Republicans Plan To Hide Cost Of Tax Cuts With 1 Weird Trick

WASHINGTON – Republicans have a math problem with the massive proposed tax cut package at the center of President Donald Trump’s legislative agenda. Their plan? Just ignore it.

The House Republican budget calls for $4.5 trillion in tax cuts over 10 years. Trump, however, wants to make those cuts permanent, which would make their actual cost — and the damage they would do to the already $36 trillion federal debt — much, much bigger.

And following Trump’s wishes would make passage in the Senate all but impossible since bypassing a Democratic filibuster requires following strict budget rules and not increasing the deficit.

The solution for GOP leaders is to simply pretend a huge part of the tax cuts doesn’t exist. They want to use the “current policy” baseline, which assumes tax cuts — like the deficit-busting ones Republicans passed in 2017, the last time Trump was president — will simply be extended permanently even if that’s not what the law says. So, using this accounting, Republicans could claim that the tax cuts would be cost-free even though in reality they would increase the deficit.

Democrats, unsurprisingly, are crying foul about the GOP’s accounting, pointing out that it would fly in the face of their purported desire to rein in the federal deficit and the national debt.

Senate Minority Leader Chuck Schumer (D-N.Y.) called the scheme a “hocus-pocus” attempt to “magically turn $5 trillion of deficit spending into zero dollars on their balance sheets.”

“Any junior high school student would tell you this is a bunch of bunk,” Schumer said Thursday.

House Speaker Mike Johnson (R-La.) defended the practice at a news conference Wednesday.

“It’s a really important principle, and I hope that we can employ that because it makes a big difference in the calculations, and I think it also makes good, logical sense,” Johnson told reporters. “We’re not introducing new law. We’re extending the existing law, and by definition that’s what current policy means.”

Congress has never used this kind of accounting for legislation passed via reconciliation, and doing so this year would set a precedent for future majorities. It’s partly why conservative Republicans in the House didn’t use it for their budget that was adopted this week. Johnson only has a one-seat majority in the House, and he’s facing pressure from the conservative House Freedom Caucus to include more savings and be realistic about the cost of the bill.

“If the Senate thinks they’ve got a better model, you know, fine, present it, but don’t give me sort of smoke and mirrors,” Rep. Chip Roy (R-Texas), a member of the House Freedom Caucus, told reporters on Thursday.

It’s not clear yet whether enough House Republicans will go along with the accounting method favored by Senate Republicans. GOP senators want to make other changes as well, and the two chambers must reconcile their differences as they write the legislation in the coming months.

For example, some far-right lawmakers maintain that the spending cuts called for in the House budget are too small, while moderate Republicans sensitive to cuts to programs like Medicaid say they are too big. Several GOP lawmakers faced angry constituents at town halls over the weekend, including voters upset by cuts to government services and layoffs of federal workers.

The party is facing another problem in the Senate, where current rules do not allow for their preferred accounting tactic that would make the tax cuts appear cost-free. The Senate parliamentarian, the chamber’s nonpartisan rules arbiter, rebuffed their attempt to use it on the 2017 tax cuts, which also passed via reconciliation.

However, Republicans could go nuclear and vote to overrule the parliamentarian, an extraordinary move that would require a simple majority vote. It’s something Democrats were urged to do in 2021 to pass former President Joe Biden’s full agenda, but they lacked the votes to do so with a narrow 50-50 majority. The composition of the Senate now stands at 53-47.

“They can pass a budget with 50 votes, but they can’t repeal math,” Sen. Elizabeth Warren (D-Mass.) said when asked about a potential vote to overrule the parliamentarian. “At the end of the day, a tax giveaway to billionaires is still a tax giveaway to billionaires, and there is not one single American who will be fooled by this nonsense that the Republicans are trying to float.”

The Urban-Brookings Tax Policy Center, which provides nonpartisan tax policy analysis, said that taxpayers would foot the bill regardless of the semantics of budgetary accounting.

“In the end, Congress will have to pay for tax cuts and new spending by raising trillions of dollars in other taxes, cutting other spending or by borrowing the money,” the group said this week. “And no scorekeeping tricks can change that.”

Arthur Delaney contributed reporting.