Republicans are trying to hide just how much their budget bill costs
The writer Dan Davies once noted that “Good ideas do not need lots of lies told about them in order to gain public acceptance.” It’s always a useful insight, and particularly relevant to how the Senate passed its version of the radical Republican budget bill earlier this week.
The legislation is mostly a stunning exercise in the upward redistribution of income, consisting of huge tax cuts mostly for the rich and steep spending cuts mostly for health care and nutrition assistance programs used by vulnerable families. But because the tax cuts boosting incomes for the rich are so large, even with the steep spending cuts, it is also an exercise in significantly increasing federal deficits and debt.
The Senate version of the bill would add nearly $4 trillion to the federal debt. This is a lot to be adding to the federal debt during a time when unemployment is low, inflation is above-target, and interest rates remain far higher than they’ve been for most of the last 15 years.
Further, if Republicans wanted to add $4 trillion to the national debt, they could write a check for $12,000 to every single adult and child in the United States. Yet, the bottom 40% of households in the U.S. won’t get any benefit at all from this bill, instead their incomes will outright fall. Why? Because all of that $4 trillion (and more) is needed to write enormous checks to the richest households. For example, the richest 130,000 households—who currently make more than $5 million per year—will receive almost $300,000 annually from the Republican budget bill.
So, what did the bill’s architects do with this inconvenient fact as they debated the measure in the Senate? They denied it. The method of denial is insisting on scoring the deficit effect of the bill on a “current policy” rather than a “current law” baseline. The mechanics of this (explained below) are a little wonky, but the result is that using a “current law” baseline—the standard in every previous federal budget throughout history—would correctly show that the budget bill would add $4 trillion to debt, whereas adopting a historically unprecedented “current policy” baseline would instead erroneously show that it added less than $500 billion.
The reason that there is a large difference between these two baselines stems from some gimmickry contained in the last big Trump tax cut—the Tax Cuts and Jobs Act (TCJA) of 2017. That bill’s main priority was a large and permanent tax cut for corporations. Today, corporations are paying hundreds of billions less in taxes because of it and will forever unless the law is changed. The TCJA also included tax cuts for individuals. Even these were tilted toward richer households, but there were some cuts up and down the income distribution.
However, the budget reconciliation rules dictate that only bills that do not increase the federal deficit in the last year of the 10-year budget window are allowed to pass with a 50-vote threshold. If the bill does increase deficits in that last year of the window, then a filibuster-proof 60 votes are needed. Because the TCJA’s individual tax cuts were secondary in importance to the tax cuts for corporations, the only way to have that bill not raise deficits in the last year of the budget window was to phase out the individual provisions in the last years of the budget window. These provisions sunset in 2025—absent congressional action, the current law says taxes will rise (mostly for the richest households).
But as of 2025, the TCJA’s individual provisions are in effect. So, if one assumed—law be damned—that the current policy of the TCJA was already going to be in place forever, then the cost of extending them relative to that current policy baseline is zero.
Using current policy as a baseline for assessing the effect of federal legislation on budget deficits is utterly irrational. One could use this reasoning to pass a bill instituting a universal basic income (UBI) of $12,000 per person in the United States, then pass another bill “extending” this UBI under a current policy baseline and declaring that there is no cost to it.
Lindsey Graham, Republican Chair of the Senate Budget Committee who was behind the push to use the current policy baseline, has gloated that “I’m the king of numbers as budget chairman—I’m Zeus.” But innumerate or dishonest politicians aren’t actually allowed to repeal the laws of math or economics. It is a fact that the Republican budget bill adds trillions to the national debt, period. And it does it for the simple purpose of making the rich richer and the poor poorer.
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