AP sources: GOP tentatively agrees to $1.5T plan on tax cuts

By ANDREW TAYLOR Markets Associated Press

Top Republicans on a key Senate panel have reached a tentative agreement on a tax plan that would add about $1.5 trillion to the government's $20 trillion debt over 10 years, according to congressional officials.

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Tennessee Sen. Bob Corker, a member of the chamber's dwindling band of deficit hawks, said on Tuesday that Republicans have "potentially gotten to a very good place" on agreeing to how much the upcoming tax measure might cost, once the Senate's tax writers have blended together rate cuts, additional revenue raised through curbing tax breaks, and the beneficial effects of what he called "pro-growth tax reform."

"We'll have something for you a little bit later today," said Sen. Pat Toomey, R-Pa., a participant in the negotiations from the party's more aggressive side on tax cuts.

Corker didn't offer a number, but officials familiar with the Senate Budget panel's internal discussions said the allowance for the tax measure would amount to $1.5 trillion.

The figure would allow deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their upcoming tax overhaul wouldn't add to the deficit. That would represent an about-face for top Capitol Hill Republicans such as Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Paul Ryan, R-Wis., who had for months promised it would not add to the budget deficit, currently estimated to rise to about $700 billion this year.

Corker said he's willing to be flexible with revenue estimates and said, "I'm all for pro-growth tax reform but over a decade it needs to pay for itself per valid models."

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The divide between the Senate GOP's deficit hawk and "supply side" wings has to be overcome before action on this fall's tax measure can commence in earnest. Republicans preached a hard line on the deficit while Barack Obama was president but are taking a more lenient approach now that President Donald Trump is occupying the Oval Office.

Unlike the House, Senate Republicans aren't planning to pair the tax measure with spending cuts.

The work of the budget panel is critical since Republicans need to agree on a Capitol Hill budget plan in order to pass a follow-up tax bill that's a top priority of Trump and a centerpiece of the party's fall agenda without fear of a filibuster by Democrats. But both House and Senate Republicans are divided and the budget debate is months behind schedule.

Earlier Tuesday, Sen. Ron Johnson, R-Wis., one of the budget panel's more ardent advocates of tax cuts, said a 10-year, $1.5 trillion tax cut "ought to be a minimum."

Proponents of strict government spending policies swiftly condemned the apparent agreement, warning of further ballooning of the national debt.

"With the U.S. in such a dangerous fiscal situation, policymakers shouldn't even consider voluntarily adding another $1.5 trillion to our national debt," Michael Peterson, president of the Peter G. Peterson Foundation, said in a statement. "Reaching $20 trillion in debt should be a wake-up call to solve our fiscal challenges, not an invitation to add to the problem."

Many Republicans in Washington promise that cutting corporate and individual rates and ridding the code of inefficient tax breaks, deductions, and preferences will boost the economy and cause a burst of new revenue. But the outlines of their tax plan itself remain secret, and it's not clear how successful they will be in cleaning up the loophole-choked tax code.

Congress' impartial scorekeepers have accepted the premise of such "dynamic scoring," but past studies by the Joint Tax Committee and Congressional Budget Office have been cautious about how much economic growth and tax revenues would follow tax cuts. Corker said he wouldn't feel bound by conservative estimates from Capitol Hill scorekeepers, raising the possibility of using analysis from outside economists.

The development also means, under the tricky Senate rules governing fast-track debate on the budget and taxes, some of the provisions in the upcoming tax measure would have to be temporary.

Corker on Monday opposed an overwhelmingly popular defense measure that would smash the budget, saying "the inability to get our fiscal house in order is the greatest threat to our country."

"There's a spectrum of opinion inside our conference," Johnson told reporters who encountered him on a Senate sidewalk Tuesday morning. "We should be doing everything to grow our economy and part of that is as aggressive pro-growth tax reform as we can get."