The Senate is moving ahead on a Republican budget plan, a critical step in President Donald Trump and the party’s politically imperative drive to cut taxes and simplify the IRS code, which is being led largely by U.S. Sen. Mike Enzi of Wyoming.
The nonbinding budget plan would permit Republicans to pass follow-up tax cuts later this year that would cost up to $1.5 trillion over the coming decade. The plan cleared a procedural hurdle in the Senate on a party-line vote of 50-47.
The plan breaks with longstanding promises by top Republicans like Senate Majority Leader Mitch McConnell and Speaker Paul Ryan that the upcoming tax drive won’t add to the nation’s $20 trillion debt.
Enzi, who chairs the Senate Budget Committee, has also been outspoken about the need to reduce the nation’s deficit. His website states that Congress needs to “get serious about addressing America’s mammoth national debt,” and in a press release Tuesday, Enzi said that the proposed budget and tax cuts would lead to a budget surplus by 2027.
However, the nonpartisan Congressional Budget Office disagrees with that assessment. If the measure’s politically difficult cuts were implemented, the budget deficit would drop to $424 billion after 10 years and average about $540 billion a year over the life of the plan, the office estimates.
Republicans use different math, relying on optimistic predictions of economic growth that average 2.6 percent a year, while ignoring growing, chronic deficits run by Social Security to claim that their budget could actually generate a surplus by 2026.
Even most economists sympathetic to arguments that tax cuts boost the economy don’t claim they fully pay for themselves, however.
“A good estimate for real-world tax policy is somewhere around 25-30 cents on the dollar,” said GOP economist Douglas Holtz-Eakin.
Once the budget plan passes through the GOP-controlled Congress, the House and Senate can then advance a follow-up tax overhaul measure without fear of a filibuster by Senate Democrats.
“It is crucial that Congress approve this fiscal framework in order to eliminate the dated and stifling tax policies that are holding back our nation,” said Enzi.
The budget plan calls for $5 trillion in spending cuts over the decade, including cuts to Medicare, Medicaid and the Obama-era health care law, though Republicans have no plans to impose those cuts with follow-up legislation.
Wyoming Democratic Party Executive Director Dean Ferguson said that while he had not carefully examined the latest budget proposal, Democrats in the state are concerned about protecting jobs in the state.
“The top priorities I’ve heard have to do with making sure anything that the federal government is doing, it was helping Wyoming maintain and keep jobs,” Ferguson said.
Tuesday’s vote sets up a vote later this week to pass the budget. That vote is likely to be close, but key GOP moderates such as Susan Collins of Maine and Lisa Murkowski of Alaska have signaled support. Rand Paul, R-Ky., is opposed, but so far he is the only Republican to come out against the measure, and GOP leaders are confident the budget will pass by Friday.
Trump and his GOP allies plan to use the $1.5 trillion in tax cuts to sharply reduce corporate rates, cut taxes for most individuals, and slash taxes on business partnerships such as law firms, medical practices and accounting firms. After failing to deliver on their promise to “repeal and replace” the health care law, Republicans fear that failure to deliver on taxes would be a political disaster.
The spending cuts in the measure include $473 billion from Medicare and more than $1 trillion from Medicaid. Although the budget plan is nonbinding, it puts Republicans and Democrats on record about its policies.
Enzi touted both the proposed budget and tax changes in the press release.
“By keeping more money in the pockets of hardworking taxpayers and small businesses, these reforms – if done right – will boost investment, wages and productivity here at home,” Enzi said.