How the GOP tax plan will impact the economy

Former Bush Council of Economic Advisers chair Glenn Hubbard and New York Times columnist and ABC News contributor Paul Krugman debate how the sweeping GOP tax plan will impact the economy on "This Week."
7:44 | 12/17/17

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Transcript for How the GOP tax plan will impact the economy
Pensions and retirement accounts are soaring as the stock market hits new 85 record highs since the election. How are we doing? Are we doing okay? Not bad, right? Look at the markets. How they have grown. This tests the the trusts up vesters show in the xhern economy. They have trust in what president trump is doing in this particular field. An endorsement of president trump's economy from president Vladimir Putin of Russia. We'll talk about the economy right now. With two of America's prominent economists. Paul Krugman. And Glenn Hubbard. Dean of the Columbia business school. Chair of the council of economic advisers under George Bush. Donald Trump's tweet, tax cuts will increase investment in the American economy and in U.S. Workers. Your response? Lots of people. Basically all serious studies say, oh, not so much. Maybe a little boost. Not so much. We had the university of Chicago surveyed 42 economists. Only one thought it would have a significant effect. I have been looking what do the markets think? We have a chart here. If you can show it. Never mind the stock market. If you're going to cut taxes on corporations, you would expect the stocks to go up. Better jum, look at the dollar. If this bill does what it says it will do, scads of money pour in. All of that should lead to a surge in the dollar. The dollar has none nothing. The dollar rose when trump was elected. People thought the infrastructure plan was going to happen. Then it wasn't. It lowered. This is a big nothing burger. It doesn't look like much of anything. How much difference can a tax cut make when the economy seems to be burning on all cylinders? In the short run, lit provide boost to demand. I think the fed would look forward to that. In the longer run, the the issue son to supply side. The tax bill could probably raise gdp by about 3% in the long run. That's not the beginning of a new era. It is certainly very, very positive for the economy. Economists have long campaigned on tax reform adds the biggest single policy rep. Is this tax reform? I think it is. You're cutting business tax rates. The coref any tax reform. You're broadening the base. It's not really. The base broadening is -- it's raising taxes on the individual. It raises taxes on individuals in the long run through backhanded things. After 2025? Yes, some sweeteners. Loss leaders go away. Then, what T vow is, individuals are going the lose health care expenditures are supposed to be cut. That's a big part, too. The% number, that's a -- that's a complete outlier. Very few people who have studied this stuff think that's right. And even that doesn't take account, I was interested to see van Hollen bring this up, how much in gdp goes to foreigners. Because a lot of the the money is expected to come from overseas. They're not going the bring it for free. They'll take retained earnings abroad. Even liberals think, I don't know. It's not worth very much. Sit worth $1.5 trillion of debt? Actually H, it is. I think the% number is well within the middle of what economists have been saying for years. The real question is, do we want a pro-growth tax bill? The deficit effect of this is more than offset by the impact in growth. There will be impact on health care. One of the things up chuded with us the repeal of the Obamacare mandate. We talked to the senators about other provisions. They don't look like they'll necessarily be passed. The congressional budget office says 13 million people lose health insurance. Republicans want you to believe that is not going to happen. But if it doesn't happen, their numbers don't add up. Their bill counts on the savings that T come from 5 million people losing medicaid and another 5 million dropping off the obamacare-subsidized exchanges. This is tax cuts for corporations by taking away health care from people raising taxes on individuals. Is this something that should the a priority? Is this smpg that makes sense? And we vice president gone through the pass-through business thing. ? On the health care piece, I think we need a more serious discussion of health care reform. What do we do to help low-income people get health insurance? How do we finance that? It's bagger discussion that happen to happen. I agree that's very, very important. There the past here with senator Cornyn and senator van Hollen. This seems to be similar to something that happened in the state of Kansas. Get people to come off salaried work to get tax cuts. I don't think you can call this a tax cut for corporations. Corporations are shareholders. Workers supplier. They're all people. And also share hoerlds. Share holders are people, too. More than half of Americans who work in business work in noncorporate business. You want some leveling of the laying field. It's complicated. It's not tax reform or simplification is it? It's not simplification. It's tax reform. The rules are designed the police behavior. I expect Paul and I are policed out of it. This is unleveling the the playing field. Right now, anybody that wants to turn themselves into a C corporation and pay taxes can do that. This is tremendously privileging people who own businesses of a certain kind. Two are really basically just workers. But happen to have the right kind of business that earns enough money. It's a crazy thing. It's creating a nightmare of loopholes. Possible exploitable things. A certain provision says architects and engineers get a tax break other service providers don't get. Not even arkt tickets of the the economy. Bottom line, is this sustain snbl will we be back a year or two from now with a change to the bill? It is sustainable. We'll be back with another tax bill in a few years. There's much more the American tax code. And frankly, the budget needs to do. I think this will be a wave of outrageous tax avoidance. There will be mass demapds people do something. H is night mare bill. Thank you both.

This transcript has been automatically generated and may not be 100% accurate.

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