The Trump administration says it is open to an unusually long congressional budget window as a workaround to the legislative obstacles to tax reform.
Writing a budget longer than the standard 10 years would allow Congress to pass a revenue-losing tax reform of that length without needing any Democratic votes, making the change close to permanent.
Two top administration officials showed interest in the idea Wednesday in separate appearances on Capitol Hill: Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Mick Mulvaney.
“I think that’s a very good idea to consider strongly,” Mnuchin said at a House Ways and Means Committee hearing.
Writing a budget that applied for a long period of time, such as 20 years, would be out of step with recent practice but allowed under law.
It is an idea that might tempt Republicans, who are planning to use a special legislative procedure that is part of the budget process, known as reconciliation, to pass tax legislation. Reconciliation allows bills to pass with only 51 votes in the Senate, meaning that it could allow Republicans to pass tax reform without any support from Democrats.
Reconciliation is limited by specific rules, however. One rule relevant to tax legislation is that it cannot add to the deficit in any year beyond the budget window or else it must expire at the end of the budget window.
That rule is the reason that the Bush tax cuts were temporary and expired after 10 years. House Republicans have said that they want tax reform to be permanent to provide certainty to businesses and are aiming to write a tax bill that doesn’t add to the deficit so that it can pass through reconciliation.
If the window were extended to 15, 20 or 30 years, however, revenue-losing tax reform could be made close to permanent.
“I think it’s a more reasonable way to look at the budget window,” Mulvaney said at a House Budget Committee hearing. “And I think it’s important for us to look at whatever options give us the best and most common-sense view of the economy and our proposals to change it.”
The president’s own budget, released this week, used the standard budget window of 10 years.
The relevant budget, however, would be the one that the Senate and House agree to, a necessary step for unlocking reconciliation.
One member of Congress, Sen. Pat Toomey of Pennsylvania, has been pushing hard for Republicans to write a budget with a long window for the purpose of tax reform.
Toomey has argued for tax reform that cuts revenue. “I think it’s actually important that it not be” revenue-neutral, he said in a television interview last week. Instead, he argued, lowering rates will generate economic growth and thus tax revenue, even if budget scorekeepers fail to take account of that effect.
While House Republican leaders have demanded a permanent rewrite of the tax code, the Trump administration has signaled that it is open to a temporary tax cut.
“Permanent is better than temporary, and temporary is better than nothing,” Mnuchin said at Wednesday’s hearing.
