When we look forward to congressional action (or inaction) on taxes, it is important to remember that it’s going to come packaged as a budget resolution, which means that it’s going to deal with spending as well as revenue. The draft resolution approved by the House Budget Committee in July calls for $203 billion in mandatory spending (basically, entitlement programs, including Medicare, Medicaid, and food stamps) cuts. Many House Republicans think that spending-cut target is much too small.
Yet you can read for hour after hour about the dynamics of the tax bill without seeing the word “spending” mentioned at all.
The Washington Post’s latest big-picture take on the bill, for instance, begins with this description of the choices involved:
Trump advisers and top congressional leaders, hoping to assuage conservatives hungry for details, are working urgently to assemble a framework that they hope to release next week, according to White House aides and lawmakers. But after months of negotiations, the thorniest disagreement remains in view: how to pay for the giant tax cuts Trump has promised.
We are told the administration is “pressing to eliminate or reduce several popular tax deductions, including the interest companies pay on debt, state and local income taxes paid by families and individuals, and the hugely popular mortgage interest deduction.” But there’s not a word about spending cuts. We are supposed to believe that Republicans are seriously thinking about an assault on the mortgage interest deduction, by far the most powerfully defended sacred cow in the entire tax code — but they aren’t thinking about cutting Medicaid, which they’ve been trying to do all year.
Yes, the commentariat is intermittently aware — thanks to writers like my colleague Eric Levitz — that the conservative zealots of the House Freedom Caucus have never stopped demanding cuts in “welfare” (a term they apply to any federal benefits that don’t have work requirements and time limits) as part of the tax package. Indeed, HFC leaders talk about this constantly. But journalists aren’t listening. Just today Vox reports:
The Freedom Caucus’s alternative [to revenue-increasing offsets] is to make up the difference with deep cuts to welfare programs. Meadows said his caucus has identified upward of $500 billion in mandatory savings options Republicans could exercise.
Perhaps HFC members are the only Republicans primarily focused on using the tax bill to force spending cuts, but others will arrive at this conclusion soon enough. Lest we forget, the whole point of the Obamacare repeal-and-replace escapade was to cut taxes and cut Medicaid, a fact that was often obscured by massively more extensive talk about changes in individual health-insurance regulations.
With tax cuts and entitlements both squarely on the table, why wouldn’t the GOP help “pay for” the former with the latter? This is, after all, the party that repeatedly and redundantly passed a series of Ryan budgets that paid for tax cuts with the same kind of deep cuts in low-income programs (plus Medicare) that HFC members dream of each night.
Congressional Republicans are going to try to slash spending. The only question is how deep the cuts will be.