Republicans defended their tax reform plan Wednesday as senators moved forward with appointing members to participate in the conference committee responsible for resolving differences between the House and Senate versions of the bill.
“We’re making real progress,” said Rep. Evan Jenkins, R-W.V. “Just a couple of weeks ago, the House passed this really important tax cut for the American people, to bring jobs back to America and help the people of West Virginia.”
The Senate passed its version of the bill early Saturday morning by a 51-49 vote, with only Sen. Bob Corker, R-Tenn., siding with Democrats against it. Corker had said he would not accept a bill that adds to the federal deficit.
There are notable differences between the two bills yet to be resolved, but both would cut corporate taxes from 35 percent to 20 percent, reduce taxes for most workers, and eliminate many of the deductions individuals and businesses currently use.
Despite concerns about the cost from fiscal conservatives like Corker, most Republicans in Congress remain optimistic about the legislation’s impact.
“I’m excited about the tax bill and what it’s going to bring to middle-class folks and lower middle-class folks, bringing relief,” said Rep. Darin LaHood, R-Ill.
LaHood specifically cited the doubling of the standard deduction, preservation of the mortgage interest deduction, and allowing deduction of property taxes up to $10,000 as provisions that will reduce the tax burden on the middle class. He also argued that cutting taxes for small businesses and corporations will boost the economy and help workers.
“Talk to any business, whether you’re a main street business in Quincy or whether you’re a large corporation, what are they going to do with that tax break?” he said. “It’s going to go into wages, it’s going to go into hiring more people, expanding their business.”
Rep. Will Hurd, R-Texas, predicted the reforms would “supercharge” the economy as Americans send less of their money to Washington, D.C.
“That means hard-working taxpayers are going to have more money in their pocket, small businesses are are going to spend less on taxes,” he said. “So that means my buddy who has a coffee shop is going to be able to buy a new espresso machine so they don’t have a long line in the morning. This is all good for hard-working taxpayers.”
While he expects the conference committee to put together a consensus bill that can be passed by Republicans’ self-imposed Christmas deadline, Hurd acknowledged there are no guarantees.
“As I’ve learned in my three years in Congress, you can’t celebrate a victory until the ink has dried,” he said.
Sen. Rob Portman, R-Ohio, flatly rejected nonpartisan estimates by the Joint Committee on Taxation and others that the proposed changes will add at least $1 trillion to the national debt over the next decade.
“In fact, I think it will reduce the debt” he said, “because it is desperate that we have tax reform to change the current dynamic.”
According to Portman, U.S. companies have faced a competitive disadvantage globally for years, and thousands of businesses that have been sold to foreign companies would have been able to remain in America if the country had switched to the proposed system sooner.
“I’m convinced this is going to result in significantly more economic activity, investment, higher productivity, higher wages, which is a key problem in Ohio,” he said. “We’ve got flat wages and we’ve had that for more than a decade. So I think this is going to end up being very, very positive.”
Portman took issue with the JCT basing calculations on the Congressional Budget Office’s projections for long-term economic growth, which predict an average of about 1.9 percent GDP growth per year. He pointed to the last two quarters of growth at an annual rate above 3 percent, and he suggested 3-4 percent growth will continue after the tax bill is passed.
“I think if you look at those growth numbers realistically, it also changes the whole calculation,” he said. “You end up with net revenue coming in. it’s pro-growth tax reform. It’s middle class tax cuts, it’s simplification.”
Sen. Bill Nelson, D-Fla., is unconvinced by Republican promises that massive tax cuts will pay for themselves.
“My goodness, we’re going to borrow $1.5 trillion, add it to the national debt, in order to give multi-national corporations a tax cut?” he said. “I don’t think that’s good tax policy and it’s certainly not good fiscal policy.”
He also emphasized a provision in the Senate version of the bill that repeals the Affordable Care Act’s penalty for individuals who do not purchase health insurance. The CBO has estimated that could lead to 13 million fewer people covered by insurance and a 10 percent increase in premiums for others.
“Remember, this is not only a tax bill,” Nelson said. “They have attacked the Affordable Care Act… That’s in this tax bill. A lot of people don’t understand that.”
According to Sen. Jeff Merkley, D-Ore., the debt that experts expect the Republican tax reform plan to incur is a “horrifically misguided” way to spend trillions of dollars.
“What you could do with that kind of money, in order to provide scholarships to make college affordable, in order to strengthen public education, in order to do a host of infrastructure that’s been delayed for so long and is so important to our future economy that would put millions of Americans to work,” he said.
Merkley also criticized the GOP for providing most of the bill’s benefits to the wealthy and big corporations.
“It’s aimed at raiding the national treasury and giving the proceeds to the richest Americans and it’s just wrong on every level,” he said.