Budget & Taxes

McConnell Admits Some May Get Tax Increases

Senate Majority Leader Mitch McConnell (R-KY) acknowledged “that the Republican tax plan might result in a tax hike for some working Americans, saying he ‘misspoke’ days earlier when he said that ‘nobody in the middle class is going to get a tax increase’ under the Senate bill,” the New York Times reports.

Said McConnell: “I misspoke on that. You can’t guarantee that absolutely no one sees a tax increase.”

“The Senate bill unveiled on Thursday would raise taxes on millions of middle-class families, according to a preliminary New York Times analysis. The plan would also disproportionately benefit high earners and corporations. Still, middle-class earners would fare better under the Senate proposal than its counterpart in the House.”

Not Much of a Tax Cut for Ordinary Americans

John Cassidy: “The business tax cuts and A.M.T. abolition don’t leave any room for ordinary American households to receive substantial tax cuts. Both Republican bills do expand family tax credits and reduce the marginal tax rates that most households would face; but they also claw back a lot of revenue in other ways, some of which are targeted at families.”

“The upshot of all this is that the Republican tax proposals, which Trump has promoted by promising the biggest tax cuts in history, isn’t much of a tax cut at all in the sense that most Americans understand the term. It’s really designed to reduce the tax burden on businesses and wealthy individuals, and it could only be justified if, defying history, it delivered the economy-wide upsurge in G.D.P. growth, capital investment, and wages that the White House has promised, and which Cohn talked about in his interview. The supposed middle-class tax cuts are a fig leaf.”

GOP Panic Boosts Tax Cut Plan Chances

Jonathan Swan: “With the release of the Senate’s plan yesterday, tax cuts are off to a stronger start than health reform’s fraught debut earlier this year. You’ve got high top rates on wealthy people, a concession to the left — yet tons of loopholes and crony tax breaks. Even Republicans who have been skeptical all year about tax reform’s prospects say they see glints of momentum.”

One reason: “Sheer political panic: This may be Republicans’ only chance to hold onto the House. GOP leaders, especially Speaker Ryan, are under no illusions — particularly not after the results in Virginia.”

Another: “Donor pressure: As members and senators have admitted out loud, donors won’t be returning phone calls if united GOP government can’t deliver tax reform.”

Senate GOP Tax Plan Breaks with Trump

“Senate Republicans on Thursday plan to propose delaying a cut in the corporate tax rate from 35 percent to 20 percent until 2019, four people briefed on the planning said, a major departure from President Trump’s insistence on immediate changes that he says are necessary to spur the economy,” the Washington Post reports.

“Some Senate Republicans objected internally to the one year delay, but they were overruled.”

Politico: “The change from the House bill, which would institute a 20 percent corporate rate in 2018, is likely to upset President Trump and the White House, which wants the change to happen as soon as possible.”

Trouble Brewing on GOP Push for Tax Reform

Playbook: “Not only will the Senate Republicans package being released today differ significantly from the House bill — Trump said Democrats will like it better! — but House Ways and Means Committee Chairman Kevin Brady is dealing with his own issues over concerns the bill provides massive tax cuts for corporations while individual industries are lobbying to keep their own tax breaks. To further complicate things, Republicans have a massive revenue shortfall they need to plug up.”

“Still in the mix: Including a repeal of the individual mandate to buy health insurance, which raises shy of $400 billion in revenue, but would complicate the political calculus in the Capitol.”

GOP Tax Bill Has a Deficit Problem

CNBC: “The GOP bill including some changes would increase federal budget deficits by $1.7 trillion over 10 years, according to Joint Committee on Taxation estimates shared by the nonpartisan Congressional Budget Office. That includes money for additional debt service payments due to the bill.”

“Under budget rules congressional Republicans are using to pass a tax plan, the bill can only increase deficits by $1.5 trillion over 10 years, before growth is taken into account.”

Senate Delays Release of Tax Bill

The Senate won’t release its version of the GOP tax bill tomorrow as previously announced by Senate Majority Leader Mitch McConnell, Axios reports.

“Both chambers are on very tight timelines and trying to strike very difficult policy balances. Delaying introduction of the bill not only gives off the impression that things aren’t going well (whether it’s true or not), but also removes one more day that could have been spent getting the caucus on board with the bill.”

Government Shutdown Possible Next Month

“An early December government shutdown is a real possibility, since a divided Congress can’t agree on military spending, Democrats insist on help for young immigrants and President Trump’s position can change with each lawmaker he talks to,” the AP reports.

“Most of Washington is focused on overhauling the nation’s tax code, but lawmakers face a combustible mix of must-do and could-do items, with the current government spending bill set to expire Dec. 8. On the list are immigration and a U.S.-Mexico border wall; an impasse over children’s health care; pent-up demand for budget increases for the Pentagon and domestic agencies; and tens of billions of dollars in hurricane aid.”

House Tax Bill Would Bust Senate Reconciliation Rules

A new Penn-Wharton report shows that the House GOP bill would increase federal deficits substantially in both the short-run and the long-run in ways that would vastly increase the difficulty of passing it in the Senate, CNBC reports.

“The Penn-Wharton model shows that the House GOP tax bill would reduce tax revenue by $1.7 trillion over the next 10 years. That exceeds the $1.5 trillion permitted under the budget ‘reconciliation’ rules that allow Senate Republicans to sidestep Democratic filibusters.”

“Moreover, the Penn-Wharton model projects that the House GOP bill would lost another $2.6 trillion in revenue during the 12 years after 2027. Under the no-filibuster rules, the tax bill would not be permitted to increase the deficit at all after its first 10 years.”

Democrats to Meet with White House on Tax Bill

“A group of Democratic senators is set to huddle with a top White House official to discuss potential changes to the Republican tax plan Tuesday,” the Washington Post reports.

The Democrats include Sens. Joe Manchin III (WV), Heidi Heitkamp (ND) and Sherrod Brown (D-OH).

“What, if any, substantive change to the emerging proposals might come out of the meeting is unclear — but it will allow the White House and the moderate Democrats to claim they’re at least trying to forge bipartisan consensus.”

Taxes Would Rise for Many Working Class Voters

“House Republicans’ tax bill would increase taxes for 12 percent of Americans next year, according to a new report from the nonpartisan Tax Policy Center. By 2027, at least 28 percent of Americans would see their taxes rise, the report says. Many of those taking a hit would be people who make less than $48,000 a year,” the Washington Post reports.

“The vast majority of Americans would get a tax cut if the bill becomes law… but the rich would benefit the most. The finding comes amid intense debate over whether this bill does enough to help the middle and working classes, a key promise of President Trump.”

Rand Paul’s Absence Could Hurt GOP Agenda

Politico: “A prolonged absence by Paul could also complicate matters for Senate Majority Leader Mitch McConnell (R-KY) and the broader Senate GOP’s legislative agenda. Republicans control just 52 votes in the chamber, and absences can thwart the leadership from obtaining the simple majority needed to confirm nominees and pass some legislation. The Senate GOP is aiming to take up their own tax overhaul later this month, which they are trying to pass using a fast-track legislative procedure that undercuts a filibuster from Democrats. A bill could be released later this week.”

“Paul has already indicated that, like during the health care fight, he is preparing to use his leverage to push the Senate’s tax bill in a more conservative direction — pushing for more ambitious rate cuts and even repealing Obamacare’s individual mandate to purchase health insurance. He was the sole Senate Republican to vote against the GOP budget that set up the fast-track procedure for tax reform, called reconciliation.”

GOP May Try to Use Tax Bill to Overhaul Obamacare

“Republicans are poised to begin debating details of their tax plan this week, but House Speaker Paul Ryan (R-WI) signaled Sunday that party leaders are still mulling whether to use the proposal to end a central element of the Obama-era Affordable Care Act,” the Washington Post reports.

“The tax-writing House Ways and Means Committee is set to begin reviewing the GOP plan on Monday in public hearings that could stretch into Thursday. But significant differences remain, and new proposals could be added. Ryan signaled that a repeal of the health law’s individual mandate is still up for discussion, while a key New York Republican warned that he and other GOP lawmakers from highly taxed northeastern states remain opposed to the legislation.”