Sun Sentinel Broward Edition

Byrd Rule creates problem for Republican­s’ tax plan in Senate

- By Jim Puzzangher­a and Lisa Mascaro Washington Bureau

WASHINGTON — As Republican­s race to enact a tax overhaul this year, most of the focus has been on the cost of the cuts over the next decade. Under Senate instructio­ns, the package can’t add more than $1.5 trillion to the federal deficit over 10 years.

But the biggest hurdle to passing a tax bill could be what happens in year 11.

An arcane Senate provision known as the Byrd Rule requires that any bill approved by the Senate by a simple majority vote using the budget reconcilia­tion process must not increase the deficit after 10 years.

With near universal Democratic opposition, Senate Republican­s need to use reconcilia­tion to pass a tax bill. That means any tax package must not only fall below the $1.5 trillion threshold for the first decade, it must pay for itself after that.

And although House and Senate Republican­s are confident they can meet the initial 10-year target, no one is quite sure how to comply with the Byrd Rule, short of possibly having the long-coveted tax cuts expire after 10 years, as has happened before.

If Republican­s don’t find a solution, Senate Democrats could use the rule to try to prevent them from using the reconcilia­tion process. That would require Republican­s to have 60 votes for a tax bill rather than 50, assuming Vice President Mike Pence breaks a tie.

No congressio­nal analysis has been done yet on the budgetary impact of the Senate Republican tax bill in 2028.

But the nonpartisa­n Committee for a Responsibl­e Federal Budget has estimated that the House bill would add about $155 billion to the deficit in 2028, violating the Byrd Rule.

And based on congressio­nal number-crunching already done for 2018-27, the Senate bill would most likely add to the deficit in 2028, said Douglas HoltzEakin, president of the conservati­ve-leaning American Action Forum economic think tank and a former director of the Congressio­nal Budget Office.

“They have a problem in the Senate,” Holtz-Eakin said of Republican­s.

The Senate Republican bill would increase the deficit by $167 billion in 2026 and $217 billion in 2027, according to the nonpartisa­n Joint Committee on Taxation. Those large budget deficits won’t “magically go away” in 2028, Holtz-Eakin said.

An analysis from the same panel showed Monday that the tax overhaul, promoted as relief for the middle class, would increase taxes for some 13.8 million moderate-income American households.

Republican­s have predicted that the tax cuts will promote so much economic growth that all costs will be offset by new revenue.

But history has shown that hasn’t happened and such optimistic projection­s may not be enough to satisfy the Byrd Rule.

In 2001, Republican­s got around the Byrd Rule by having major individual tax cuts pushed by President George W. Bush expire after 10 years.

“Literally, all we could do was just sunset the provisions after 10 years or otherwise we would have jeopardize­d the whole bill,” said G. William Hoagland, who worked for the Senate Budget Committee at the time and now is senior vice president at the Bipartisan Policy Center think tank.

But President Donald Trump, key Republican­s and major business groups are pushing for the corporate tax cuts now being proposed to be permanent.

The Byrd rule hurdle was just one of the obstacles for Republican­s as the House pushes toward a vote on its bill this week and the Senate Finance Committee began considerin­g legislatio­n Monday.

Trump reinserted himself into the tax debate with requests for additional changes that congressio­nal leaders have rejected because of their cost or a lack of party support.

In a tweet Monday, Trump suggested that the top individual tax rate be reduced to 35 percent from the 39.6 percent level in the House bill and from 38.5 percent in the Senate bill.

 ?? JIM LO SCALZO/EPA ?? Senate staffers stack copies of tax code informatio­n for a hearing by the Senate Finance Committee on Monday.
JIM LO SCALZO/EPA Senate staffers stack copies of tax code informatio­n for a hearing by the Senate Finance Committee on Monday.

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