Deficit haunts tax effort
GOP wrestles with how much red ink to accept with overhaul
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.