Last week, House Speaker Paul Ryan (R-Wis.) told a variety of conservative media outlets that the Republican tax plan would deliver “a tax cut for everybody.” When evidence emerged that millions of middle-class households would pay more under the GOP proposal, Ryan’s office conceded that the Speaker “misspoke.”
Evidently, there’s a lot of that going around.
Mitch McConnell, the Senate majority leader, acknowledged on Friday that the Republican tax plan might result in a tax hike for some working Americans, saying he “misspoke” days earlier when he said that “nobody in the middle class is going to get a tax increase” under the Senate bill.
“I misspoke on that,” Mr. McConnell, a Kentucky Republican, said in an interview on Friday with The New York Times.
Remember, the ostensible point of the entire exercise was the GOP’s stated desire to lower taxes on the middle class. And yet, last week, both the top Republican in the House and the top Republican in the Senate acknowledged some in the middle class will pay more in taxes, not less, under their plan.
This seems likely to create political problems for the party, but before we go too far down that road, GOP leaders are confronting a more immediate problem: their tax plan may not be able to pass.
The legislative procedures get a little tricky, but the problem is relatively straightforward: congressional Republicans, hoping to circumvent a Democratic filibuster, are pushing their tax plan through something called the budget reconciliation process. Under Senate rules – specifically, the “Byrd Rule” – bills passed this way can’t increase the deficit after 10 years.
By the GOP’s own admission, the current version of the Republican tax plan adds roughly $1.5 trillion to the deficit in its first 10 years – which is quite a bit for a party that occasionally pretends to care about balancing the budget – but then keeps running red ink in the years that follow. (According to the Joint Committee on Taxation, the Senate bill is even further from budget neutrality than the House bill.)
In other words, the GOP tax plan, at least in its current iteration, is at odds with the procedural rules Republicans are counting on. The arithmetic isn’t complicated: if the tax cuts aren’t deficit neutral by 2028, Republicans will need 60 votes in the Senate, not 50.
And with that in mind, GOP leaders have some options:
1. They can make the budget arithmetic work. They’ve had quite a while to figure out how to make their numbers add up, and so far, the plan’s GOP architects haven’t been able to figure this out.
2. They can find some Democratic friends. After excluding Democratic lawmakers from the process entirely, and writing the plan in secret, Republicans could try to find eight Senate Dems to vote for a tax plan, making the reconciliation rules unnecessary. My advice to GOP leaders: don’t get your hopes up on this.
3. They can let the tax breaks expire. When Bush/Cheney-era Republicans passed their tax breaks, they didn’t worry about trying to offset the costs; they simply put the bills on the national charge card. The catch was, the tax cuts couldn’t be permanent because they violated the aforementioned Byrd Rule. This year, GOP leaders say they’re determined to make permanent changes to the tax code, but if they change their mind, they could allow their policies to sunset in 2027.
4. They can blow up the reconciliation process. The GOP majority, if it really wanted to, could rely on nuclear-option tactics and rewrite the existing procedural rules, effectively blowing up the filibuster. This would likely face some resistance from several Senate Republicans, but no one should assume this is off the table.
5. They can go after health care benefits. GOP leaders, at Donald Trump’s behest, are reportedly eyeing repeal of the Affordable Care Act’s individual mandate, which according to the Congressional Budget Office, would give Republicans an additional $338 billion to play with. On the other hand, the CBO also found that this change would end health care coverage for 13 million Americans – and if Republicans stripped 13 million people of their insurance in order to finance corporate tax breaks, some voters would probably be a little peeved.
6. They can fail and start over. A variety of GOP lawmakers have insisted of late that failure is not an option on this issue. They’re mistaken.