Scroll to Top

Senate Republicans are getting ready to admit they don’t care about deficits after all

By dailymail / Published on Tuesday, 20 Jun 2017 01:14 AM / No Comments

A reconciliation bill obtains expedited status in reaching the floor and can be passed with as few as 50 votes. But while a reconciliation bill can increase the short-term budget deficit, the Congressional Budget Office has to certify that it won’t increase the budget deficit over the long term.

The “short term” in this case is defined as lasting 10 years, which is why Bush’s tax plan enacted steep cuts that then expired after their 10th year of life.

Republicans passed those temporary tax cuts assuming that when the time came for them to expire, political pressure would mount to extend them. And, indeed, during the 2010 lame-duck session they were extended for two additional years. But during the 2012 lame-duck session, President Barack Obama threatened to veto full extension. He proposed, instead, to extend rate cuts for incomes below $250,000 but to let the high-end tax cuts expire. Republicans pushed him back to a $450,000 income threshold, but fundamentally the GOP dream of a permanent cut in the top marginal rate died.

Rather than simply rerun that experiment, the GOP’s plan for the Trump years has been to enact permanent tax cuts. In its pure form, that was meant to be a two-step process. First pass an Obamacare repeal bill that enacts large tax cuts and pays for them with large cuts to Medicaid. Second, starting from the new, lower revenue baseline, do a big conceptual rewrite of the tax code — including curbing many popular individual deductions and replacing the corporate income tax with a new kind of consumption tax.

The trouble with doing a big conceptual rewrite of the tax code, however, turns out to be that it’s really hard. Hence the appeal of simply changing the rules so there’s no need to go through all the trouble.