5 Ways The GOP Tax Cut Plan Could Go Off The Rails

WASHINGTON — Congressional Republicans still aren’t in agreement on the shape and scope of a sweeping tax cut package at the heart of President Donald Trump’s domestic policy, but they’re plowing ahead anyway in hopes of generating some momentum to get them across the finish line by this summer.

As soon as next week, Senate Republicans plan to vote on a budget framework laying out the amount of spending reductions they will need to achieve to finance Trump’s sweeping legislative agenda: tax cuts — mostly for the wealthy — and investments in border security and energy development.

“We’ll see what happens. I think we’re in good shape,” Senate Budget Committee Chair Lindsey Graham (R-S.C.) said Thursday.

Still, by aiming for “one big, beautiful bill,” as Trump says, Republicans risk making the same mistake Democrats did under former President Joe Biden and putting all their legislative eggs in a single basket, which led to months of intra-party bickering over the basket’s exact contents, and nearly the failure of the entire legislative package.

Even with budget gimmicks, Republicans are going to struggle to please everyone. Conservatives who want deeper spending cuts will clash with moderates who want to defend politically popular health care programs will clash with New Yorkers who want relief for their state.

And the House will have to agree with the Senate.

Graham said his resolution will differ from the $4 trillion plan passed by House Republicans, which included at least $1.5 trillion in spending cuts over a decade. For one thing, he said he plans to omit language telling specific committees how much money they should cut from federal programs under their jurisdiction.

Leaving out the specific dollar amounts would give Republicans more flexibility and allow them to claim they’re not planning to cut specific programs — particularly Medicaid. The House-passed budget calls for $880 billion in savings from the committee that oversees Medicaid, which prompted waves of Democratic attacks and threats from moderate Republicans not to support a final bill.

Republicans will need to figure out exact figures later, but at least for now, Republican leaders are hoping the placeholders will satisfy conservatives demanding more cuts, keeping the ball rolling.

Read on for four more ways the plan could still go off the rails:

Despite Senate Republicans’ plan to avoid committing to specific cuts, House Republican leaders aren’t backing down from insisting on massive savings from so-called “mandatory” federal programs like Medicaid and the Supplemental Nutrition Assistance Program, which serve millions of vulnerable Americans across the country.

That’s putting them on a direct collision course with moderates, and with party members from working-class areas with huge numbers of Medicaid enrollees. A number of Republicans have suggested drastic cuts to Medicaid, specifically, would make it difficult for them to vote for the bill.

The problem for the GOP is particularly acute in the House, where they only control a two-seat majority. President Donald Trump’s decision to withdraw his nomination of Rep. Elise Stefanik (R-N.Y.) to serve as U.S. ambassador to the United Nations and keep her in the House, rather than risk losing her seat to Democrats, underscored how worried Republicans are about passing their agenda with such tight margins.

But House Budget Committee Chair Jodey Arrington (R-Texas) said he was adamant about including large spending cuts in the bill even if the Senate adjusts other policies, such as making the tax cuts permanent.

“If the Senate does the responsible thing, like we did, and balance the cost of tax cuts with spending reductions, then most of us are open to locking in tax cuts permanently,” Arrington told HuffPost on Thursday. “But they cannot change the part of the equation that reduces spending, because that’s the biggest problem.”

House and Senate Republican leaders agree on one thing: including an increase to the statutory borrowing limit in the tax cut package — a risky proposition that could give deficit hawks more leverage over the shape of the bill.

Already, some conservatives have expressed objections to increasing the debt limit using reconciliation, the budget process allowing Republicans to avoid a Democratic filibuster. Sen. Rand Paul (Ky.) is among them, while Sen. Ron Johnson (Wis.) said he’d like as much as $6.5 trillion in spending cuts over 10 years if the bill includes a debt limit hike.

“I’d support that as long as we bring spending down to a reasonable pre-pandemic baseline,” Johnson told HuffPost, calling the House spending cuts far too inadequate.

Sens. Mike Lee (Utah) and Rick Scott (Fla.) have expressed similar concerns. Senate Republicans can’t lose more than 3 GOP votes on the bill, so getting everybody on the same page will be critical.

Senate Republicans want to make their 2017 tax cuts permanent, instead of simply extending them for another 10 years. But that would make their actual cost much, much bigger, increasing the deficit by $37 trillion over 30 years, according to nonpartisan budget experts.

So what’s their solution? Simply pretending a huge part of the tax cuts don’t exist by using a budget gimmick known as “current policy baseline,” which pretends the tax cuts don’t expire at the end of this year. It would, on paper, change the price tag of the bill from $4 trillion to zero dollars, even though in reality it would explode the debt.

Such an accounting method has never been used before in reconciliation, however. Republicans are hoping for a favorable ruling from the Senate parliamentarian, a nonpartisan official who advises the chamber on its rules, to proceed. That ruling is expected in the coming days. If the ruling is negative, Republicans could vote to overrule the parliamentarian, but that would also require 51 votes.

“We need to get consensus, so that we have, for sure, 51 votes, no matter what comes up,” Sen. John Hoeven (R-N.D.) said.

There are also questions about whether conservative lawmakers in the House would be willing to go along with the gimmick.

“If we can get a ruling for permanence, and we do the fiscally responsible thing on offsets, then I think that our conference is open to receiving [the current policy baseline], but they cannot change the part of the equation that reduces spending,” Arrington said.

Another possible sticking point — one that wasn’t a problem when Republicans passed their symbolic budget resolution earlier this month — could be the federal tax deduction for what households pay in state and local property taxes.

Republicans capped the so-called SALT deduction in their 2017 tax bill, which prompted 13 Republican House members from high-tax states such as New York and California to vote no, because capping the deduction was disadvantageous for high-income taxpayers in their districts. Republicans controlled 239 House seats at the time, so they could afford such a double-digit defection.

House Republicans from blue districts know they have leverage to demand an increase in the deduction. “Coming from New York, this is really important,” Rep. Nicole Malliotakis (R-N.Y.) said this week. “That is one of the biggest priorities not just for me, but New York, New Jersey members.”

Party leaders have said they will try to accommodate their SALT demands, but doing so presents the same dilemma as with spending cuts — increasing the SALT deduction can win over the moderates, but it will try the patience of the hardliners who want to hold down the cost of the bill.