US economy to lose nearly 6 million American jobs, $1.1T in GDP if Congress lets Trump tax cuts expire: study

FIRST ON FOX: A study released by the National Association of Manufacturers (NAM) shows nearly 6 million American jobs are at stake if President-elect Trump's 2017 tax cuts expire. 

Fox News Digital first obtained a copy of the study conducted by Ernst & Young on behalf of the largest manufacturing association in the U.S. It found that if Congress does not act by the end of 2025 to preserve the Tax Cuts and Jobs Act, an estimated 5.9 million American jobs will be lost.

NAM argued that key pro-manufacturing provisions regarding R&D, capital investments and business loans of the Tax Cuts and Jobs Act of 2017 have already been phased out in 2022 and 2023, and several more provisions, namely the 20% pass-through deduction, individual tax rates and the estate tax exemption threshold, are expected to expire at the end of 2025. 

The study estimates that the U.S. economy will face $540 billion in lost wages and a $1.089 trillion GDP shortfall if the remaining Tax Cuts and Jobs Act provisions expire. Additionally, if Congress does not preserve the reforms, 1.137 million manufacturing jobs, $126 billion in manufacturing worker compensation and $284 billion manufacturing GDP are on the line, the study says.

"The time to act is now. Millions of American workers are depending on the manufacturing sector to continue driving America forward," NAM President and CEO Jay Timmons said. "Pro-growth tax policies from President Trump’s 2017 tax reforms were rocket fuel for manufacturers and made the U.S. economy more competitive on a global scale. Manufacturers kept our promises to create jobs, raise wages and benefits and invest in our community. By acting now, policymakers can choose economic growth over economic disaster and protect American livelihoods."

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Timmons argued that preserving tax reform should be one of the first priorities of the new Congress and the incoming Trump administration. 

"If Congress delays, manufacturers will be forced to delay investment and job creation decisions due to the uncertain outlook. In 2017, Congress passed the landmark Tax Cuts and Jobs Act late in the year, meaning that manufacturers’ investment decisions based on the law could not bear fruit until 2018 at the earliest," Timmons said. 

In 2018 and 2019, respectively, manufacturing capital spending grew 4.5% and 5.7%, compared to just 1.4% growth in 2017.

Timmons noted how manufacturers also added 267,000 new jobs in 2018, representing the best year for job creation in manufacturing in 21 years.

"This time around, we can’t afford to wait: With crucial TCJA provisions having expired in recent years, the economy is already backsliding," he said. "Following the expiration of immediate R&D expensing in 2022, R&D growth in the EU surpassed the U.S. for the first time in nearly a decade, and China’s R&D growth tripled our own. Congress and President Trump should work expeditiously to stimulate activity this year by acting urgently to give manufacturers the tax certainty they need to plan for long-term job-creating projects." 

NAM claims congressional inaction risks higher taxes on pass-through businesses and family‑owned firms; increased costs for R&D, capital equipment purchases and business loans; and "an uncompetitive international tax regime that disincentivizes investment in the U.S. and hampers manufacturers’ ability to compete on the world stage." 

House Republican leadership signaled that they were on board with preserving the 2017 tax reforms. 

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"Failing to extend the Trump tax cuts could result in an estimated 6 million lost jobs and the devastation of America’s manufacturing sector," House Speaker Mike Johnson, R-La., said in a statement. "It is the responsibility of Congress to act quickly so we can protect Americans’ livelihoods, prevent wage decreases, and avoid the largest tax hike in history. We all know the importance of making things here in America, so House Republicans are working hard to preserve and build on President Trump’s historic tax reform and support America’s manufacturers."

House Majority Leader Steve Scalise, R-La., said Trump’s 2017 Tax Cuts and Jobs Act "not only strengthened American manufacturing, but promoted job growth, drove innovation, increased hardworking Americans’ take-home pay, and increased U.S. competitiveness."

"With President Trump returning to the White House and Republican majorities in the House and Senate, we must act quickly to ensure we maintain global competitiveness, support investment and innovation and safeguard small businesses and workers," Scalise added. "Hardworking Americans deserve a strong economy that works for them, not against them. House Republicans stand ready to prevent the largest tax hike in history and make our economy great again."

"This study confirms the need to immediately extend the Trump tax cuts this year by showing the real-world devastation to America’s small businesses and manufacturers if we fail to act," said House Ways and Means Committee Chair Jason Smith, R-Mo. "With nearly 6 million jobs on the line, Congress must act swiftly to give American small businesses, families, and communities across the country the green light to hire more workers and expand their businesses to restore the greatest economy in our lifetime as soon as possible." 

"The last thing they need is the largest tax increase in American history," Smith added. "Ways and Means Republicans have prepared for this moment for nearly two years and are ready to deliver an economic package that Makes American Manufacturing great again."

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The study also evoked a response from the upper chamber of Congress. Senate Finance Committee Chair Mike Crapo, R-Idaho, said Trump’s tax reform "allowed Americans to keep more of their hard-earned money, and enabled businesses to invest in their ideas, products and people." He added that making those tax cuts permanent "is the best way to ensure the greatest economic growth, provide certainty and stability for American businesses, and avoid the economic losses described in this study."

A press conference to discuss the study further is scheduled to take place at the Capitol on Tuesday afternoon.