Deputy Director, Federal Tax Policy
As we’ve explained, the tax bill that congressional Republicans are finalizing is step one of a likely two-step tax and budget agenda: enacting costly tax cuts now that are heavily skewed toward wealthy households and profitable corporations, then decrying the enlarged deficits that those tax cuts fuel — and insisting that they necessitate program cuts mainly affecting low- and middle-income families. Republican leaders have repeatedly said in recent weeks that after enacting a tax bill, they will turn to budget cuts — particularly “welfare reform,” long a code for cuts to programs that help families of limited means afford food, housing, health care, and other basic needs.
“We’re looking very strongly at welfare reform,” President Trump said last month, “and that’ll all take place right after taxes, very soon, very shortly after taxes.” Republican lawmakers — including House Speaker Paul Ryan — have made similar statements over the last few weeks:
“Well, so let’s take the debt. So it’s been scored at [$1.5 trillion], was kind of the number. Even the more static analys[es] say you probably are going to get more economic growth, so it's probably going to be about $500 billion. That’s on the conservative side, some conservatives think you may get more from an increased economic pie. Everyone agrees that there's about $500 billion of that, of things that are currently in the tax code that end up getting extended anyway. They know it’s scored that way because they're not permanent right now but most people think they should be made permanent. So if you look at that extra $500 billion, I would suggest members of my party who crow about government wasting money and big government, why don't we get together and figure out a way to slow down the growth of spending?”
The tax bills themselves make these statements even more striking. Both the Senate and House tax cuts would flow overwhelmingly to wealthy households and profitable corporations, while adding nearly $1.5 trillion to deficits over ten years. The Senate bill also raises taxes on millions of low- and middle-income households and raises the number of Americans without health insurance by an estimated 13 million. Mainstream economic estimates, including those of Congress’ official tax and budget scorekeepers, contradict Republican leaders’ claims that the bill would largely or entirely offset its cost through additional revenues that higher economic growth would generate.
Republican leaders are already laying the groundwork for step two. The congressional budget resolution that Congress approved in October, which created the process and set the parameters for the tax bill, also calls for $5.8 trillion in budget cuts over the coming decade, including deep cuts in Medicaid, Medicare, and other health care programs; basic assistance including food assistance through SNAP (formerly known as food stamps); and non-defense discretionary funding, the part of the budget that funds education and training, transportation and other infrastructure, medical research, child and elder care, and other important priorities.
They chose not to include sufficient offsetting revenue-raising measures or cuts to important programs in the tax bill itself to offset its cost. Doing so would have made the tax bill even more unpopular, and its trade-offs more transparent. Instead, GOP leaders appear poised to pass the deficit-raising tax bill this year and then seek large budget cuts next year. But separating the budget cuts and tax cuts doesn’t change their priorities: