By Jacob Bogage,
Senate Republicans’ vote Monday to advance President Donald Trump’s massive tax and immigration agenda throughan unusual accounting maneuverthat circumvents the filibuster creates a new precedent in Congress that may constrain lawmakers’ ability to control the nation’s poor financial health.
Major tax cuts from Trump’s first term are set to expire at the end of the year, and the GOP hopes to extend them as part of its One Big Beautiful Bill Act. The GOP moved to utilize a bookkeeping ploy that zeroed out the multitrillion-dollar cost of those policies on federal balance sheets.
The legislation, though, will still require the federal government to borrow an additional $3.3 trillion over the next decade, according to the Congressional Budget Office, regardless of how Republicans mark down the cost of their bill.
Investors in U.S. government debt remain concerned about skyrocketing spending, which is why the bond markets have showed signs of turmoil. Even a handful of high-profile Republicans, including House Budget Committee Chairman Jodey Arrington (Texas), have criticized the GOP’s move.
Fiscal hawks worry that the legislation creates a new framework that Republicans and Democrats alike could use to approve runaway spending without worrying about offsetting such spending with budget cuts or tax hikes.
“A political system that is looking for every opportunity not to cover the bills will use and abuse this going forward,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan Washington think tank.
Congressional fiscal policy is traditionally measured using what’s known as a “current law baseline,” which takes into account when provisions expire. Republicans, though, are using a “current policy baseline” for Trump’s agenda, which assumes that renewing trillions of dollars’ worth of tax cuts comes without a cost.
Republicans wove the policy baseline into their budget legislation early in the drafting process, and leaders in both chambers of Congress spent weeks convincing their members it was the only way to accomplish Trump’s broad economic ambitions.
To avoid the scrutiny of the Senate parliamentarian, the nonpartisan official charged with upholding the chamber’s procedures, the GOP gave Senate BudgetCommittee Chairman Lindsey Graham (R-South Carolina) the ability to determine the baseline, then voted to uphold his decision.
“As budget chairman, I’ve decided to use current policy when it comes to the cutting taxes,” Graham said Sunday on the Senate floor. “If you use current policy, they never expire, so the policies that were created in 2017 would not end in December. They would continue. And that’s a good thing for the American people, that’s a good thing for the economy, because it gives you certainty.”
The country’s financial condition is increasingly dire, and worsened, independent economists say, by the effects of cascading deficits. The national debt exceeds $36.2 trillion, and even without the expensive new legislation, debt could top 250 percent of the United States’ annual economic output by 2055 if annual agency spending and federal revenue remain at historical averages, the Congressional Budget Office reported in May.
“This is clearly a shift in budget accounting that will clear the path to ballooning the debt now, but will also create a precedent that will be used over and over and over again in the future,” MacGuineas said.
The new baseline has been used before, including by Democrats, but notfor such expensive legislation. And Republicans have signaled plans to use the tactic in the near future to reduce the legislative friction of more tax cuts.
Tax writers set some of the most popular provisions of Trump’s agenda – including no taxes on tips, overtime and auto loan interest – to expire by the end of Trump’s term. A deal to raise the cap on the state and local tax deduction, which lets itemizing filers write off the amount they paid in local taxes from their federal tax bill, expires after five years.
Ordinarily, it would be difficult for Congress to extend those tax cuts indefinitely because of the Senate’s filibuster, which is the procedural step that requires 60 votes to advance a bill, as well as the strict rules that govern budget legislation.
But Republicans’ use of the policy baseline sidesteps those constraints.
The GOP is using a process called reconciliation that allows it to bypass the filibuster while adhering to other rules, including the current law baseline, to pass tax and spending bills. Instead, Republicans voted to waive the baseline and give themselves the power to officially determine how much their legislation will cost.
That means extensions of not only Trump’s first-term tax cuts but also policies in the GOP’s newest legislation could be passed at a fraction of the actual cost on paper – and without cooperation from the Democratic minority.
Democrats have warned they could use that precedent if they retake power in Congress to implement a sweeping domestic agenda and undo GOP legislation.
“If current policy baseline becomes precedent, then the ranking member and I are going to be very happy to use it when we pass Medicare-for-all, universal health care for everybody,” Rep. Pramila Jayapal (D-Washington) said at the House Budget Committee’s markup of the tax bill in May. “There’s a lot of ways in which this is problematic.”
Republicans say their new precedent, which was approved in a party-line 53-to-47 vote, corrects a long-standing problem with congressional bookkeeping: that spending policies are evaluated as though they will continue in perpetuity, where tax policy is not.
That is true, but it’s because most spending laws either support social safety-net programs with dedicated funding sources or are made through the annual appropriations process to finance federal agencies.
“That system that was set up was intentionally designed to favor tax increases over spending cuts,” Senate Finance Chair Mike Crapo (R-Idaho) said Sunday on the Senate floor, “and to force Congress to increase taxes and increase spending.”
Democrats argue that Republicans didn’t balance the scales of taxes vs. spending but rather cleaved a gash through the filibuster and damaged the legitimacy of the Senate.
Sen. Ron Wyden (Oregon), the top Democrat on the Finance Committee, described the GOP’s move as the “nuclear” option to pass Trump’s budget bill.
“We will be a sicker, poorer and weaker country if this bill becomes law, and the Republicans have gone nuclear to pass it,” he said on the Senate floor. “But these moves cut both ways, and there’s going to be a lot of cleanup for Democrats to handle down the road.”
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