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“… Republicans are readying an untested and aggressive move—a blatant gimmick, critics say—that would declare that Congress can extend expiring tax cuts and record no costs. House Republicans didn’t attempt the maneuver in the
budget they passed this week. Key GOP senators are eager to try it.
… The idea—known by the lovely Washington name of “current-policy baseline”—has two main advantages for Republicans.
First, it makes a
$4 trillion tax cut over a decade look like $0, which could be easier to sell to lawmakers and voters. Second, in the arcane Senate budget procedure world, declaring tax-cut extensions free opens Republicans’ easiest path to making President Trump’s expiring tax cuts permanent.
… The reaction from Democrats, budget experts and a handful of Republicans has been withering. Rep. David Schweikert (R., Ariz.) has described the idea as a fraud and its proponents as lazy and intellectual scammers.
“Am I giving you enough inflammatory language?” he said. “I can actually go much further.”
Here’s the thing: Whether or not Republicans assume tax cuts have no cost, the endpoint of extending tax cuts would be the same when revenue and spending are tallied over the next few years. Assuming tax-cut extensions are free means acknowledging that today’s official debt projections are too low.
… Republicans find themselves here because of choices they made in 2017.
… Republicans capped their 2017 tax cuts at $1.5 trillion over 10 years and followed the requirement that reconciliation bills can’t add to deficits beyond the budget window.
To hit those targets, they scheduled core provisions—including individual tax rate cuts, a higher standard deduction and a larger child tax credit—to expire after 2025.
… They made a calculated bet that a future Congress would extend popular tax breaks. They are now that future Congress, regaining full control in last year’s elections and trying again to use reconciliation for tax cuts.
The House plan uses the standard, consistent accounting approach called the current-law baseline. Because tax cuts aren’t on the books after 2025, official projections show revenue rising and deficits shrinking; changing that shows up as a revenue loss.
The House plan includes spending cuts and allocates $4 trillion to $4.5 trillion for tax cuts, roughly enough for a 10-year extension of the expiring tax cuts. They would, however, have a hard time making cuts permanent or including ideas like a higher cap on state and local tax deductions and Trump promises like “no tax on tips.”
Senators say, “Wait, these tax cuts have existed for eight years, and Congress shouldn’t consider extensions a cost.” They haven’t settled on exact procedures and mechanics, but they want to use the current-policy baseline so that only new proposals would carry costs.
House Speaker Mike Johnson (R., La.) supports the idea.
“That’s a really important principle and I hope that we can employ that,” he told reporters last week. “
It makes a big difference on the calculations and I think it also makes good logical sense.” …”
