The following article by Niv Elis was posted on the Hill website September 27, 2017:
Democrats on Wednesday excoriated the GOP’s proposed tax framework, saying it would blow an enormous hole in the deficit — warning that popular social programs are next.
“Make no mistake: After [the] Republicans’ tax plan blows a multitrillion-dollar hole in the deficit, they will sharpen their knives for Social Security, Medicare, Medicaid and vital job-creating investments for middle-class families across America,” said House Minority Leader Nancy Pelosi (D-Calif.).
Republicans, who typically tout themselves as fiscally conservative, are arguing that economic growth will make the tax plan deficit neutral or even add revenues. They say that the use of so-called dynamic scoring, a method that takes into account broader impacts on the economy, would show that.
“It would take less than four-tenths of a percent of stronger growth to fully offset” the proposed tax-cut deficit, said Sen. Pat Toomey (R-Pa.), a member of the Senate Budget Committee.
But Democrats and many nonpartisan fiscal hawks say dynamic scoring is not the way to go.
“Dynamic scoring is fake math. It’s just made-up, fake math to hide another deficit-busting tax cut to benefit the wealthiest Republicans,” said Senate Minority Leader Chuck Schumer (D-N.Y.), adding that tax reform should be deficit neutral “on its own merits.”
House Ways and Means Committee ranking member Richard Neal (D-Mass.) said the plan would “explode our nation’s deficit by believing that tax cuts pay for themselves — something that respected economists on both sides of the aisle know is simply not true or borne out by any facts.”
He also warned the GOP against touching retirement benefits.
Deficit watchers in Washington also sounded the alarm.
“Tax cuts shouldn’t be handed out like Halloween candy. To grow the economy, they must be paid for, and the details of this plan appear to come up $2 to 2.5 trillion short,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
“Deficit-financed tax cuts are a recipe for a short-term economic sugar high followed by sluggish long-term growth,” she added.
Michael Peterson, president and CEO of the Peter G. Peterson Foundation, said that Congress should not rely on overly optimistic economic assessments to pay for tax cuts.
“Banking on rosy projections of hypothetically higher growth is setting voters, and the economy, up for disappointment,” he said.
The need to comply with strict congressional budget rules, however, complicates Republicans’ message on the deficit. The Congressional Budget Office and Joint Committee on Taxation do use some dynamic scoring, but not to the extent backed by Republicans.
Budget reconciliation, the process that Republicans are using to allow them to pass a tax bill without Democratic support, requires the budget to lay out deficit limits for the legislation in question.
Republicans on the Senate Budget Committee, including Toomey, are including $1.5 trillion in deficit-financed tax cuts in the bill to ensure that the process doesn’t get tangled in the rules.
At the same time, they argue that their own official deficit figure is inaccurate and wouldn’t materialize due to growth and different methods of measurements of the deficit baseline.
“The way it’s being reported just numbers-wise is somewhat accurate, but it’s actually not accurate when you look at what really is happening versus current policy,” said Sen. Bob Corker (R-Tenn.), referring to the baseline measurement method.
A report from the left-leaning Center on Budget and Policy Priorities said those methods were not reliable.
“The justifications for dismissing the $1.5 trillion cost defy both evidence and logic,” it said.
According to Toomey, even getting to the $1.5 trillion mark would require tax writers to “broaden the base” and come up with trillions of dollars to offset revenue lost to lower tax rates. With estimates of lost revenue as high as $5 trillion, finding offsets in the tax code will be no easy task.
Democrats, who have in the past been willing to finance their priorities with deficit spending, are hoping that their anti-deficit arguments will stick.
Republicans, including President Trump, have shown willingness to compromise on cutting taxes for the wealthy, the central point of attack for Democrats, who demand that “not one penny” of the tax cut go to millionaires.
Top conservatives in the House said they would be willing to leave the top tax bracket untouched, and Senate Republicans have not drawn red lines on the matter either.
“My preference is not to raise taxes on anybody,” Toomey said Wednesday. ”With respect to very high income individuals, I don’t think we can guarantee that yet.”
The budget outline released Wednesday proposed lowering the top tax rate from 39.6 percent to 35 percent, but left the door open to adding an additional tax on the wealthy.
View the post here.