The Senate Tax Bill's $1 Trillion Hole

By Yuval Rosenberg and Michael Rainey Senate Tax Bill Would Add $1 Trillion to the Deficit, Congressional Analysts Say The Senate tax bill looks increasingly likely to pass, even if it’s still not clear exactly what will be in it. However, as Republican leaders sought to lock down the 50 votes they need, Congress’s Joint Committee on Taxation may have just complicated their path. The JCT issued an analysis that found that, even accounting for the economic growth the tax plan would generate, the tax cuts would still add $1 trillion to the deficit over 10 years. JCT said that while the Tax Cuts and Jobs Act would add about 0.8 percent to GDP and that extra growth would generate additional tax revenues of $458 billion over 10 years, the tax cuts themselves would reduce revenues by $1.4 trillion, and interest on the additional debt would cost another $50 billion. The net result is a tax overhaul that falls well short of paying for itself. (Chart via [Martin Sullivan]( The JCT findings are in line with other mainstream analyses of the GOP plan, none of which has found that the tax plan will pay for itself. Even so, a spokesperson for Senate Finance Committee Republicans essentially dismissed the analysis, calling it “curious” and “incomplete” because the Senate bill was still evolving. And the Tax Foundation, a conservative group working on its own score of the Senate bill, said the newest numbers were “likely underestimating the economic growth spurred by this tax bill.” Senate Republicans have very little margin for defections among their 52-member caucus, but even if two undecided deficit hawks in the Senate find the JCT analysis troubling enough to withhold their support, Republicans may be able to round up the votes they need anyway. McCain Says He’s a ‘Yes’ on the Tax Bill ... The Arizona Republican, a critical vote on the Senate’s tax bill, said Thursday — before the JCT analysis was released — that “after careful thought and consideration” he’s decided to support the legislation: “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families.” McCain added that, while he takes seriously the concerns raised by some of his fellow Republicans about the higher deficits that would result from the $1.4 trillion tax cut, the net economic impact of the bill “would be positive.” McCain’s announcement leaves just five GOP senators officially undecided, barring any late changes of heart: Susan Collins, Bob Corker, Steve Daines, Jeff Flake and Ron Johnson. ... And the Odds of the Bill Passing Soar McCain’s announcement moved the bill one big step closer to the finish line — and maybe further than that. CNN’s Manu Raju [said]( that “McCain voting for bill likely means Flake too will support it. Corker too. Unlikely that Daines, Johnson and Collins all will vote and sink Senate bill. Bill likely to pass Senate.” Stocks soared as investors reacted to tax plan’s growing momentum and traders on [PredicIt]( an online market that allows individuals to place bets on specific events, agreed, pushing the odds of the bill passing to 93 percent. [Share]( [Tweet]( [Forward]( Senators Falling in Line on Bill With ‘Something for Every Republican to Hate’ McCain isn’t the only GOP senator who will be voting for the tax bill despite concerns over some of its effects — a sign of just how eager Republicans are to accomplish a core item on their agenda and just how acutely they feel the political pressure heading into a midterm election year. [Bloomberg’s Sahil Kapur]( “Some Republican senators hate that they’re about to vote for a bill that cuts individual tax rates before raising them back in a few years. Others hate that they might have to approve spring-loaded tax hikes if deficits increase. Some hate that large corporations would get a lower tax rate than family-owned businesses. And plenty of GOP senators hate that their once-in-generation opportunity to rewrite the tax code wouldn’t abolish the estate tax that conservatives detest.” Republicans clearly, desperately, want to get to “yes,” but whether they can or not may well depend on one other controversial provision still being negotiated: the [revenue trigger]( that would raise taxes if the economy and federal receipts don’t grow as projected. The trigger [may not comply with the Senate’s budget rules](. And the $350 billion it would raise falls far short of the $1 trillion that would be added to the debt, according to the new JCT score. Sen. Bob Corker and some fellow GOP deficit hawks want that backstop to be included, while other senators don’t like the idea. Sen. John Kennedy of Louisiana, for example, reportedly said Tuesday he’d have to be drunk to vote for it and that he’d [rather drink weed killer](. But by Wednesday, he was moderating those sentiments. “I may have to get drunk to vote for the bill,” he [said](. “But I’m not gonna let the perfect be the enemy of the good, and I’m not gonna draw lines in the dirt.” The question then becomes whether more than two senators might withhold their votes for the tax bill without the trigger they wanted. [Share]( [Tweet]( [Forward]( The US Economy Reaches a Sweet Spot "The U.S. economy is running at its full potential for the first time in a decade, a new milestone for an expansion now in its ninth year,” The Wall Street Journal’s Ben Leubsdorf [reports](. But the milestone was reached, in part, because the Congressional Budget Office has, over the last 10 years, downgraded its estimate of the economy’s potential output. “Some economists think more slack remains in the job market than October’s 4.1% unemployment rate would suggest. Also, economic output is still well below its potential level based on estimates produced a decade ago by the CBO.” Still, the news that the economy has reached its potential suggests that this is a [“mighty strange time”]( for the GOP’s tax plan stimulus, writes The Washington Post’s Andrew Van Dam. [Share]( [Tweet]( [Forward]( Trouble for Obamacare Enrollment [Axios’s Sam Baker]( says that the initial reports about Obamacare enrollment this year will prove to be misleading. “People keep saying enrollment is going well. It's not. Sure, the number of people signing up each day appears high. That doesn't mean much when the enrollment period is half as long as it was last year. In about two weeks, open enrollment is going to end, and the overall number is going to be low, and a lot of the public is going to be confused about what happened, after they kept hearing about how enrollment was so much stronger than last year. That hasn't been the case since the first week of the sign-up window, and it certainly is not the case now.” So far, nearly 2.8 million people have signed up for 2018 coverage, compared to 12.2 million who signed up last year. News - [Ahead of Vote, Promised Treasury Analysis of Tax Bill Proves Elusive]( – New York Times - [GOP Leaders Struggle With Shutdown Strategy]( – Politico - [AARP Opposes Senate Tax Bill, Calls Medicare Cuts and Obamacare Mandate Repeal 'Troubling']( – CNBC - [An 11th-Hour Raid by the Wealthiest Baby Boomers]( – The Atlantic - [On Capitol Hill, Drug Prices Are Now the Hot Topic]( – Stat - [What Republicans Say When Asked Why Their Tax Bill Benefits the Rich Most of All]( – Washington Post - [Governors to Congress: Pass CHIP Already]( – Axios - [Patients With Rare Diseases and Congress Square Off Over Orphan Drug Tax Credits]( – Kaiser Health News - [The White House Expects Trump to Get Even More Outrageous]( – Axios - [Warren Buffett's Fruit of the Loom Tries on Subscription Underwear]( – Bloomberg - [Wheelin’ and Dealin’ McConnell in Full Force on GOP Tax Bill]( – Roll Call Views - [No Serious Lawmaker Should Support This Tax Bill]( – Robert Rubin, Washington Post - [Republicans Are Offering a Bad Bargain for America’s Future]( – Robert J. Samuelson, Washington Post - [GOP Tax Bill: Wrong Debate at the ​Wrong Time]( – Will Marshall, The Hill - [The Latest Republican Tax Proposal Is the Dumbest Yet]( – David Dayen, The Nation - [There Is No Economic Theory That Justifies the GOP Tax Plan]( – Eric Levitz, New York - [There's Too Much Tax Increasing in Republican Tax Cut Plan]( – Adam Brandon and John Tamny, USA Today - [A Hidden Tax Bill Time Bomb]( – Brian D. Langstraat, Washington Times Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? 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