A group opposed to the federal budget deficit has come out against lawmakers using a 20-year budget window in a bid to ease the passage of tax reform later in the year.
“Tax reform should be fully paid for, regardless of the budget window. If the only purpose of moving to a 20-year budget window is to add to the debt, then it is a gimmick,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said in a statement issued June 22.
Whether a tax system revamp should be revenue-neutral and how to measure that benchmark have been among the many questions swirling around GOP plans for overhauling the system. In their compilation of proposals issued in 2016, House Republicans said they would assume current tax policy remains in place when they write their tax plan, an assumption that would be scored as adding hundreds of billions of dollars to the U.S. deficit when measured against the current-law baseline used by the Congressional Budget Office.
Under Senate rules regarding budget reconciliation, provisions that would increase the deficit outside the budget window are subject to a floor challenge requiring 60 votes to waive. Because Republicans have said they want to write tax reform without relying on Democratic votes, the 60-vote rule means the GOP must decide between making tax reform revenue-neutral and meeting the reconciliation restriction, or having it lose revenue but expire when the budget window lapses.
In 2001 and 2003, tax cuts passed under reconciliation were temporary, but most were extended permanently in 2012 after negotiations between President Barack Obama and Republicans in Congress.
Budget resolutions in the past have been for either five or 10 years, but a 20-year budget resolution would be one way to ease Republicans’ dilemma. While a revamp that cuts revenue would still be limited in time, its 20-year lifespan would ease the uncertainty that businesses would face, proponents argue.
MacGuineas said there is a need for more long-term perspective in the budget. “Unfortunately, many seem more interested in abusing long-term budgeting than using it properly. If the goal is to enact a massive tax cut that expires after two decades instead of one, the longer window will merely magnify the fiscal irresponsibility that would come from a shorter-term tax cut and will bring us no closer to fixing our costly and underfunded entitlement programs,” she said.
Sen. Patrick J. Toomey (R-Pa.) told Treasury Secretary Steven Mnuchin he should “seriously consider” a budget window longer than 10 years as Mnuchin negotiates tax reform on behalf of the Trump administration.
“A permanent tax reform is the best, but it takes bipartisan support and you just heard we’re not going to get that. So the next best thing is a temporary great tax code but making it long enough that we can actually enjoy the benefits,” Toomey said when Mnuchin appeared before the Senate Budget Committee June 13.
Mnuchin said he hoped to get bipartisan support for a tax code revamp. “If we can’t, reconciliation is an alternative and I look forward to working with you and the Senate on ideas such as a 20-year window as opposed to a 10-year window,” he said.
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