As they search for ways to join the Republican tax cut push, self-styled “deficit hawk” senators have raised questions that will appear to make no sense.
Sen. Bob Corker of Tennessee, for example, vows to oppose any bill that will increases the deficit by even a penny. Yet the budget framework for tax cuts that will he helped design expressly permits $1.5 trillion in higher deficits over the next 10 years.
In different words, Corker’s tax cut demand seems to directly contradict his budget outline.
A lot, actually.
Corker insists a tax cut that will seems to expand the deficit by $1.5 trillion under budget rules may not, inside the real world, expand the deficit at all. He cites two different reasons stemming via how deficits are measured in addition to forecast.
The first involves roughly $500 billion in temporary tax cuts that will are set to expire nevertheless that will Congress usually extends. Budget rules assume they expire — as they do under current law. that will, in turn, increases the amount of projected revenue in addition to reduces the amount of projected deficits by $500 billion before tax cuts are taken into account.
Republicans assume instead that will those provisions would likely be extended – as under current policy. that will reduces expected revenue in addition to increases projected deficits inside the absence of tax cuts.
Using that will assumption, Corker in addition to different Republicans insist one-third of the $1.5 trillion tax cut can be already baked into the government’s books.
The second reason concerns projections for economic growth. The budget framework measures $1 trillion in revenue lost via tax cuts on a “static” basis. Static estimates don’t attempt to calculate whether tax cuts generate additional economic growth in addition to revenues.
Republicans leaders prefer “dynamic” estimates reflecting the effects of growth. inside the current debate, they insist that will GOP tax cut plans will generate at least $1 trillion in additional revenues.
Those two assumptions – that will $500 billion of higher deficits can be already booked, in addition to that will tax cuts generate $1 trillion in extra revenue – are how Republicans claim a $1.5 trillion tax cut under budget rules won’t increase the deficit at all.
nevertheless that will’s only in theory. Favorable assumptions haven’t resolved the deficit drama. Corker in addition to different Republicans such as Sen. James Lankford of Oklahoma remain unconvinced the tax cut bill will indeed generate the $1 trillion in revenue they need.
To assuage their doubts, they want a deficit “trigger” inside the tax cut bill. Such a provision would likely force tax increases if deficits later prove higher than expected.
the idea’s unclear whether in addition to how such a trigger would likely work. nevertheless the deficit hawks have not bad reason to fear they will need one.
The University of Pennsylvania’s Penn Wharton budget design, overseen by a former economist for President George W. Bush, projects brand-new revenue via the Senate’s tax cuts inside the range of $117 billion to $368 billion. that will’s not even close to enough to keep the deficit via rising.
Similarly, 88 percent of top economists surveyed by the University of Chicago project substantially higher deficits in addition to debt via the House in addition to Senate GOP bills. Only the Tax Foundation — an outlier among economists for the aggressiveness of its dynamic scoring methods — has projected a 10-year revenue increase of at least $1 trillion via the Senate bill.
Broadly shared expectations of higher deficits help explain why Republicans aren’t waiting for analyses by professional career economists within the government.
The Treasury Department has not released its own forecast. Senate leaders aim to pass their bill that will week even though the Joint Committee on Taxation, the official scorekeeper of Congress, hasn’t completed its “dynamic” growth estimates for the bill.
nevertheless senators may receive those estimates whether they want them or not. In a letter Tuesday to Democratic Sen. Ron Wyden of Oregon, the Joint Committee’s top staffer said his colleagues were racing to produce them as early as Wednesday evening.