Days after Republican leaders unveiled the first details of their tax cut framework, a split has emerged within the GOP over fears that the plan could add trillions of dollars to the deficit with no guarantee of tax cuts for the entire middle class.
Republican leaders have promised to unite the party around a plan to create explosive economic growth by cutting tax rates for the majority of businesses and individuals. But battle lines are being drawn among rank-and-file Republicans such as Sens. Rand Paul (Ky.) and Bob Corker (Tenn.) who have questioned the assumptions underpinning the GOP plan.
The early skepticism comes as GOP leaders are planning for an aggressive timeline that would allow them to vote on a tax bill before the end of the year. House leaders plan to vote as early as this week on a budget framework that is a key step that would allow a tax bill to eventually pass the Senate without the help of Democrats.
Tax-writing committees could begin writing a bill and holding hearings as early as the end of this month. That would set up final votes in November or early December, assuming Republicans can remain unified on their plan.
But Corker has said that he is unwilling to vote for any tax plan that “adds a penny to the deficit.” Leaders are preparing to vote on a budget framework that would cost no more than $1.5 trillion in lost revenue with the expectation that the tax cuts would eventually pay for themselves through economic growth. But Corker said tax writers need to do away with costly tax breaks and benefits to help pay for rate cuts that he thinks will cost far more than leaders expect. He has also called on leaders to cut spending to help bring the budget into balance.
“I do know that it takes $4 trillion of loophole closing to execute what they want to execute,” Corker said Monday. “I’m all for the most draconian loophole closing that can possibly take place, but I haven’t seen Congress do those sort of things.”
Another faction emerged Monday when Paul posted on Twitter questioning leaders’ promise to deliver tax cuts to all middle-class taxpayers.
“This is a GOP tax plan?” Paul wrote on Twitter. “Possibly 30% of middle class gets a tax hike? I hope the final details are better than this.”
Paul linked to a report from the independent Tax Policy Center that the top 1 percent of earners would see the biggest windfall under the plan. Benefits for the wealthy would grow over time, and within 10 years, nearly 80 percent of the cuts would go to households making more than $900,000, according to the report.
Most Republicans have rejected those findings, saying that the estimates were based on insufficient information.
Neither Paul nor Corker said he was firmly against the bill, but any GOP split over the tax framework creates a potentially perilous negotiation in the Senate, where Republicans hold a slim 52-to-48 majority. Leaders plan to take advantage of special Senate budget rules that would allow a tax bill to pass with 51 votes rather than the 60 votes needed for most other legislation.
Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said plans to finance tax cuts by adding to the deficit could be a problem for some Republicans, but he is confident that economic growth will more than compensate for short-term losses.
“We’re not going to ever get this place turned around without being willing to make some difficult decisions,” Hatch said Monday. “Sometimes it means we might have to have a deficit to create the economy that will explode.”
Hatch said that he stands by Senate GOP budget projections that the plan will balance in 10 years, assuming average economic growth of 2.6 percent. That growth far outpaces the 1.9 percent estimated by the nonpartisan Congressional Budget Office.
“We have to go forward no matter what,” Hatch said. “I’m going to do my best to get a system here that will pay for itself and pay for a lot of other things in the future.”