By Nicole Goodkind On 9/11/18 at 4:32 PM
President Trump Signs New Tax Reform Bill
Republicans are pushing to pass additional tax reforms before midterm elections this November. But the changes, which would make the individual tax cuts passed in December permanent, could add another $2 trillion to the deficit over the next 10 years.
The proposed cuts came as the federal deficit hit $895 billion in the first 11 months of fiscal year 2018. That’s a 32 percent, or $222 billion, increase over last year’s deficit, according to the nonpartisan Congressional Budget Office.
Still, House legislators hope to make quick work with the bills, dubbed “tax reform 2.0,” in the 15 working days left before the November 6 elections. Republican Kevin Brady released his official proposal Tuesday, writing in a statement that “it’s the time to ensure we never let our tax code become so outdated again.”
House Ways and Means Committee Chairman Kevin Brady holds up an example tax form during a news conference with Speaker of the House Paul Ryan following the weekly House Republican Conference meeting at the U.S. Capitol. Chip Somodevilla/Getty Images
Republicans hope to remind voters of the December tax cuts and to take full credit for the thriving economy as they head into the polls. “We’re going to build on that success,” said House Majority Whip Steve Scalise last week. “We’re not resting on our laurels.”
“Anytime we’re talking about tax cuts and the growing economy, we’re winning,” said Matt Gorman, a spokesman for the National Republican Congressional Committee, to Reuters.
The plan is mostly about optics as the changes are not expected to pass this year. A favorable outcome in Senate would require 60 votes and a number of Republicans have already expressed their uncertainty. The proposal would also cement the $10,000 state and local tax (SALT) deduction cap, potentially hurting Republicans up for re-election in vulnerable states. “I do not favor that,” Representative Leonard Lance, who is running a tight race in New Jersey told The Hill. “I favor complete deductibility of state and local taxes.”
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Democrats believe the proposed cuts will help them come November. “With version 2.0 of the GOP tax scam for the rich, Republicans want to add even more to the deficit, and even more to the bank accounts of the wealthiest 1 percent,” said House Minority Leader Nancy Pelosi in a statement.
“Republicans’ first tax law raised taxes on middle-class families, hiked health care costs for millions and showered the most well-off and well-connected with massive tax cuts,” said Representative Richard Neal, the top-ranking Democrat on the House Ways and Means Committee, to the Washington Post. “This tax legislation won’t help workers or families, but it will further enrich GOP donors and provide Republicans with more ammunition to attack programs like Medicare and Social Security.”
House Speaker Paul Ryan and House Majority Leader Kevin McCarthy said last week that they intend to move the tax bill to a floor vote this month. The bill’s markup by the Ways and Means Committee will likely occur this week.
Under President Barack Obama, Ryan was considered a deficit hawk. In 2011, he won a “Fiscy” award, from the anti-debt Concord Foundation for “being the first [representative] in several years to step forward with a specific scorable budget plan that would actually solve the nation’s long-term structural deficits.” But in recent years, he’s advocated for tax and spending bills that added more than $200 billion to the deficit.
President Donald Trump campaigned on the promise to wipe out all federal debt within eight years. He reportedly suggested printing more money to make up for his tax and spending plans, according to Bob Woodward’s account, Fear: Trump in the White House. “Just run the presses—print money,” Woodward says Trump told then-chief economic adviser Gary Cohn.
The plan would add about $630 billion to the deficit by 2029 in addition to the $1.9 trillion the plan costs when higher interest payments are factored in, according to the Congress’ Joint Committee on Taxation.
The right-leaning Tax Foundation found that between 2026 and 2036, the bill will add another $2.4 trillion to the federal deficit.
The anti-deficit Committee for a Responsible Federal Budget (CRFB) estimated that the changes would cost $4 trillion over the next 20 years, or $5 trillion with interest.
“This is a plan built on quicksand—sinking in the very debt that finances it,” said CRFB president Maya MacGuineas in a statement. “Not only will it add hundreds of billions to the deficit, but it may actually slow long-term growth, especially if recent spending increases are also made permanent. With trillion-dollar deficits coming as soon as next year according to the White House’s own projections, it is beyond irresponsible to put even more tax cuts on the national credit card to fuel an economic sugar high that won’t last.”
The individual tax cuts passed last December are currently set to expire in 2025.
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