You Want Your Tax Cut? Here’s Your Tax Cut:
This is the only graph you really need to see:
It shows, most simply, that the proposed tax cuts won’t come close to paying for themselves.
And this is not an estimate from some left-wing think-tank, it’s from the government itself. In a longer report that we’re linking to here, the Joint Committee on Taxation agrees the tax cuts will spur economic growth and job growth. But that’ll make up for less than 1/3 of the overall sum Trump and Congress want to hand out, mainly to corporations and super-rich people.
See that far-right column representing the next 10 years? We’ll enlarge it for you:
So it shows tax cuts will cost $1.4-trillion, will spur $400-billion in growth, leaving a shortfall of $1-trillion dollars. $1,006,700,000,000 to be exact. An amount the White House has been assuring us would “pay for itself”. Which means Trump is soon probably going to attack the Joint Committee on Taxation and its Chief of Staff (more on that below).
CNBC visualizes the same data in a slightly more dynamic way:
Of course nobody really thought the tax cuts would pay for themselves (they never do!), which is why Republicans were racing to pass the bill before the JCT came out with its assessment. But they weren’t quite fast enough… And the hugeness of the gap came as a particularly big surprise.
So that one graph was enough to completely slam the brakes on Republican Senators’ attempts to pass their tax plan. Unfortunately, probably only for one day. Still, it was a breathtaking momentum-killer, rendering Republicans temporarily unable to solve any of their remaining issues, and putting a virtual freeze on the bill until later this morning as they scramble to find money and hammer out a quick agreement that’ll still allow them to pass it.
Republicans are also doing their best to question the validity of the JCT report, saying it’s unfairly anticipating aggressive action by the Federal Reserve. At the same time, a long-promised separate assessment from Trump’s Treasury Department that might’ve painted a rosier picture failed to materialize.
Bloomberg is running a continually updated feed of any changes in the status of the bill.
So What Is The Joint Committee On Taxation? Why Is It Going Around Issuing Reports Instead Of The Congressional Budget Office? And Who’s In Charge Of It?
The Joint Committee on Taxation is kind of a Super-Committee that’s been around since 1926, made up of 5 members of the Senate Finance Committee, and 5 members of the House Ways and Means Committee. It’s responsible for assessing the impact of all legislation related to changes in tax law. (The CBO does that for most everything else). And according to Politico, “lawmakers are required to use its figures”.
The members chose the Chief of Staff, who is in charge of hiring several dozen tax economists, compiling and issuing reports, etc. Right now that’s Thomas Barthold, who’s been in that position since 2009 (meaning he was originally appointed by a Democrat–watch out!), and has been on the Committee’s staff since 1987 (meaning he’s a career bureaucrat–also watch out!)
Orrin Hatch and Paul Ryan together decided to keep Barthold on when Republicans regained control of Congress. At the time, they issued a joint statement saying: “[Barthold] and his staff produce quality, objective reports and analyses that help shape the major policy debates that are important to hard-working American taxpayers”.
A Second Roadblock Stymies Corker And “Budget Hawks”
The new numbers put more power into the hands “budget hawks”. But, ironically they have a mess of problems of their own to deal with.
Tennessee Senator Bob Corker’s been pushing for a “trigger” that automatically hikes taxes back up in the next 5 or 6 years if the the bill doesn’t produce the level of economic growth it promises.
And that idea would’ve probably gained a lot of momentum in light of the new estimate showing the tax bill would balloon the deficit to by a much bigger number than expected.
Except…that option, which seemed to be by far the Republicans’ best solution to get things moving again, got nixed by the Senate Parliamentarian, who said if it was included in the bill, the bill would violate rules allowing the Senate to pass it by a simple majority.
Leaving Corker to insist if a “trigger” is an impossibility, then he wants out-and-out tax cuts right now. The Hill reports Republicans have agreed in principle to reduce the size of the bill by $350-billion in order to prevent Corker and Senators Ron Johnson and Jeff Flake from sending the bill back to the Finance Committee. But it might have to end up being more because even Corker might’ve underestimated the size of the shortfall. The “trigger” Corker originally wanted would’ve been designed to raise back about $350-billion, but the estimate of the deficit is about 3X that.
It’s also not clear where those immediate cuts would come from.
Still, at this point, that looks like the most likely way forward…
Even though it is kind of mind-blowing to consider that Republicans are now talking about raising taxes in order to still be able to cut taxes…
So Who Is The Senate Parliamentarian, And What Exactly Does She Do?
Your Senate Parliamentarian is Elizabeth MacDonough, a lawyer who has served in that position since 2012. The best way to think of her role is as a referee at a pro football game: she doesn’t play the game, but knows the rules better than many of the players and coaches, and is extremely well versed in all the traditions and minutiae. And like a good referee, she goes out of her way to maintain a low profile.
Interestingly, since the role of the Parliamentarian is advisory, she can be overruled by the Presiding Officer of the Senate, although the last time that happened was in 1975. The Parliamentarian can be hired or fired by the Senate Majority leader. MacDonough was hired by Democrat Harry Reid, when he was Majority Leader. Mitch McConnell kept her on when Republicans took over. It is kind of remarkable with all the divisiveness in Washington right now, (and Trump’s drive to rid Executive Branch offices of life-long employees), how many high-ranking bureaucrats continue to be trusted by both sides in Congress, regardless of who’s in the majority.
House Conservatives Might Inadvertently Be Presenting Democrats With A Strategic Opportunity
Mark Meadows, who leads the so-called “Freedom Caucus” (once called the “Tea Party”) in the House, told Senators Mike Lee and Marco Rubio not to bother with their plan to increase tax credits for children, because he’ll never allow it to make it into the final bill when it’s reconciled with the House version. Meadows saying “We have made it very clear that 20 percent corporate is the red line.” Lee and Rubio very sensibly proposed raising the corporate tax rate to 22% in order to hand some money back to families instead, because the underlying tax bill reduces deductions for people who have more than a couple of kids.
While Meadows’ pronouncement probably kills Lee and Rubio’s chances of getting the votes they need from Republicans, Roll Call suggests it creates an intriguing opportunity for Democrats: they could vote in favor of the amendment to make sure it stays in, even while eventually voting against the bill as a whole. That way they’d complicate negotiations between the House and Senate, and force Republicans to chop out a measure to help families, which might not play well come election time.
The Hits They Just Keep On Coming
The New York Times reports President Trump is very close to finally pushing out Secretary of State Rex Tillerson, and replacing him with CIA Chief Mike Pompeo.
Arkansas Senator Tom Cotton would replace Pompeo.
No one would publicly confirm the Times’ story:
• The White House: “There are no personnel announcements at this time.”
• The State Department: “[Tillerson] remains committed to doing his job.”
• Tom Cotton: “I’m very proud to be representing the people of Arkansas”
Notice that the word “no” does not appear in any of those statements. So while we usually don’t report on speculation of this kind, that inclines us to believe it’s true, and not just a trial balloon or some kind of aggressive power-grab.
And if it is true, there are several interesting dynamics to consider:
- Pompeo is a West Point Graduate and was a tank commander in the Army (he also has a Doctor of Law degree from Harvard). Which means Trump, who’s largely surrounded himself with former high-ranking military officers, might actually listen to him. Tillerson never had that “in”.
- Pompeo’s worldview lines up better with Trump’s: he’s spoken out strongly against Obama’s Iran deal, and railed against Hillary Clinton. (Had she been elected, he would’ve probably been the one at the helm of endless congressional hearings into her emails and Clinton Foundation dealings). Also like Trump, he has spoken out in favor of waterboarding and other “enhanced interrogation” and does not consider it torture. (So has Cotton). The Atlantic warns Pompeo’s also long expressed strong anti-Muslim sentiments.
- Cotton has gotten close to Trump because of the Senator’s push to cut legal immigration, and severely limit the ability of people who are already in the U.S. to bring relatives over.
- UN Ambassador Nikki Haley is the odd person out. She was once considered a shoe-in as Tillerson’s successor. Word is Trump considers her too “green”. Which is interesting, considering she’s a career politician, and was Governor of South Carolina for 6 years. Pompeo’s only been in politics for 6 years, coming into Congress as part of the wave of Tea Party candidates elected in 2010.
- Finally, the change would greatly expand the Koch Brothers’ influence inside the Trump Administration. Before he ran for office, the Koch Brothers supported Pompeo in business. His nickname in the House was “The Congressman from Koch”. That’s not necessarily an entirely bad thing: believe it or not, the Koch’s are actually more liberal on some immigration issues than Trump; seeing immigration as essential to a growing economy. (They just don’t want to have to be forced to pay those immigrants a higher minimum wage).
Trump envisions himself a modern day Andrew Jackson, and that comparison does seems to be increasingly apt at least as far as his cabinet goes: not a single member of Jackson’s cabinet made it through his first term (with the exception of his Postmaster General, which is no longer a cabinet position).