Thursday, November 2, 2017

28 billion reasons to fear the GOP tax cut

This morning’s Daily Star featured Catherine Rampell’s reasons why This tax reform thing won’t be as easy as Republicans think. That is not good news. Green Valley seniors should be quaking in their sandals for what it might (might, might) cost them. I emphasize “might” because it’s not yet a done deal.

On Thursday [that would be today, Nov. 2], after years of wishin’ and hopin’ and thinkin’ and prayin’ (and lately, nose-holdin’), the Republican House speaker and his party will finally drop the text of their long-sought tax bill.

Then, thanks to clever manipulation of Senate rules, the bill will secure swift passage, requiring only a simple majority of senators (meaning Democrats cannot obstruct) and a gold-Sharpied presidential signature for delivery, at long last, to a cheering Republican base. Right?


Even with President Trump in Asia (and if Ryan is lucky, too busy to trash his own tax plan), the GOP bill faces enormous challenges.

I’m going to focus here on just one.

… Republican lawmakers are even more likely than usual to deploy budgetary gimmicks, such as ludicrous-speed economic growth or pretending that a corporate tax break will expire in five years when everyone knows it will be renewed.

There’s potentially an even bigger problem for getting this tax cut through. It has to do with a relatively obscure law, called “statutory PAYGO,” that hasn’t gotten much attention.

This legislation has been on and off the books (it’s been on since 2010) since 1990. It says that if all of the bills passed by the end of the current calendar year have the net effect of increasing deficits, then automatic, immediate, offsetting cuts to certain non-discretionary spending programs — including (yikes) Medicare — go into effect.

Here’s how it would work.

If Congress successfully passes a $1.5 trillion tax cut before going home for Christmas, $28 billion would get automatically slashed from Medicare between January and September of next year. And that’s just in Medicare. Other popular programs, such as mandatory spending on student loan administration and farm subsidies, would be wiped out entirely, according to the Committee for a Responsible Federal Budget.

And such cuts would continue for a decade. Not exactly a people-pleaser.

The point of this law is (in theory) to stop Congress from doing fiscally irresponsible things. As with most of its hand-tying exercises, Congress can always override this automatic sequester, as they did when passing the Bush tax cuts in 2001.

But here’s the key: A bill to override these cuts would require 60 votes. Meaning at least a handful of Democrats would be needed to pave the way for tax cuts after all.

Republicans seem to believe they can get the votes by threatening to cast Democrats as killing Medicare. But what’s to stop smart Democrats from pointing out that Republicans put Medicare at risk in the first place?

So, those of us who are of Medicare age - and the rest of us who are approaching that phase of life - have some worrying to do. Like $28 billion worth worth of worries.

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