Senate bill would add $3.3T to debt, Budget Office says

Nonpartisan group’s estimate far higher than $2.4T from House version

Senate Majority Leader John Thune, R-S.D., walks to the chamber at the Capitol in Washington, D.C., on Sunday. J. SCOTT APPLEWHITE — ASSOCIATED PRESS

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By Andrew Duehren

New York Times

The sprawling tax and health care bill that Senate Republicans are trying to pass would add at least $3.3 trillion to the already-bulging national debt over a decade, the nonpartisan Congressional Budget Office said Sunday, putting a far higher price tag on the measure than some of the party’s fiscal hawks had indicated they could stomach.

The cost of the Senate bill, which Republicans rolled out overnight Friday and were still shaping Sunday, far exceeds the $2.4 trillion cost of the version passed in the House, where lawmakers had insisted that the overall price of the bill not substantially change. But Senate Republicans still moved forward with a number of costly changes to the bill, including making prized tax breaks for business a permanent feature of the tax code.

With roughly $29 trillion in debt currently held by the public, the budget office had already expected the government to borrow another $21 trillion over the next decade, meaning the Republican bill would make an already-dire fiscal forecast worse. And the initial estimate of a cost of $3.3 trillion for the Senate bill is an undercount, because it does not include additional borrowing costs that could push the bill’s overall addition to the debt closer to $4 trillion.

That is the central complaint of hard-right Republicans who have resisted the measure and insisted on a lower cost. On Saturday night, a group of them demanding bigger cuts — including Sens. Ron Johnson of Wisconsin, Mike Lee of Utah, Cynthia Lummis of Wyoming and Rick Scott of Florida — held out for four hours before agreeing to begin debate on the bill.

The main component driving the cost of the Republican legislative effort is the extension of a series of tax cuts from 2017. Many of those tax cuts are set to expire this year, and extending them into the future represents a roughly $3.8 trillion hit to the budget. Republicans have also piled some additional tax cuts on top, including versions of President Donald Trump’s promises to not tax tips and overtime, bringing the overall size of the Senate tax cut to roughly $4.5 trillion.

To offset some of that cost, Republicans have also proposed deep cuts to the country’s social safety net, particularly Medicaid. According to the CBO, the Senate version of the legislation would mean 11.8 million Americans lose their health insurance by 2034 as federal spending on Medicaid, Medicare and “Obamacare” (former President Barack Obama’s health care law) is reduced by roughly $1.1 trillion over that period.

To save more money, Johnson, who initially voted to block the bill Saturday night but later reversed himself to allow it to move forward, told reporters that he planned to propose an amendment that would cut Medicaid even further. But it was not clear whether it would have enough support to be adopted — or whether Johnson would support the legislation if it failed.

Republicans in the House had sought to limit the size of the tax cut by necessitating that its cost not be more than $2.5 trillion larger than the total spending reductions. The Senate plan would miss that benchmark, angering some conservatives in the House, where nearly every Republican would have to support the bill for it to pass.

Alternate accounting

Given the deep hole created by their plans, Senate Republicans have embraced an alternative way of thinking about budget costs. They have argued that the extension of the 2017 tax cuts should not be considered a new cost to the budget because they are currently in place. They have asked Washington’s scorekeepers to evaluate the bill by ignoring the $3.8 trillion cost of extending the tax cuts. By that metric, called the “current policy baseline,” the bill would actually reduce deficits by roughly $500 billion, the Congressional Budget Office said Saturday.

Switching to the alternative accounting method is critical for accomplishing another Senate Republican goal: making the 2017 Trump tax cuts permanent.

Republicans are using a special process, called reconciliation, to steer past Democratic opposition in the Senate. Reconciliation imposes a number of additional rules on lawmakers, though, including that they cannot add to the debt in the long-term. Waving away the cost of the 2017 tax cuts would allow Republicans to make them permanent while still technically conforming to the Senate’s rules.