not designed to be a holistic view of the deficit. They're designed to play into very specific rules for passing legislation through what's called the reconciliation process in Congress where you only need a simple majority to pass rules instead of the filibuster proof super majority of 60 votes, right? That's a really sort of highly specialized in Byzantine process and it's just a mistake to extrapolate from the CBO score to think that you you you're understanding what's going to happen to the deficit overall. There's a number of things that are not included in that score that will reduce the deficit. Let me let me go through some of them for you. First, better economic growth. The one beautiful bill contains numerous tax incentives for better economic growth. There's full expensing on investment, full expensing on equipment investment on new factories, on R&D. There's things like no taxes on tips and overtime and social security, and these are targeted segments of the population that are very responsive to incentives to work more. And these will get economic growth booming, right? In addition to keeping tax rates low and preserving the president's historic 2017 tax cuts. This economic growth creates more revenue because if there's more income then there's more taxes that get paid into the government and that brings deficit down. But there's lots of other stuff that the CBO doesn't include also, things like tariff revenue, things like cuts from discretionary discretionary spending administratively, things like lower interest burdens because we're borrowing less because of these other things. And all of these combined to materially bring down deficits. We calculate that when you add all these things up, better economic growth leading to higher revenues, tariff revenue pouring in, less discretionary spending because of administrative cost to waste fraud and abuse, and lower interest expenses, we calculate that when you add all these things up together, you get about eight and a half to 11 trillion dollars of deficit reduction over the 10-year budget window.

04:58 Speaker A

Stephen, let me uh push back because within this within this report, I believe you're projecting 4.9% economic uh economic growth. However, the tax rates are going to likely stay the same in this plan versus 2017. What do you say to those that are saying you're being too optimistic on the output potential of the economy?

05:40 Stephen Moore

Yes, so that's actually not the growth projection. So that that number 4.6 to 4.9% GDP growth over a four year period relative to letting the tax cuts expire mean that GDP will be about almost 5% higher at the end of four years than before. Now that works out to, you know, a point to a point and a quarter a year, right? of better of better GDP growth from this, which brings GDP growth into the high twos range uh as a result of the one big beautiful bill and and in the other policies we've got going on. So it's it's it's not a correct reading of the paper to think that we're we're claiming there's going to be 5% GDP growth.