Bessent to Senate GOP lunch
Senate Republicans' tax package would cost $4.2 trillion, according to a new estimate that will likely create additional complications for Republicans as they race to get their megabill to President Donald Trump's desk.
That's already more than the $4 trillion that House Republicans say they're willing to spend on tax cuts, and it doesn't include the cost of a hoped-for deal to loosen a controversial cap on state and local tax deductions that would likely add hundreds of billions of dollars more. It's unclear whether the House will be willing to swallow the higher price tag.
The estimate from the official Joint Committee on Taxation also comes as Senate Republicans are scrambling to salvage a number of provisions meant to offset some of the cost of the legislation after they were rejected by the Senate parliamentarian.
Though Republicans have been debating their tax, immigration and defense bill for months, lawmakers in the two chambers have not yet settled on how much they can spend in total on the legislation — an impasse set to soon come to a head.
And, confusingly, the estimate is the second official analysis of the legislation in recent days — and is radically different from the first. At the insistence of Republicans, the JCT also estimated the cost of the legislation using an alternative methodology that showed the plan only costing $442 billion.
Critics call that 'current policy baseline' analysis a budget gimmick that's designed to hide the true cost of the legislation. Democrats demanded the second estimate using the conventional methodology forecasters use to project the cost of legislation.
'Republicans claim their plan costs only $440 billion, but this new analysis shows it actually costs 10 times that much,' said Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Ron Wyden (D-Ore) in a joint statement. 'The Republicans want to rig the process and flout the rules.'
The dueling analyses only cover the tax portion of the package. The other parts will be analyzed by JCT's sister agency, the Congressional Budget Office.
The new estimate comes as Senate leaders hope to push their draft of the legislation through the chamber this weekend, with an eye toward getting it to Trump's desk by their July 4 recess. On Tuesday, Trump urged lawmakers to stay in session until the bill is passed. 'NO ONE GOES ON VACATION UNTIL IT'S DONE,' he wrote on Truth Social.
Amid mounting concern over federal red ink, House Republicans have been adamant that lawmakers spend no more than $4 trillion on tax cuts — their tax cuts clock in at $3.8 trillion — unless they can simultaneously come up with more than $1.5 trillion in spending cuts.
Senate Republicans' budget allows $5.3 trillion in tax cuts and is vague about how much in spending they intend to cut. Normally lawmakers would settle on a common approach as part of a budget plan adopted in the spring, but they were unable to find an agreement.
The tax portion of the Senate's draft is now being scrubbed for violations of the chamber's arcane procedural rules for budget reconciliation, and it's possible that some of the bill's tax increases — designed to help defray the cost of the bill — could be thrown out by the parliamentarian, which would exacerbate budget pressues. Reconciliation measures, which are immune to filibusters, are supposed to be strictly focused on budgetary matters, though lawmakers frequently try to include other provisions that can be deleted by the parliamentarian.
Behind closed doors, lawmakers are still massaging the tax portion of the plan, and it's possible they will add new offsets to help bring down the cost.
Much of the difference between the cost of the House and Senate plans is driven by Finance Committee Chair Mike Crapo 's drive to make many more of the provisions a permanent part of the tax code. He'd do that not only with a trio of business provisions projected to cost $566 billion, but a number of other tax breaks as well. At the same time, he added new provisions like a new charitable break for people who don't itemize that's projected to cost $63 billion.
Crapo (R-Idaho) partly makes up the difference by squeezing or throwing out altogether a number of proposals approved by the House. His draft includes smaller breaks for tips and overtime demanded by Trump while dumping plans to expand health savings accounts and spending less on a deduction for owners of unincorporated businesses.
Crapo has also antagonized House Republicans by phasing out green energy credits created during the Biden administration more slowly than they'd like while cutting more out of the politically sensitive Medicaid program.
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