They don’t seem too worried about it.
As the tax legislation currently stands, if Republicans push it through Congress without major changes, an obscure rule would trigger automatic cuts to Medicare and other programs ― and they will need Democrats to bail them out with votes. Democrats, however, say the cuts are just another terrible thing about the tax bill.
Sen. Ron Wyden (D-Ore.), for instance, said Wednesday of the tax bill that “these corporate handouts are going to force billions of dollars in cuts to Medicare.”
But Don Stewart, a spokesman for Senate Majority Leader Mitch McConnell (R-Ky.), said Democrats themselves would prevent the cuts by supporting a separate piece of legislation.
“It’s a false alarm from Dems opposed to the [tax] bill,” Stewart said in an email. “They would have to vote to allow any such sequester to happen and you know they won’t do that.”
Democrats, for their part, are complaining about the cuts but seem uninterested in publicly bargaining. A spokesman for Senate Minority Leader Chuck Schumer (D-N.Y.) declined to comment. House Democratic Whip Steny Hoyer (D-Md.) offered cagey responses to HuffPost questions Wednesday about how Democrats might use their leverage.
“I’m sure when we get to that point, we’ll have discussions about what else is going to be considered,” he told HuffPost. “It does give us some leverage, yes.”
According to a pay-as-you-go rule that Congress created for itself long ago, if legislation passed during the year increases the budget deficit in the next 10 years, either by reducing revenue or increasing spending, then the Office of Management and Budget is required at the end of the year to immediately offset 10 percent of the deficit increase with automatic spending cuts.
Since the current versions of the tax bill in the House and Senate would reduce revenue by about $1.5 trillion over 10 years, the Congressional Budget Office said Tuesday that passing the law this year would add a $150 billion deficit to the pay-as-you-go scorecard, which currently has a positive balance of $14 billion. The net result would be automatic budget cuts of $136 billion ― including a $25 billion cut to Medicare.
Democrats on the House Budget Committee pointed out that in addition to the Medicare cuts, the sequester would completely eliminate funding for a range of other programs, including social services and trade adjustment assistance.
Congress can get around the whole problem simply by passing legislation that waives the tax bill’s deficit impact on the scorecard ― which is exactly what it’s done in the past, including for Republican tax cuts passed in 2001. A Senate GOP aide said Republicans would offer such legislation later this year. Another possibility is that a pay-as-you-go waiver could be inserted into a must-pass spending bill needed to avert a government shutdown.
Unlike the tax bill itself, which Republicans are advancing through a special process called budget reconciliation that allows a bill to pass the Senate with only 51 votes, the separate pay-as-you-go bill would need the usual 60 votes ― meaning it would need at least eight Democrats if every Republican is on board. So Republicans will basically be daring Democrats to vote against a bill to prevent Medicare cuts.
Marc Goldwein, a policy expert with the Committee for a Responsible Federal Budget, complained that neither Democrats nor Republicans seem to care about massive budget deficits when they’re in power. He would rather see Republicans reduce the deficit impact of their tax bill than just wave it away with a separate piece of legislation.
“It just seems like in Washington fiscal responsibility is a weapon, not an ideology,” Goldwein said.
Another procedural problem facing tax reform is the so-called Byrd rule in the Senate, which says legislation is ineligible for the lower vote threshold if it increases deficits after 10 years. Senate Republicans revealed their solution to the Byrd rule on Tuesday evening: making a huge swath of their proposed tax cuts temporary.
Even though Republicans don’t actually want the cuts to be temporary, by saying on paper that the cuts will “sunset” in 2025, the massive revenue loss in later years simply vanishes — at least according to the budget projections used for scoring legislation.
“Right now, they’d be amenable to almost anything,” Sen. James Inhofe (R-Okla.) said of his Republican colleagues in an interview with HuffPost on Wednesday. “You’re seeing at this stage a lot of willingness to go along with things.”