As the Senate races toward a vote Thursday or Friday on a 250-plus page bill to overhaul the American tax code, with no hearings and without a complete analysis of the bill’s impact, a cadre of Republican senators say they’re working “feverishly” on a last-minute rewrite. Skeptical of the wild economic growth GOP leadership promises will make up for all the revenue lost in the legislation, the change they’re seeking would create a “backstop” or “trigger” mechanism to undo some of the deepest tax cuts in the bill after several years if that magic economic growth doesn’t materialize.
“That way you’re in a situation where you’re not creating deficits, should the projections laid out not be real,” Sen. Bob Corker (R-TN) explained to reporters Monday night. “We’ve been working throughout the entire Thanksgiving break on it, working closely with the administration, and some members of the Finance Committee to design a trigger or a backstop—in the event the revenues are not there, there’s a way to recoup them.”
Corker, one of the leading proponents of the idea, wouldn’t say exactly what tax cuts the trigger would undo or when it would kick in, though he suggested there could be multiple triggers in the 10 years after the bill becomes law.
Sen. James Lankford (R-OK) also called for the measure in a press conference Monday.
“What if we don’t get 0.4 percent growth?” he asked, citing the number touted by GOP leadership as resulting directly from tax cuts. “Do we have realistic numbers and is there a backstop in the process just in case we don’t? We should build in the ‘What if?’ What if this doesn’t work? What changes might be needed in the tax code in the days ahead to be able to adjust in what scenario?”
Both Lankford and Sen. Jerry Moran (R-KS) have pointed to the fiscal disaster in Kansas that resulted from a slew of massive tax cuts as a cautionary tale that should not be repeated on the federal level.
The Senate plans to vote this week before getting a full dynamic score from the Joint Committee on Taxation, which would calculate exactly how much growth the bill would generate and what that impact would be on government revenues.
Corker said the lack of this information makes his policy demand even more important.
“That’s one of the reasons we need a trigger, because there’s no way they’ll have a score in time,” he said. “We’re bypassing that step, which is one of the reasons we need a backstop.”
Reports by independent groups, including the Tax Policy Center, have found that even with the predicted economic growth, the tax bill would still balloon the deficit by more that $1.2 trillion—enough to trigger deep automatic cuts to Medicare and other federal programs if Congress doesn’t vote to waive its own budget rules.
Still, most GOP lawmakers insist, without citing their sources, that the tax bill won’t increase the deficit at all, let alone by more than $1 trillion.
“It will pay for itself,” declared Sen. John Kennedy (R-LA). “I would not vote for this bill if I thought it was going to increase the deficit.”
“Now, it might in the short term,” Kennedy allowed. “But in the medium term and the long term, I think it will pay for itself.”
“We have economists saying that if the economy will grow four-tenths of one percent, it’ll pay for itself,” Sen. Chuck Grassley (R-IA) told TPM, adding that he is vehemently opposed to Corker and Lankford’s trigger idea.
“I don’t think it would look very good to have a bill to cut taxes that also signals to the world that we’re just automatically going to increase taxes,” he told TPM. “One of the things that is very important with the economy is certainty. Tax legislation has a lot to do with that certainty. But that would bring a great deal of uncertainty into it.”
Grassley, a senior member of the Finance Committee, seemed unaware of the details of the trigger proposal, asking TPM whether it would kick in after 8 or 10 years.
The 11th-hour battle between the GOP’s deficit hawks and magic growth adherents over the trigger proposal is just one of several fights happening on the sidelines of the tax bill debate. Republicans can only lose two votes from their caucus and still pass the bill under the rules of reconciliation. With Corker, Lankford, Moran and Sen. Jeff Flake (R-AZ) concerned about the deficit, Sen. Susan Collins (R-ME) sounding the alarm about the repeal of the individual mandate, and Sens. Ron Johnson (R-WI) and Steve Daines (R-MT) threatening to vote no unless certain corporate tax breaks are made more generous, passage is far from certain.