House Republicans announced legislation Monday to permanently lock in last year’s tax cuts, looking to remind voters of the surging economy — and the Republicans’ role in getting it there — in the weeks before the November elections.
The three bills have been dubbed Tax Reform 2.0. They would make good on President Trump’s repeated calls on Congress to go beyond the $1.5 trillion package he signed last year and give Americans more breaks.
The legislation would make permanent last year’s tax breaks for individuals, preventing them from facing a tax increase in eight years, while boosting incentives for retirement savings and giving more lenient tax treatment to startups and small businesses.
“Under our new system, we’re seeing incredible job growth, bigger paychecks and a tax code that works on behalf of families and American businesses. Now it’s the time to ensure we never let our tax code become so outdated again,” said Rep. Kevin Brady, Texas Republican and chairman of the House Ways and Means Committee, which announced the bills.
Republican leaders say they want to hold a vote in the House by the end of September, giving their members a chance to crow about last year’s tax cuts and to force Democrats to explain their opposition amid a surging economy.
The bills are likely to end up as more of a political statement than a policy accomplishment because it’s doubtful they would survive a Democratic filibuster in the Senate.
The latest package is not protected by a budget, which would have circumvented the filibuster.
The cuts would add at least $650 billion to the deficit over the next decade, according to the Center on Budget and Policy Priorities, a left-leaning think tank.
Like with last year’s bill, the center said, most of the savings would benefit wealthier Americans.
Democrats are eager to engage on that message.
“The first Republican tax law hasn’t helped workers get ahead. Wages aren’t keeping up with inflation, costs for health insurance and prescription drugs are rising, and companies are laying people off and shipping jobs overseas,” said Rep. Richard E. Neal of Massachusetts, the top Democrat on Ways and Means. “This new tax legislation is more of the same: It disproportionately benefits the wealthiest Americans while growing the nation’s debt even more.”
The tax reform is the biggest legislative accomplishment of a Congress that has been controlled by Republicans since Mr. Trump took office. Republicans are counting on the tax cuts to persuade voters to keep them in charge.
Americans are increasingly pleased with the economy’s performance. A Quinnipiac University poll released Monday found that 70 percent of respondents said the U.S. economy is “excellent” or “good,” matching the poll’s record high.
“The Economy is soooo good, perhaps the best in our country’s history,” Mr. Trump said on Twitter, adding that Democrats were “flailing” for a response.
The latest round of numbers included 4.2 percent quarterly growth in the gross domestic product, a continued low unemployment rate and even a significant boost in average wages.
But the president isn’t enjoying the fruit of those numbers. His approval rating stood at just 38 percent in the Quinnipiac poll, dragged down by what voters saw as personal failings of lack of honesty and leadership.
“The economy booms, but President Donald Trump’s numbers are a bust. An anemic 38 percent approval rating is compounded by lows on honesty, strength and intelligence,” said Tim Malloy, the poll’s assistant director.
Adding to Mr. Trump’s woes last week was former President Barack Obama, who said he deserved the lion’s share of credit for the soaring economy.
“Let’s just remember when this recovery started,” the former president said in a speech marking his return to the campaign trail. “I’m glad it’s continued, but when you hear about this economic miracle that’s been going on, when the job numbers come out, monthly job numbers, and suddenly Republicans are saying it’s a miracle, I have to kind of remind them, actually, those job numbers are the same as they were in 2015 and 2016.”
Mr. Obama did oversee similar job numbers, with average monthly growth of 226,000 in 2015 and 195,000 in 2016.
Mr. Trump presided over average monthly job growth of 182,000 last year. So far this year, it has been 207,000.
But the White House said Mr. Trump has to be given credit for a broader set of data.
Small-business optimism, business confidence, real sales, real private nonresidential fixed investment and core capital goods orders and shipments have surged since Mr. Trump took office, said Kevin Hassett, chairman of the Council of Economic Advisers.
“If anyone were to assert that the capital spending boom that we’re seeing right now was a continuation of the trend that President Trump inherited, then, well, they wouldn’t get a high grade in graduate school for that assertion,” Mr. Hassett said.
Although he said Mr. Obama is often unfairly blamed for the Great Recession that he inherited, Mr. Hassett said there were “a whole bunch of policies that I think were very negative for growth.”
Mr. Hassett did have to correct Mr. Trump’s math in a tweet Monday that said growth in gross domestic product, at 4.2 percent, was higher than the unemployment number, at 3.9 percent, “for the first time in over 100 years!”
The statistic is wrong. It was the first time in about a decade that GDP surpassed the unemployment rate.
Mr. Hassett said he didn’t know how the president got the wrong number.
Mr. Trump has been a major cheerleader for congressional Republicans’ plans for Tax Reform 2.0.
The crux of the effort is making permanent changes for individuals: lower income tax rates, a higher standard deduction and a bigger child tax credit.
That would fix the problem Republicans created when they used a gimmick to fit into the $1.5 trillion budget space allotted for the 2017 tax cuts. Republicans made the corporate tax cuts permanent but imposed a sunset on the individual tax cuts, leaving Americans poised to face massive hikes in 2026.
But it also would send deficits soaring.
“The reason that these provisions were not permanent in the first place was that we could not afford it. What has changed?” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation, which tracks budget news. “Tax cuts simply don’t pay for themselves. America’s future economy depends on a strong fiscal foundation, and more debt is the last thing we need.”
Copyright © 2021 The Washington Times, LLC.