Republicans Preparing Major Tax Cut Bill For After Debt Ceiling Crisis
WASHINGTON ― House Republicans are preparing a package of tax cuts they could take up soon after Congress gets finished with its debt ceiling crisis.
Taking up the tax legislation would represent a reversal of Republicans’ recent focus on reducing the federal budget deficit since more tax cuts would further deplete government revenue.
“Obviously, we got to get through the debt ceiling,” said Rep. Darin LaHood (R-Ill.), a senior member of the House Ways and Means Committee, where tax laws are written. “But we’re prepared to move forward with an economic package that I think will be reflective of what we’ve talked a lot about.”
LaHood said that Republicans would consider how to “continue with the Tax Cuts and Jobs Act,” their landmark tax reform bill from 2017 that slashed corporate and household taxes by more than $1 trillion, as well as revive various business tax breaks that have expired or are currently phasing out.
House Majority Leader Steve Scalise (R-La.) described it as “a big economic package that we’ve been putting together, locking in tax cuts, addressing some of the regulatory issues that are holding our economy back.”
Republicans used a budget trick to hide the total cost of their 2017 tax cuts by making some parts of the legislation temporary, sunsetting them at the end of 2025 with the expectation of a later extension. The Congressional Budget Office has estimated that extending those cuts would cost another $3.5 trillion over a decade. It’s not clear if Republicans intend to try to reauthorize all of the expiring provisions.
“For folks who are talking about fiscal responsibility right now, they’re holding this ’til after we get through this crisis,” Rep. Suzan DelBene (D-Wash.) told HuffPost. “We need to get through this crisis, but they’re already talking about tax policy and big tax cuts.”
House Speaker Kevin McCarthy (R-Calif.) has called the national debt the greatest threat to the U.S., insisting that Democrats agree to spending cuts in exchange for agreeing to let the federal government continue borrowing money. If Congress can’t reach a deal, the government could fail to pay its bills in the coming weeks, potentially damaging the economy.
“We need to get through this crisis, but they’re already talking about tax policy and big tax cuts.”
Democrats have said Congress should reduce the budget deficit with tax increases, but McCarthy has claimed that taxes are too high, pointing to a 24% ratio of tax revenue to the overall size of the U.S. economy in 2022.
“We have more money [than at] any given time coming in to America,” he said Thursday.
Last year’s number was likely an outlier, and recent data suggests tax revenue has already fallen. In its most recent budget outlook, the CBO said revenue would hover around 18% of gross domestic product, or just slightly above the historical average, through 2033 ― even if the 2017 changes are allowed to expire.
Extending the cuts would most likely worsen the imbalance between spending and revenue, which is what creates the budget deficits that add to the debt every year.
LaHood suggested Republicans might consider ways to reduce the impact of their proposed tax expenditures on the federal budget, but that it was more important to bring tax relief to households and businesses coping with inflation.
“I think we will be looking at offsets there, but I think we’re going to look at how do we bring relief to the American people and families and that’s what we’ll be focused on,” he said.
House Ways and Means Chair Jason Smith (R-Mo.) has said he hopes for the committee to approve the package by his birthday on June 16, Politico’s subscription-only tax newsletter reported this week. A spokesperson did not respond to HuffPost’s request for comment.
Even if the House passes a Republican tax cut bill, the legislation would be unlikely to get through the Democrat-controlled Senate.