Earlier today, the U.S. Senate Budget Committee narrowly approved a revised version of the Trump Tax Plan. Republican leaders made a few changes to win over holdouts in their caucus, but these changes don’t actually change the core of this tax package. It still primarily benefits the wealthiest Americans, it still grows the budget deficit while providing little economic benefit, and it still poses major risk to the nation’s health care system.
What would the “trigger” actually trigger?
Senator Bob Corker (R-Tennessee) had objected to the Trump Tax Plan’s cost, and its potential to explode the federal budget deficit. Republican leaders moved to allay his concerns by adding a “trigger” that automatically rolls back tax cuts if they expand the deficit further than the $1.5 trillion that Congress has already authorized. This promise of a yet-to-be-specified “trigger” was enough to get Corker, along with fellow holdout Senator Ron Johnson (R-Wisconsin), to join fellow Republicans in passing the bill out of the Senate Budget Committee on a 12-11 party-line vote.
Since we don’t know how this “trigger” is designed, we still don’t know exactly how this would affect the federal budget. And with Republican leaders eyeing larger cuts in the “pass through” tax that would result in an even heftier price tag and larger budget deficit, this whole talk of a “trigger” may be a moot point.
And if anything, this “trigger” ensures that the tax bill won’t produce the kind of economic growth that the White House has promised. Why is that? The Trump Tax Plan still relies on the promise of future budget cuts to pay for the tax cuts, and those budget cuts would be in addition to automatic budget cuts that the tax package would cause upon its passage. Between the budget cuts and a triggered revocation of tax cuts, this tax package is essentially designed not to provide any lasting economic benefit.
New health care provision may do slightly less harm, but would still leave more Americans uninsured
The other major revision Senate Republican leaders are making has to do with health care. Last week, Senator Susan Collins (R-Maine) denounced their decision to include repeal of Obamacare’s individual mandate in the bill. To address her concerns regarding health care costs and loss of coverage, the White House and Senate Republican leaders have agreed to establish a temporary $4.5 billion reinsurance fund for states to set up programs to reimburse insurance companies for covering patients who would be most at risk for higher premiums and/or loss of coverage if the individual mandate were repealed. Republican leaders have even promised Collins they will include this reinsurance fund alongside the Alexander-Murray plan to stabilize the health insurance market.
This reinsurance fund may help a little in containing insurance costs, but it isn’t nearly enough to undo the $300 billion+ worth of damage that individual mandate repeal would wreak upon the nation’s health care system. The Center on Budget and Policy Priorities (CBPP) estimates that the federal government would need to permanently invest at least $5 billion a year in reinsurance just to keep insurance premium costs down, and that probably still wouldn’t address the additional costs that would result from pulling 11 million or more Americans out of the health insurance market.
What hasn’t changed: How the Trump Tax Plan favors the wealthy
Regardless of these and other recent tweaks to the Senate bill, this tax package continues to favor the wealthiest Americans over nearly everyone else. Senate Republicans have framed their larger “pass through” rate cut as “small business tax relief”, even though it’s actually designed to allow wealthy investors to pay a lower business tax rate. And throughout the entire process, Republicans have kept in place a permanent corporate rate cut that primarily benefits the largest multinational corporations.
Republican leaders may bring their version of the Trump Tax Plan to the Senate floor as early as this Thursday. Senator Dean Heller (R) continues to promote the bill on social media, but Senator Catherine Cortez Masto (D) remains strongly opposed. With Cortez Masto and all other Senate Democrats expected to vote against the bill, Republicans can’t lose more than two votes in order to pass it by the end of the year.
Cover photo provided by the U.S. Air Force.