The Trump administration is looking to permanently extend the expiring individual, estate and business tax provisions. If the Trump tax cuts — enacted during his previous term in office — are extended, they would boost long-run economic output by 1.1 percent, the capital stock by 0.7 percent, wages by 0.5 percent, and hours worked by 847,000 full-time equivalent jobs.

Extending the expiring individual tax provisions adds 0.4 percent to long-run GDP, while the business provisions add 0.7 percent. Extending the estate tax provisions leaves GDP unchanged but boosts domestic saving, resulting in an increase in American incomes.

Increased interest payments, the result of reducing tax revenues by $4.5 trillion over the budget window, would require higher interest payments on the debt, and reduce American incomes as measured by GNP by 1.0 percent. Deficit financing of the tax cuts thus drives a wedge between the long-run increase in output of 1.1 percent and the long-run