Several Republican senators doubted their tax reform legislation would raise the deficit enough to trigger $25 billion in mandatory cuts to Medicare next year, despite a new estimate that it would.
A major concern from centrist holdout Sen. Susan Collins, R-Maine, is that the bill would trigger a 2010 law that installs mandatory spending cuts if the deficit reaches a certain threshold. Collins said she recently received assurances from Senate Majority Leader Mitch McConnell that he would pursue a waiver to the 2010 law’s deep cuts.
But Republicans said there would be enough growth from the tax bill to prevent a major spike in the deficit that triggers the cuts.
“We are presupposing it is going to cause a deficit and I am not sure that is a correct presupposition,” said Sen. Bill Cassidy, R-La.
“This will be a revenue enhancer and not a revenue decrease overall or else we wouldn’t be doing it,” added Sen. Mike Rounds, R-S.D.
Collins disagrees and is worried the bill would raise the deficit enough to trigger the 2010 Statutory Pay-As-You-Go Law.
Rounds and Cassidy spoke before the nonpartisan Joint Committee on Taxation estimated on Thursday that the tax bill would increase the deficit by more than $1 trillion over the next decade. It concluded that the tax cuts would not stoke enough economic growth to pay for themselves.
House Democrats previously asked the nonpartisan Congressional Budget Office how a bill that would raise the deficit by $1.5 trillion would affect the pay-go law.
CBO responded it would trigger $136 billion in cuts in fiscal 2018, $25 billion of which would come from Medicare.
Collins said earlier Thursday that she was alarmed by that chance. She said McConnell has agreed to add a waiver to a must-pass legislative vehicle such as an omnibus spending package.
But Republicans don’t share Collins’ concerns.
Sen. John Hoeven, R-N.D., said the Joint Committee on Taxation previously estimated that the tax bill would lead to economic growth of 1.9 percent, while the latest growth rate of the economy was 3.3 percent.
“I think the economic growth will be there,” he said.
Even if the growth does not materialize, Congress can waive the cuts. Since the pay-go law was signed in 2010, it has been waived 16 times.
However, any waiver would require 60 votes in the Senate and support from Democrats.
Senate Democrats are not willing to discuss where they stand on a waiver.
“Until I see what their package is with regards to healthcare I am not going to shoot from the hip,” said Sen. Ron Wyden, D-Ore.