As the Senate pushes to bring a version of the “Tax Cuts and Jobs Act” to the floor for a vote, several Republican senators have raised different concerns about problems with the bill that might cause them to vote no.
Because leadership has opted to use budget reconciliation to advance this bill, Republicans only need 51 votes (which could include the vice president) to pass it. But with only 52 Republican Senators, any dissent is a serious threat to passage.
I am on record – repeatedly – as saying that this bill is not real tax reform and bad for taxpayers.
The fixes being floated to appease outlying Republicans do not make it better. Let’s look at what we know about the concerns of dissenting senators, options for addressing them under discussion, and why I think these options are bad policy.
1. The bill is fiscally irresponsible because it increases the deficit and debt unless unreasonable assumptions of growth are achieved.
I share this concern that several senators, including Sens. John McCain, R-Ariz., Jeff Flake, R-Ariz., Bob Corker, R-Tenn., James Lankford, R-Okla., and Jerry Moran, R-Kan., have raised.
But the potential fix to address this problem – including a “trigger” that would roll back tax cuts if deficit reduction or growth benchmarks are not achieved – is only window dressing for several reasons. Congress does not need to set self-imposed triggers for action. It can legislate changes at any time.
Also, recent efforts to automatically impose discipline have not been particularly successful.
Since the passage of the Budget Control Act in 2011, Congress has adjusted up the spending limits three times, often using specious offsets. Is there any reason to believe they won’t do the same when it comes to tax cuts?
And is there any chance that a Congress advocating that tax cuts will spur significant economic growth would later raise taxes if future growth appeared insufficient? Or that tax increases wouldn’t make sense if the country is in the midst of a recession?
All these uncertainties also suggest that it would be difficult if not impossible for a trigger mechanism to satisfy the certain Senate rules that any provision in reconciliation must have a “score” (revenue or spending) or be ruled not germane. Since it would be unclear if the trigger would ever be triggered, it would not score.
2. The bill unfairly favors large corporations over small businesses.
Tax reform is all about trade-offs, and Sens. Ron Johnson, R-Wis., and Steve Daines. R-Mont., have voiced concerns that the current draft of the bill gives too much to large corporations at the expense of small businesses and what are known as pass-through entities. From the perspective of fiscal policy, we need not even address the merits of this argument – which has been argued forcefully on both sides. From a taxpayer perspective, any changes made to address these concerns would be very expensive. The changes in the pass-through rules in the draft bill clock in at more than $360 billion; expanding those changes would be even more expensive.
3. Passing a bill using reconciliation and only the narrowest of vote margins leaves too many voters and taxpayers out of the process.
Both McCain and Johnson have urged the Senate to pursue a bipartisan path to tax reform through regular order. As I have said time and time again, the only way to achieve durable tax reform is from an open, bipartisan process. Johnson’s words make the case: “I would prefer a tax bill that was so politically saleable we could have got bipartisan support, but that is not the path leadership took. And so we are set up in this awful rushed process, a desperation to pass anything. That’s not the way to pass something that is going to affect so many people’s lives, and have such a dramatic effect on our economy.”
There is only one fix to this bill that makes sense for taxpayers: Throw it out and start from scratch through regular order. Corker summed it up nicely regarding what he’d like to do to the individual side of the bill: “Throw it in the trash can, and take it directly to the incinerator.” Then lawmakers can turn to doing the hard work of making tradeoffs and taking the time to find ways to develop a truly comprehensive, deficit neutral tax reform that has wide, bipartisan support. It’s not too late.
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