Deficit haunts tax ef­fort

GOP wres­tles with how much red ink to ac­cept with over­haul

The Dallas Morning News - - Nation & World - Marcy Gor­don and An­drew Tay­lor, The As­so­ci­ated Press

WASH­ING­TON — Se­nate Repub­li­cans are strug­gling with how many bil­lions of dol­lars Pres­i­dent Don­ald Trump’s tax code over­haul would add to the deficit as they work on a GOP bud­get plan that’s a pre­req­ui­site to any far-reach­ing change in the na­tion’s tax sys­tem.

Se­nate Ma­jor­ity Leader Mitch McCon­nell and GOP mem­bers of the Bud­get Com­mit­tee met Tues­day with two top Trump ad­min­is­tra­tion of­fi­cials to make progress on forg­ing the bud­get plan, which is re­quired to stave off po­ten­tial Demo­cratic block­ing tac­tics and pass the sub­se­quent tax bill only with GOP votes.

The as-yet-un­drafted bill to over­haul the tax code is the top pri­or­ity for Trump and Repub­li­cans af­ter the col­lapse of their ef­fort to dis­man­tle Barack Obama’s health care law. Trump’s top eco­nomic ad­viser, Gary Cohn, and Trea­sury Sec­re­tary Steven Mnuchin met with McCon­nell, R-Ky., and bud­get panel mem­bers.

“From my stand­point, let’s set our­selves up for suc­cess on tax re­form,” Sen. Ron John­son, R-Wis., a mem­ber of the com­mit­tee, said be­fore the meet­ing.

The meet­ing ended in late af­ter­noon with­out a spe­cific pro­posed num­ber for the size of the bud­get com­ing for­ward. Not want­ing to show dis­ap­point­ment, par­tic­i­pants stressed that it had been in­tended to be pre­lim­i­nary.

Capi­tol Hill Repub­li­cans have promised that the tax re­write will be “rev­enu­eneu­tral,” not adding to the na­tion’s $20 tril­lion-plus debt, but they are in fact count­ing on bud­get ma­neu­vers to find hun­dreds of bil­lions of dol­lars to help max­i­mize cuts to cor­po­rate and in­di­vid­ual tax rates. For starters, they are go­ing to as­sume the tax leg­is­la­tion would mean higher eco­nomic growth and greater fu­ture tax rev­enues.

House ac­tion has been held up by a bat­tle be­tween mod­er­ates and con­ser­va­tives over whether to pair spend­ing cuts with the fil­i­buster-proof tax mea­sure. Se­nate ac­tion has been on hold while the House strug­gles.

The mo­men­tum to­ward deficit-fi­nanced tax cuts runs counter to the long­time promises from top Capi­tol Hill lead­ers that this year’s ef­fort to re­write the tax code wouldn’t add to the na­tional debt. And it sets up a sce­nario in which many of the promised new tax rates would ex­pire af­ter 10 years. That’s be­cause of the Se­nate’s ar­cane rules.

On the bud­get panel, Sen. Bob Corker, R-Tenn., is hop­ing to limit the deficit cost of the tax ef­fort, while Sen. Pat Toomey, R-Pa., is on the other end of the spec­trum, fa­vor­ing more ro­bust deficit­fi­nanced tax cuts. GOP lead­ers have asked them to try to craft an agree­ment among the 12 bud­get panel Repub­li­cans.

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