The Republican tax plan would add $1.7 trillion to federal deficits over the next 10 years, according to a nonpartisan analysis released Wednesday.
In a letter to a key Republican committee head, the Congressional Budget Office and the Joint Committee on Taxation said that the tax reform proposal being considered in the House would add more to the deficit than is allowed under procedural rules.
Republicans are banking on passing tax reform through the process known as reconciliation, which allows them to use only a simple 51-vote majority in the Senate but also limits the bill to increasing the deficit by no more than $1.5 trillion by 2027.
Previously, Republicans expected the tax reform bill, known as the Tax Cuts and Jobs Act, to increase the deficit by only $1.4 trillion — nearly three hundred billion dollars less than the CBO’s Wednesday estimate. By 2027, the CBO says, the U.S. will be $11.78 trillion in debt. (The CBO’s estimate doesn’t consider potential macroeconomic effects: for example, possible economic growth as a result of tax cuts.)
The new estimate complicates the G.O.P’s pledge to pass the tax reform package — billed as the first significant overhaul of the federal tax code since the Reagan years — by the Thanksgiving recess.
The House of Representatives continues to mark up the first draft of the legislation, and the Senate is preparing to release its version, though Wednesday’s news will likely send members of the upper house back to the drawing board to make changes so it does not exceed the budgetary ceiling.
It will be a tricky task. The tax reform bill offers a number of tax cuts, particularly to the wealthy, and tax cuts cost money: the federal government is suddenly receiving significantly less income. Revising the bill to accommodate budgetary constraints might require provisions that make the tax plan suddenly seem less monumental — for example, making the tax cuts only temporary.
Correction: The original version of this story misstated the difference between the CBO’s estimate of the tax bill’s impact on the deficit and and the Republicans’ estimate. It is $300 billion, not $3 billion.
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