Senate budget allows $1.5tr tax cut
The budget forecasts a balance in nine years through $5tr in largely unspecified spending
Senate Republicans unveiled a fiscal 2018 budget resolution Friday that they intend to use to push through as much as $1.5 trillion (Dh5.5 trillion) of tax cuts in the coming months, but it won’t allow the GOP to pursue a full repeal of Obamacare.
The budget, authored by Senate Budget Chairman Mike Enzi, forecasts a balance in nine years through $5 trillion in largely unspecified spending cuts.
Unlike the House budget proposed in July, Enzi’s blueprint doesn’t call for cuts to Medicaid or a partial privatisation of Medicare.
“A pro-growth tax plan will move the US economy forward and help to produce better jobs and bigger paycheques for every American,” Enzi, of Wyoming, said in an emailed statement.
Once in place, the budget resolution would allow Republicans to bring up a tax-cut bill that would increase deficits by as much as $1.5 trillion, compared with a Congressional Budget Office baseline.
Under the fast-track process, the GOP-controlled Senate could pass the proposal with no Democratic votes.
The budget sets a target for the Senate Finance to report back with its draft tax bill by November 13. “The Senate budget resolution drafted by Budget Committee Chairman Mike Enzi is a critical step to advance President Trump’s agenda to provide tax relief for the middle-class and unleash economic prosperity for all Americans,” said White House budget director Mick Mulvaney in a statement. “I urge the Senate to pass this resolution and come to a swift agreement with the House so President Trump can sign America-first tax relief into law this year.”
Senate Democratic leader Chuck Schumer of New York said the GOP plan would “blow a huge hole in the deficit and stack up debt, leading to cuts in programmes that middle-class Americans rely on”.
Higher bracket
President Donald Trump and Republican leaders announced a tax-cut plan Wednesday that would cut the top individual rate to 35 per cent from the current 39.6 per cent. It would let Congress decide whether to create a higher bracket for those at the top of the income scale. The rate on corporations would be set at 20 per cent, down from the current 35 per cent. Under Senate rules, any tax cuts that increase the deficit would have to expire in 10 years because the budget process can’t be used for long-term deficit increases.
The provision making it easier for Congress to allow oil and gas drilling in part of the Arctic National Wildlife Refuge was sought by Alaska Republican Dan Sullivan. Under the proposal, royalties from oil and gas production in the wildlife refuge would be raise revenue that could help offset at least $1 billion in tax cuts over a decade.
The proposal’s instructions to the Finance Committee could allow a partial repeal of Obamacare, although panel Chairman Orrin Hatch has said he will keep that separate from a tax overhaul. Republican leaders have said they won’t try again on the health care law until fiscal 2019. When Republicans attempted to use the 2017 budget process to repeal Obamacare earlier this year, they didn’t provide a 10-year plan for reducing the deficit.
The new Senate plan proposes a balanced budget within nine years, while leaving it to other committees to figure out how to achieve that.