Republicans thought once they had Senator John McCain’s vote, their tax cut bill would sail through the Senate. They were wrong. A study from the nonpartisan Joint Committee on Taxation, the JCT, concluded that the bill doesn’t live up to the hype.
Lawmakers have been trumpeting that economic growth resulting from the tax cuts would be enough to offset the budget deficit. Unfortunately, the JCT analysis predicts that in spite of the projected economic growth the tax legislation will still add a staggering $1 trillion to the deficit over the next ten years. This revelation sent senators scurrying to make changes to satisfy the deficit hawks in Congress.
Even worse, the Congressional Budget Office projected that the bill would increase the deficit by $1.44 trillion. Senator Orrin Hatch, Chairman of the Senate Finance Committee, noted that other economic studies had predicted better economic growth from the cuts and the structure of the bill was still “evolving.” He mused that the analysis from the JCT was “curious” and needed further study.
Senators Bob Corker, Jeff Flake and James Lankford have voiced their concerns about how the bill would affect the deficit. They wanted to put a “trigger” into the legislation that would hike taxes if the projected economic growth did not materialize. However, the Senate parliamentarian ruled that Senate regulations prohibited using this type of trigger.
In addition to the deficit issue, several senators want concessions for the millions of small business owners who report their income on a pass-through basis. Senators Daines and Johnson were previous “no” votes but changed their position after securing changes to the legislation that increased the deduction for business income from 17.4 percent to 20 percent.
Not surprisingly, the Democrats are completely united in opposition to the bill. Senator Chuck Schumer said the bill would increase the deficit to dangerous levels, stunt economic growth and harm the middle class.
With zero Democratic support, Senate Republicans can only lose two votes from their party. If they get three “no” votes, the bill is dead.