WASHINGTON — President Trump may be considering a tax-cut plan that could rankle Republican congressional leadership. While both House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell have pushed for deficit-neutral tax cuts, a senior White House official told Yahoo News the president could consider a plan that might add to the national debt.
“All options are on the table,” the official said.
The official cautioned that Trump hasn’t settled on a strategy for tax cuts and said it would be “premature” to say he’s abandoned the deficit-neutral approach.
McConnell has previously called the current level of debt “dangerous” and said that he would prefer a revenue-neutral package of tax cuts and spending that does not increase the deficit. Ryan has similarly advocated for enacting tax cuts without adding to the debt.
The sudden failure of the GOP health care plan last week has raised questions about whether Trump can pass other parts of his ambitious agenda without increasing the deficit. The Republican plan would have generated substantial savings that would have made some room in the budget for Trump’s other priorities. He is pushing for several costly initiatives: the border wall, “the biggest tax cut since Ronald Reagan,” and increases in both defense and infrastructure spending.
It is extremely unlikely that Republicans will have enough votes to avoid a Democratic filibuster and pass major tax cuts in the Senate. This increases the importance of the impact of the tax cuts on the deficit.
The main mechanism Republicans could use to pass tax cuts is known as reconciliation, which allows budget-related bills to pass with a simple 51-vote majority rather than the filibuster-proof 60 votes. But reconciliation can only be employed for legislation that doesn’t add to the deficit in 10 years. Still, Trump’s tax cuts don’t necessarily have to be deficit-neutral to pass through reconciliation. The process could be used on a tax plan that sunsets within a decade and avoids affecting the debt beyond that point. However, tax cuts that bring down revenue and raise the debt would be sharply at odds with both Ryan and McConnell’s economic priorities.
Nevertheless, the White House clearly isn’t ruling out plans that would increase the deficit just yet. Yahoo News asked White House press secretary Sean Spicer on Thursday if Trump is open to increasing the national debt to achieve his agenda. Spicer responded by outlining the president’s tax priorities and indicating that the plan is still being formulated.
“When it comes to tax reform, he’s got three underlying goals. One is tax simplification, two is to lower the rates, and three is to grow jobs in the economy,” said Spicer, later adding, “If you look at it dynamically as the plan develops — and again, as I mentioned earlier, we’re not there yet. We are beginning that process of engaging the stakeholders.”
Spicer suggested that the Trump administration could consider adding to the deficit with its ultimate proposal.
“As the plan develops and there’s a cost put on it, that’s going to be a decision that gets looked at,” said Spicer.
Ultimately, Spicer said, he couldn’t comment on the effect Trump’s tax proposal would have on the debt until the full details of the plan emerge. He also indicated that the final plan might have “economic growth and job creation aspects” that could offset concerns about the deficit.
“To answer that question without knowing what the full scope of it is is looking at something and answering it in a vacuum,” said Spicer.
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