The Senate is racing towards a vote on its ill-conceived and fiscally irresponsible tax bill by the end of this week.
It seems the evil GOP bastards have run into a new problem: the Senate GOP tax bill does not comply with the “Byrd Rule,” which means GOP leadership technically cannot pass the bill with a simple majority vote with just Tea-Publicans. Matthew Yglesias explains, New dynamic score shows the Senate tax bill raises debt by more than advertised:
To comply with the terms of the Byrd Rule that allows Senate Republicans to bypass a Democratic filibuster, the tax plan must meet two conditions. On the one hand, it needs to comply with the budget resolution’s mandate to raise the deficit by no more than $1.5 trillion over 10 years. According to Penn-Wharton, it does that. But on the other hand, it needs to not increase the long-term deficit in the years following.
And here’s where Penn-Wharton says that there’s a problem: “We estimate that the Senate TCJA continues to reduce revenue in years beyond the 10-year budget window.”
Critically, this conclusion does not change when they attempt a “dynamic” score that considers the potential growth-boosting effects of tax cuts. Instead, they find that “the Senate Tax Cuts and Jobs Act reduces federal tax revenue in both the short- and long-run relative to current policy. In the near term, there is a small boost to GDP, but that increase diminishes over time.”
Senate Republicans would like you to look past ugly distributive numbers and think about broad growth effects. But the bottom line here is not even Republicans can make that math work out when they need to plug it into a rigorous model.
* * *
In short, the Senate GOP leadership wrote a bill that’s designed to game the system with phase-ins and phase-outs, and Penn-Wharton thinks taxpayers will respond in kind — gaming the gamed system, reducing federal revenue, and increasing the long-term deficit.
The result is a plan that raises long-term deficits by significantly more than the bill is supposed to, even before you consider the impact of higher debt service costs.
So even with their “magic asterisk” dynamic scoring and GOP fuzzy math, they cannot make the numbers add up. Does this mean that the GOP tax bill will be subject to the 60 vote cloture rule because it does not comply with the Byrd Rule? Not in the Septuagenarian Ninja Turtle’s Senate. “Rules? We don’t need no stinkin’ rules! We do whatever we want.”
The Senate GOP tax bill gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off, according to a new report released Sunday by the nonpartisan Congressional Budget Office. Senate GOP tax bill hurts the poor more than originally thought, CBO finds:
Republicans are aiming to have the full Senate vote on the tax plan as early as this week, but the new CBO analysis showing large, harmful effects on the poor may complicate those plans. The CBO also said the bill would add $1.4 trillion to the deficit over the next decade, a potential problem for Republican lawmakers worried about America’s growing debt.
And who exactly are these GOP deficit peacocks? Because they have been virtually silent during this tax debate.
By 2019, Americans earning less than $30,000 a year would be worse off under the Senate bill, CBO found. By 2021, Americans earning $40,000 or less would be net losers, and by 2027, most people earning less than $75,000 a year would be worse off. On the flip side, millionaires and those earning $100,000 to $500,000 would be big beneficiaries, according to the CBO’s calculations. (In the CBO table below, negative signs mean people in those income brackets pay less in taxes).
The main reason the poor get hit so hard in the Senate GOP bill is because the poor would receive less government aid for health care.
The Senate Republican tax bill eliminates the requirement that almost all Americans purchase health insurance or else pay a penalty. The CBO has calculated that health insurance premiums would rise if this bill becomes law, leading 4 million Americans to lose health insurance by 2019 and 13 million to lose insurance by 2027.
Many of the people who are likely to drop health insurance have low or moderate incomes. If they drop health insurance, they will no longer receive some tax credits and subsidies from the government. The Joint Committee on Taxation (JCT), the other official nonpartisan group that analyzes tax bills, put out a similar report showing how lower-income families are hurt by the loss of the health-care tax credits. But the CBO goes a step further than the JCT. The CBO also calculates what would happen to Medicaid, Medicare and the Basic Health Program if the Senate GOP plan became law. The CBO is showing even worse impacts on poor families than the JCT did.
Economist Jared Bernstein explains How the Republican tax cut plan goes after health care:
[C]onsider the other reason the tax plan is so ill-advised: its potential effect on health care.
The Senate added the repeal of the individual health coverage mandate to its version of the big tax-cut plan for at least three reasons. First, because it scores as saving about $320 billion over 10 years, making it a juicy, partial “payfor” for a plan that, even with this change, still will raise deficits by well over $1 trillion over the next decade. Second, because it takes a whack at the structure of Obamacare. And third, because it’s politically easy to defend: The Republicans claim they’re freeing folks from purchasing something they don’t want.
But the argument that getting rid of the mandate will improve people’s well-being by allowing them to opt out of coverage without a penalty is weaker than it first sounds, as per this analysis by Aviva Aron-Dine. She draws heavily on the Congressional Budget Office’s estimate that repealing the mandate will lead to 13 million fewer people with coverage and a 10 percent increase in premium costs.
* * *
For those with low and moderate incomes, the ACA controls coverage costs through either Medicaid or premium tax subsidies, the latter meaning that the government helps to pay your premium costs if your income is below 400 percent of the federal poverty level (almost $80,000 for a family of three with one kid). And when your premiums go up, so does your subsidy. Thus, those on whom the mandate imposes the heaviest financial lift here are those with incomes above this cutoff. And for them, if the CBO is right, premium costs will be higher as a result of repealing the mandate.
* * *
The House bill also repeals the deduction of medical expenses for those who spend more than 10 percent of their income on medical expenses not covered by insurance. While high-income families make the largest claims, lots of low- and moderate-income families take this deduction: More than 70 percent of claimants have incomes below $75,000.
Finally, and I consider this to be an existential threat to social insurance in general, the Republicans’ strategy with all this tax cutting is not just to channel revenue away from the Treasury and toward the top 1 percent. It’s to create large deficits to force future spending cuts. This implicit attack on public health coverage is every bit as threatening as the direct attack.
According to the Congressional Budget Office, the GOP tax bill will instantly trigger $400 billion in automatic cuts to Medicare in the next 10 years, including $25 billion in the first year after enactment alone.
These cuts are the result of a law known as Statutory PAYGO. That law requires an automatic cut in spending when Congress increases the deficit. The tax bill is, in Donald Trump’s words, “a big, beautiful Christmas present” — for Trump’s family and other billionaires. If the Republicans are successful in passing a tax bill that increases the deficit by $1.5 trillion, as they intend, the provisions of PAYGO will be activated.
To be clear: If the tax bill passes the Senate and is signed into law by Trump, nothing more needs to be done to cut Medicare. If the House and Senate do nothing, the cuts take effect immediately after the end of the congressional session and get bigger every passing year. A vote for this tax bill is a vote to cut Medicare.
This is important because the mythical moderate from Maine, Sen. Susan Collins, says her tax vote may hinge on a health care bill. Here’s how it works:
Sen. Susan Collins has suggested she’d vote for a tax bill repealing the Affordable Care Act’s individual mandate only if Congress also passes separate legislation to establishing a new reinsurance fund.
Collins may be the key to passing the Senate’s tax reform bill. But it’s hard to see the Republican-controlled Congress passing a reinsurance bill — and though experts say such a measure would help offset the effects of repealing the mandate, many say it wouldn’t go far enough.
Let me make this easy for you, senator. If Congress does not first enact your reinsurance bill, you are a no vote on the Senate GOP tax bill. You aleady voted against “Obamacare” repeal because of your concerns for its effects on Medicaid and the health insurance markets. You cannot in good conscience vote for this tax bill and square your vote on “Obamacare” repeal.
There are other problems with this ill-conceived tax bill. The most glaring of which is Corporate repatriation is a scam: GOP plan rewards tax-dodgers.
Then there is the attempt to buy off Christian Right Tea-Publican votes with the repeal of the so-called Johnson Amendment which prevents charities, social welfare organizations and, perhaps most importantly, churches from endorsing candidates. Hidden in GOP tax bill: A plan to turn churches into dark-money spigots.
My personal favorite is the House tax bill, approved this month along party lines, would eliminate the teacher spending deduction in its effort to clean up the tax code, close loopholes and secure bigger tax cuts for all. But the Senate bill, which could come up for a vote in the coming days, would double it, to $500. How a $250 Break for Teachers Explains a House-Senate Divide on Taxes. If the GOP tax bill makes it to a conference committee, guess which side will prevail.
David Leonhardt of the New York Times writes today, Will These Senators Live Up to Their Own Principles?:
John McCain helped defeat the Republican health care bill, in protest of its secretive, rushed process. Susan Collins and Lisa Murkowski voted against the same bill because they believed that middle-class and poor families had a right to health care access. Jeff Flake and Bob Corker ended their Senate careers rather than fully submitting to Trumpism. Then there are the two showing new signs of independence: James Lankford of Oklahoma and Jerry Moran of Kansas.
The tax bill is a test of all of them … [because] … This tax bill contains provisions that betray their stated principles.
* * *
So what are the senators going to do?
I hope that they do not fold because doing so — doing what President Trump and Mitch McConnell want — is the easier political path. I dearly hope they do not follow the cynical tactics of a few of their colleagues who have made a show of opposing a Trump-backed bill only to change positions after being offered a fig leaf of change. Senator Ron Johnson of Wisconsin and Representative Tom MacArthur of New Jersey have each done so more than once this year, and now it’s hard to take either seriously.
None of us should expect senators to vote only for bills that we personally support. They have their own beliefs and principles. But I do think it’s fair to expect them to vote only for bills that are consistent with those principles. This tax bill is not — not even close.
Finally, E.J. Dionne of The Post makes a direct appeal to Sen. John McCain. McCain could save the country from this terrible tax bill:
What can stop this duplicitous raid on the federal treasury? A mobilization at the grass-roots that tries to muster some of the energy that went into saving Obamacare would be helpful. But in the end, the honor of the Republican Party is in the hands of a small number of senators.
Sens. Bob Corker of Tennessee and Jeff Flake of Arizona have said over and over that (unlike their two-faced leaders) they actually do care about the deficit, even where this tax-cut bill is concerned. If they don’t vote against it, they will be enrolling in the Ryan-McConnell Deficit Prevarication Association. Sen. Susan Collins of Maine is as close as there is to a genuine moderate in the Senate GOP. Voting for this utterly immoderate scheme would mean tossing her moderate credentials into a bonfire.
But the man whose voice most needs to be heard is Arizona Sen. John McCain. Over the past few months, he really has been the conscience of the Senate. This summer, he gave a remarkable speech during the Obamacare debate in which he chided the party’s leadership for “asking us to swallow our doubts and force [the bill] past a unified opposition.”
“I don’t think that is going to work in the end,” he said, “and it probably shouldn’t.”
It definitely shouldn’t work on this Pay-Off-Our-Donors tax cut. More than anyone, McCain could give Corker, Flake and Collins the heart to follow their convictions.
UPDATE: Paul Krugman chimes in, The Biggest Tax Scam in History:
* * *
So will [Republicans] manage to pull off this giant con job? The reason they’re rushing this to the Senate floor without a single hearing, without a full assessment from Congress’s own official scorekeepers, is their hope that they can pass the thing before people figure out what they’re up to.
And the question is whether there are enough Republican senators with principles, who believe that policies should not be sold with lies, to stop this bum’s rush.
Call Sens. John McCain and Jeff Flake now and demand that they vote against this terrible GOP tax bill.