House Republicans Proposed a Tax Bill That Can’t Pass the Senate

The House Ways and Means Committee released their tax cut bill yesterday and Dylan Matthews has a comprehensive look at what it does. But even as someone who follows these things pretty closely, I have to admit that my eyes glazed over a few times while trying to get through his explainer. The truth is that the vast majority of Americans won’t even try. A good number of them will simply believe Speaker Paul Ryan when he says things like this:

Over the next few days, different groups will provide us with an analysis of the ways various groups of people would be impacted by these changes. It will be important to take a look at those in order to understand the big picture of where Republicans want to go with this legislation. Here’s a pretty big hint:

The bill in its current form would almost certainly give disproportionate benefits to wealthy Americans, who tend to benefit from corporate tax cuts more than non-wealthy Americans and who could likely exploit the pass-through rate [for LLCs and partnerships] by setting up dummy corporations. People earning between $400,000 and $1 million would face a significantly lower top income tax rate.

But (could you tell one of those was coming?)…keep in mind that the bill that was released yesterday has zero chance of becoming law. Matthews explains:

As written, it is almost guaranteed to increase the budget deficit by trillions over 10 years, and quite possibly keep increasing the deficit after 10 years are up.

That’s a big problem: Under Senate rules, some legislation can pass with only 51 votes only if it doesn’t increase the long-run deficit. So the current draft of the legislation would probably need 60 votes instead, meaning significant Democratic support, which Republican leaders haven’t been even trying to court. They need legislation that can pass with 51 votes, and for that, they need the bill to not raise the long-run deficit.

That means the bill needs to change — either the cuts need to get smaller or Republican leaders need to find new ways to raise money, or both.

In some ways this bill is a flip version of the so-called “skinny bill” the House passed to repeal Obamacare. They have provided more of a roadmap this time, but they haven’t done the work necessary to pass a bill through the budget reconciliation process in the Senate.

As things develop over the next few weeks, competing forces will come in to play. On the one hand, lobbyists and advocacy groups will go to work to protect their territory—likely increasing the amount this bill raises the deficit. On the other hand, Republicans will be trying to find additional pay-fors that will lower the amount it contributes to the deficit so that it can pass with only 51 votes in the Senate.

Watching those competing forces go to work will give us some idea of whether or not there is any hope that Republicans can finally get something done legislatively. What we’ve learned from this opening salvo is that, working behind closed doors, they weren’t able to put together a bill that could accomplish that—which might be the big take-away from yesterday.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.