Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said the losses could shape the tax bill going forward. “I mean, it could, because the elections went against the Republicans,” Hatch said in a brief morning interview.Asked whether he is feeling pressure to tilt the tax plan’s benefits more toward the middle class, Hatch said, “I think we’ve been moving that way anyway.”
The House Republican tax plan may have a deficit problem.The GOP bill including some changes would increase federal budget deficits by $1.7 trillion over 10 years, according to Joint Committee on Taxation estimates shared by the nonpartisan Congressional Budget Office. That includes money for additional debt service payments due to the bill. . . . A separate report from Fitch Ratings on Tuesday estimated that the GOP tax cuts would not pay for themselves and instead would add “significantly” to U.S. debt.
The most important shortcoming of the House bill is its impact on the national debt. The official estimate finds that the bill will increase the debt by around $1.4 trillion over 10 years. Adding in the cost of interest on the new debt and realistically assuming that some important temporary provisions in the bill — the ability immediately to write off new investment and tax credits for households — will be extended by future Congresses, the estimated total new debt rises above $2 trillion.All the usual reasons to be concerned about so much new debt apply. Over time, the debt would slow economic growth and reduce wages, undoing the good done by encouraging investment in the first place. In addition, $2 trillion in additional debt makes it harder for the government to respond to a recession, and possibly even increases the likelihood of a fiscal crisis.
He also thinks the breaks for the rich (raising the income level for the top bracket and the 25 percent “pass-through” rate) need to be dumped and provisions to help lower-income taxpayers (an expanded earned income tax credit and the separate child credit) need to be added. And that’s a Republican talking.
And finally, the Senate will throw the bill in the trash. There’s a legitimate question whether it would pass the Byrd test. In any event, a preview of the bill (now delayed until after the House bill is marked up in the Ways and Means Committee) is dramatically different. “Senate leaders were exploring postponing the centerpiece of the effort — an $845 billion corporate tax cut — until 2019, according to four people familiar with a draft of the legislation,” The Post reported. “The move would make it easier to comply with Senate rules that aim to limit any legislation’s impact on the debt.” In addition, the entire state and local tax deduction may go, which would likely be a no-go in the House where even a partial repeal has blue state Republicans in an uproar). Furthermore, “Senators also were debating how to ensure that fewer of the plan’s benefits flow to the wealthy and more flow to the middle class.” These two bills sound, well, essentially incompatible with one another.
Perhaps all these obstacles will be overcome. After Tuesday, however, that became a whole lot harder.