Republicans in Congress are signaling they want to change how the Congressional Budget Office (CBO) calculates the cost of extending President Donald Trump’s 2017 tax cuts, which mainly benefit the ultra-wealthy, by utilizing a budgeting trick that would wrongly suggest that such cuts don’t cost a single penny.
Current CBO policy is to examine the tax cuts as a policy that is expiring and being reimplemented — which is exactly what is happening. The cuts would cost around $4.6 trillion over the next decade under this kind of examination, which is called the “current law” metric.
What Republicans are proposing instead, however, is to employ what is called the “current policy” metric, changing long-standing precedent for how the CBO does its accounting. Under this metric, the tax cuts for the wealthy wouldn’t be seen as creating new debt in the budget, but rather as a renewal of already existing policy, allowing the GOP to claim they cost $0 over the next decade, as they are not a change from the policy that’s been in place since 2017.
The chair of the Senate Finance Committee, Sen. Mike Crapo (R-Idaho), has expressed support for the change — the switch, he said this week, “recognizes that extending current law does not change the tax policy, does not reduce tax revenue.”
Speaker of the House Mike Johnson is also in favor of switching from “current law” to “current policy” accounting.
“I hope that we can employ that because it makes a big difference in the calculations,” he told reporters.
Notably, the change would allow Johnson to falsely claim to some of the budget hawks within the Republican Conference that keeping the tax breaks in place won’t contribute to the deficit. It would also let Republicans claim that they were being fiscally responsible by voting for a continuation of the tax cuts.
But observers and critics have noted this tactic is a ploy to distort what’s really happening with the budget.
“It’s a tacit admission that Republican leaders have no expectation of paying for the cost of their tax agenda,” NBC News political reporter Sahil Kapur wrote in his reporting on the change.
In comments on the Senate floor on Thursday, Senate Minority Leader Chuck Schumer (D-New York) blasted the new approach being considered.
“Any junior high school math student could tell you that this is a bunch of bunk,” he said. “You can’t pass five trillion dollars to cut taxes for the rich and pretend like it doesn’t affect the deficit.”
The change in how the CBO examines budgets could also allow Republicans to make more cuts. Just this past week, the GOP-run House of Representatives passed a bill that cuts more than a trillion dollars from Medicaid and the Supplemental Nutrition Assistance Program (SNAP). With this budgeting trick being utilized, Republicans could make even steeper cuts to these and other social safety net programs.
Democrats have lambasted the current bill, noting that the cuts are meant to help pay for tax breaks for millionaires and billionaires.
“Republicans are cheering the passage of their extreme budget resolution that betrays the middle class,” Rep. Brendan Boyle (D-Pennsylania) said after the legislation passed. “Their bill will impose pain and suffering on tens of millions of hardworking Americans — cutting Medicaid and the Affordable Care Act, all to fund extravagant giveaways for billionaires like Elon Musk.”
“99% of House Republicans just voted to gut Medicaid so they can lower taxes for the richest 1%. They’re showing you exactly who they’re working for,” Rep. Pramila Jayapal (D-Washington) said in a social media post.
Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center, also stated that the change in calculating the budget that Republicans are seemingly veering toward won’t change the fact that a deficit will be created at the expense of most Americans.
Don’t be fooled by the debate over “current law” versus “current policy” baselines, or by unfounded claims that tax cuts pay for themselves. No matter how Congress formally scores the price of extending the 2017 Tax Cuts and Jobs Act (TCJA), as well as other Trump initiatives, accounting legerdemain can’t make fiscal reality disappear.
“In the end, Congress will have to pay for tax cuts and new spending by raising trillions of dollars in other taxes, cutting other spending, or by borrowing the money. And no scorekeeping tricks can change that,” Gleckman added.
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