DENVER – The official nonpartisan committee of Congress tasked with reviewing the economic effects of legislation said Thursday, in a new dynamic score, that the bill Senate Republicans brought out of the finance committee will increase revenues and the nation’s GDP far less than was originally estimated by the Trump administration and some other Republicans.
The Joint Committee on Taxation’s much-anticipated dynamic score of the Senate Finance Committee’s version of the tax reform bill estimates that the nation’s gross domestic product would increase by about 0.8 percent over the next 10 years, which would generate a relative revenue gain of $458 billion over the same time period, but which would also tack on an additional $1 trillion to the national deficit.
The $1 trillion addition to the deficit is less than the $1.4 trillion the Congressional Budget Office originally estimated the bill would add, and the new estimate shows growth would be likely under the bill, but also that it wouldn’t pay for itself. Interest payments of around $50 billion over the 10-year period would be made to the federal debt.
A mid-November JCT report said that the Senate bill would raise taxes on families earning between $10,000 and $75,000 each year, yet would give big cuts to millionaires.
The Committee for a Responsible Federal Budget notes the GDP increase estimate would be “less than a 0.08 percentage point improvement” in growth compared to current growth rate estimates.
The GDP and revenue gain estimations fall far short of the estimates from the conservative-leaning Tax Foundation, which projected $1.3 trillion in relative revenue growth, that have been touted by Senate Republicans and the White House.
Treasury Secretary Steve Mnuchin had previously promised $2 trillion in revenue growth and 3-percent GDP growth.
“We think this is all about creating growth, and we’ll create economic growth to pay down the deficit,” Mnuchin told Fox News earlier this month.
On Thursday, his department had still not released analysis it promised, prompting calls for an inspector general investigation into the department from Sen. Elizabeth Warren, D-Mass, according to the New York Times. By Thursday evening, the Times reported that the office of the inspector general for Treasury had opened an "inquiry" into the matter.
Other Democrats scoffed at the reform measure after the JCT estimate came out.
"It is the total opposite of what the Senate sponsors and the Trump administration have been claiming for months,” Sen. Ron Wyden, D-Oregon, told reporters after the JCT analysis was released.
JCT analysis, parliamentarian ruling force Republicans back to drawing board
There were still changes being made to the measure Thursday, and amendments were being filed ahead of the “vote-a-rama” that will precede a final Senate vote. The JCT will not be able to account for those changes before a final vote.
There was a moment of high drama when three of the Republican senators who have been most-bullish on the bill—Sens. Ron Johnson of Wisconsin, Jeff Flake of Arizona and Bob Corker of Tennessee—held out on a vote that would have sent the bill back to the finance committee for three days. But after about 20 minutes of discussion, the senators voted against that proposal, sending the discussion period forward.
However, walking off the Senate floor, Sen. John Cornyn, R-Texas, said a “trigger” that has been floated for days that would kick in in the event growth rates aren’t met was struck down by the Senate parliamentarian, forcing Republicans back to the drawing board to find a way to kick-in a tax increase at some point over the 10-year budget period that would add additional revenues.
A spokesman for Sen. Cory Gardner, R-Colo., said the JCT analysis “falls short” of a full analysis of the Republican effort.
“While it does show greater revenue than the CBO score, which had its flaws, Sen. Gardner and his colleagues believe that it falls short in analyzing exactly how much this economy will grow when these pro-growth policies are injected into the economy,” Gardner’s spokesman, Casey Contres, told Denver7.
“While cuts to wasteful spending need to continue to be identified these policies that reduce tax rates on businesses and middle class families are the best way to move forward on getting this nation back on the fiscal track it needs to be,” Contres added. “Opposing this legislation only further halts our economy that is not growing anywhere near the rate it should be.”
Gardner, Bennet call for bipartisanship but take jabs
Earlier Thursday, before the JCT analysis was released, Gardner said on the Senate floor the tax reform measures, for Coloradans, “means more jobs, higher wages…means true economic growth.”
He talked about wage growth and the effect of the corporate tax rate on the wage gap, which he argues would shrink under the GOP tax plan to cut the corporate tax rate. Gardner has also pointed to a Tax Foundation study that found the original finance committee bill would lead to growth in after-tax wages for Coloradans of at least $3,000.
“Low-tax countries see wage growth of 4 percent, and that is because they create an environment that encourages businesses to grow and expand, while high-tax countries like the United States chase money out of the country,” Gardner said.
And though he said Tuesday he “look[ed] forward to the bill being debated…though an open amendment process” and that he was “hopeful” that both parties would work together, he took digs at Democrats on the floor Thursday as well.
“The opponents to this reform pounds their fists on their desks and shoot off standard talking points about millionaires and billionaires—they told us from the outset in a letter to Sen. [Mitch] McConnell they didn’t want to have tax cuts for everyone and wouldn’t accept a credible package,” he said.
“There have been no substantive amendments, because I’m afraid the opponents aren’t interested in making the bill better,” Gardner continued. “They are interested in a political fight and continuing to see Americans suffer under low wages and high taxes, but they don’t tell us why other than just not this bill.”
Gardner's spokesman, Contres, said that Gardner planned to file several amendments to the legislation, including one that would allow marijuana businesses, like those in Colorado, to use tax deductions and credits that other businesses are allowed to use. Gardner also filed an amendment to expand 529 qualified tuition plans to help people go to college.
Meanwhile, Democrats, including Sen. Michael Bennet, accused Republicans of operating outside of normal Senate rules by going through the reconciliation process with the bill, which could allow Republicans to pass a measure with a simple majority instead of the typical 60 votes.
“We need to slow down, work in a bipartisan manner, hold hearings, and craft a tax reform plan that does not add…to our national debt,” Bennet tweeted.
He and Sen. Edward Markey, D-Mass., further said that they had gotten 41 senators to sign onto a bill of theirs that would block new drilling in the Arctic National Wildlife Refuge. Sen. Lisa Murkowski, R-Alaska, said Thursday she would support the tax reform bill with added allowances for drilling there.
If the tax reform bill was not being pushed through reconciliation, 41 senators would indeed be enough to block the measure because of their opposition to the Arctic drilling, the senators argued.
“This critical decision affecting our public lands and water deserves a real process and full debate. Rather than jamming a provision through the Republican tax bill, let’s listen to the American people and protect this national treasure—one of the last wildest places left in our country,” Bennet said in a statement.
What comes next?
Republicans in the Senate can only lose two votes in their push for the passage of the bill, and several senators have been on the fence. A 52-48 party-line vote on the motion to proceed brought the measure to the floor Wednesday, and with Murkowski’s endorsement, and that of John McCain, the bill headed closer to passing Thursday before the concerns about the JCT analysis and “trigger” were raised.
The House of Representatives passed its version of tax reform earlier this month, with all of Colorado’s Republicans voting in favor of the measure, and all Democrats voting against it.
McConnell said he expected a final vote late Thursday or early Friday.
Shortly after 7:30 p.m. in Washington, the Senate adjourned from the tax reform votes for the day, though debate was ongoing on the bill. Votes are expected to begin again at 11 a.m. ET Friday.