The Senate Budget Committee has embraced deficit-financed tax cuts in its proposed budget resolution, showing an unwarranted disregard for the growing national debt that has -- in the past -- drawn so many expressions of alarm from committee members and other lawmakers.
The resolution set be voted on this week in committee assumes that its unspecified policies along with their economic feedback would reduce projected deficits by $4.7 trillion over 10 years, which is a little less than half of projected deficits over the time period.
The resolution includes parliamentary language (“reconciliation” instructions) that would enable the Senate to pass $1.5 trillion in tax cuts with a simple majority, avoiding the risk of a filibuster and the need to negotiate a bill with bipartisan support. It essentially jettisons past rhetoric about “revenue-neutral” tax reform, a phrase that means a tax package would neither increase nor decrease federal deficits.
Given that the federal debt has just surged past $20 trillion and is projected to grow rapidly in the next few years even under current law, revenue neutrality should be considered the minimum standard for fiscal responsibility. Ideally, Washington would revise the tax system in a way that would actually help reduce projected deficits.
The proposed Senate resolution was released two days after President Trump and congressional leaders unveiled a loose framework for substantially reducing taxes for many businesses and individual taxpayers. This framework lacks a great deal of information about the tax cuts as well as how they would be financed.
The Senate Budget Committee’s proposed resolution is similarly vague on key issues. For example, it assumes $4 trillion dollars in savings from mandatory spending programs over the next decade -- but these cuts are not specified and, unlike the tax cuts, there are no reconciliation instructions to help enact this level of savings.
Trump administration officials and congressional Republicans are also counting on a $1.4 trillion boost in economic feedback to help reduce deficits but it is impossible to validate this assumption, given the lack of detail provided about the policies that would supposedly produce such results.
Simply assuming that unspecified policies will result in higher rates of economic growth than the U.S. has experienced in the recent past is unrealistic, particularly if deficit-financed tax cuts worsen Washington’s already unsustainable fiscal path. It amounts to a magic asterisk.
Elected officials are essentially dangling something popular in front of the American public -- large tax cuts -- while ignoring or hiding the trade-offs and difficult choices that would need to be made to avoid pushing the debt up even faster.
The proposed budget resolution also includes language that would help move a tax plan through the Senate with undue speed. Particularly troubling is the elimination of a rule that would require a full Congressional Budget Office (CBO) estimate of the cost of the legislation at least 28 hours before a vote.
The need for Congress to carefully consider such estimates should be obvious; they should know what they are voting on.
That need is underscored by a report released Friday by the nonpartisan Tax Policy Center. The center’s “preliminary analysis” said the Republican budget framework would reduce federal revenue by $2.4 trillion over the next 10 years and by $3.2 trillion over the following decade.
A similar conclusion was reached by the Committee for a Responsible Federal Budget. These are far larger revenue losses than supporters of the plan have suggested.
The desire for a quick legislative accomplishment should not overwhelm lawmakers’ earlier concerns about the nation’s growing debt and the need for tax policy changes that would not add to federal deficits in the years ahead.