Before Senate Republicans passed their tax bill early Saturday, GOP leaders boasted that it would be a huge boon for the US economy.
Goldman Sachs does not agree.
Alec Phillips and Blake Taylor, analysts on Goldman's US economic-analysis team, say that the Senate version of the tax bill, called the Tax Cuts and Jobs Act, would slightly boost growth in the short term — but that the boost would quickly fade.
"We have increased our estimate of the growth effects of the legislation slightly, to around 0.3pp in 2018 and 2019," Phillips and Taylor said in a note to clients on Monday.
"This reflects the slightly larger amount of tax cuts in the Senate plan following revisions, and our expectations regarding the eventual compromise."
The 0.3-percentage-point estimate is slightly higher than most expectations but well below Republicans' assurances.
The nonpartisan Joint Committee on Taxation, Congress's official scorekeeper, said the bill would boost the annual growth rate by roughly 0.08 points, according to a breakdown from the Committee for a Responsible Federal Budget.
The nonpartisan Tax Policy Center said the increase would be even smaller, at 0.002 points a year.
The Penn-Wharton Budget Model found that the legislation would boost growth by 0.03 to 0.08 points a year.
Many advocates of the bill have said it would boost gross-domestic-product growth by 0.4 percentage points a year.
Phillips and Taylor also said that repatriation of foreign-held assets — something Republicans have said would help the US economy — would do nothing for growth.
"On the corporate side, we disregard the temporary increase in tax payments in 2018 related to the tax on deemed repatriation; we do not estimate a growth effect from those repatriated profits, either," the note said.
And while the JCT and TPC say they expect small boosts to economic growth outside the tax plan's first two years, Phillips and Taylor aren't so sure.
"We note that the effect in 2020 and beyond looks minimal and could actually be slightly negative," their note said.