The Wheels Are Coming Off The Tax Bill’s Promised Deficit Trigger

J. Scott Applewhite/AP
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The Republican tax bill sailed out of committee Tuesday after former hold-out Sen. Bob Corker (R-TN) secured a “verbal promise” from President Trump to include a “trigger” mechanism in the bill that would undo some of the bill’s tax cuts if they—as predicted—balloon the federal deficit in the coming years.

But the wheels are already coming off the car.

Uncertainty about exactly what tax cuts would fall under the trigger and the length of time before it goes into effect, along with staunch opposition to the idea from fellow Republicans and outside conservative groups, could kill the idea before it ever makes it into the bill. With a vote just a day away and the details of the proposal still shrouded in secrecy, senators are agonizing over siding with the deficit hawks demanding the trigger or the growing band of lawmakers insisting no trigger is necessary because the tax cuts will create wild economic growth to fill the trillion-plus dollar deficit.

According to information leaked to Bloomberg News, one version of the trigger currently under discussion involves $350 billion in tax hikes beginning in 2022 if the promised growth fails to materialize. The exact size of the tax increase would be determined by the size of the economic shortfall. Another version detailed by Politico involved hiking the corporate tax rate by 1 percent if GDP doesn’t grow an average of 0.4 percent over the five years after the law is enacted.

A final version may never see the light of day.

At least four senators – Dean Heller (R-NV), Thom Tillis (R-NC), Chuck Grassley (R-IA), and John Kennedy (R-LA) – say they’re opposed to the idea of a deficit trigger. Grassley told TPM on Tuesday that it would inject uncertainty into the economy. On the House side, several lawmakers have also come out against the idea, and powerful conservative advocacy groups are mobilizing as well.

“The idea of a ‘tax hike trigger’ should be rejected on its merits,” wrote Club for Growth President David McIntosh on Wednesday. “It will have harmful impacts on American businesses and undermine any economic growth potential in this tax reform bill because businesses will not invest due to the possibility of a higher tax rate.”

Instead of a trigger that raises taxes if the federal deficit becomes too deep, the Koch brothers-funded group has an alternative proposal.

“Here’s an idea. How about cutting spending?” McIntosh wrote. “A spending cut trigger would be a far better idea.”

Americans for Prosperity joined the chorus, writing: “Champions of pro-growth, comprehensive tax reform should oppose any attempt to include this harmful provision.”

Neither group addressed the question of why, if they are so convinced the tax cuts would create plenty of economic growth and wouldn’t grow the deficit, they oppose a backstop measure that would only kick in in the event that fails to happen.

ABOUT THE AUTHOR

Alice Ollstein is a reporter at Talking Points Memo, covering national politics. She graduated from Oberlin College in 2010 and has been reporting in DC ever since, covering the Supreme Court, Congress and national elections for TV, radio, print, and online outlets. Her work has aired on Free Speech Radio News, All Things Considered, Channel News Asia, and Telesur, and her writing has been published by The Atlantic, La Opinión, and The Hill Rag. She was elected in 2016 as an at-large board member of the DC Chapter of the Society of Professional Journalists. Alice grew up in Santa Monica, California and began working for local newspapers in her early teens.

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