WASHINGTON— An obscure but consequential bookkeeping matter has become the latest flashpoint in Congress as Republicans labor to enact President Donald Trump’s sprawling tax cut agenda. Senate Republicans are looking to change how extending many of Trump’s 2017 tax cuts would be scored when it comes to future federal deficits. The Congressional Budget Office has projected that extending the cuts would increase deficits by nearly $4 trillion over the coming decade.
Democrats accuse Republicans of violating Senate norms with the move. Senate Democratic leader Chuck Schumer, D-N.Y., says Republicans are going “nuclear,” blowing up the institution’s rules.
The debate carries major ramifications for Trump’s agenda and the country at large, with policy decisions in the balance that could shape America’s economic and budgetary outlook for years to come.
So what is the dispute all about?
Why lawmakers keep talking about the baseline
Republicans are looking to draft their bill using a “baseline,” or starting point, that shows no impact on the deficit.
Such a baseline assumes that Trump’s 2017 tax cuts will continue regardless of their expiration date, essentially counting their renewal as cost-free. On top of that, Republicans are planning to go forward without a
“They are deciding that the way we’re going to do this is to break the Senate and make up our own rules,” Sen. Cory Booker, D-N.J., said as he spoke on the Senate floor for more than 25 hours to protest Trump’s agenda. “This is how they are going to get a bill through that gives trillions of dollars in tax cuts to the wealthiest in the country.”
The accounting change makes it easier for Republicans to make the tax cuts permanent as they try to muscle a bill over the finish line this year. But it also underscores how tax cuts — as well as spending — have historically taken precedence over deficit reduction when it comes to legislative priorities, leading to more government borrowing and a national debt now exceeding $36 trillion.
The arguments for and against the change
Some of the most powerful forces in Washington are arguing for the accounting change.
Scores of deep-pocketed trade and business groups say that creating a pathway for making the 2017 tax cuts permanent provides the certainty and stability companies need to drive growth and productivity.
“Americans should not have to worry about their tax relief expiring every few years,” said Senate Majority Leader John Thune, R-S.D.
Meanwhile, fiscal watchdogs are sounding the alarm.
“I think this should be rejected by any fiscally responsible member of Congress,” said Michael Peterson, chairman and CEO of the Peter G. Peterson Foundation, a debt watchdog group. “It’s a blatant attempt to get around one of the few rules we have that protects the next generation and our fiscal future.”
How it all relates to the Senate’s filibuster
Republicans are looking to pass Trump’s tax cut package with a simple majority, which is usually not possible in the Senate, where most legislation requires 60 votes to advance.
But the process for avoiding a Senate filibuster comes with certain rules, including it can’t increase the deficit beyond a specific timeframe, typically 10 years. Republicans chose to sunset large portions of the 2017 tax cuts after just eight years to comply with that requirement.
The Senate parliamentarian generally decides whether legislative proposals fit within the rules for legislation not subject to a filibuster. But in this case, Republicans argue that Senate Budget Committee Chairman Lindsey Graham, R-S.C., has the prerogative to decide which baseline is used to score the bill’s cost.
Schumer bristled at the GOP’s approach.
“By ignoring the parliamentarian, Republicans are going nuclear,” Schumer said Wednesday. “They’re trampling all over rules that have governed the Senate for decades in order to give massive tax breaks for their billionaire friends.”
The issue also came up at the White House when Trump met with Republican senators.
