House Speaker Mike Johnson said Sunday that Republicans will find spending cuts to offset President Trump’s push for tax cuts, which a nonpartisan budget analysis estimates will cost at least $5 trillion over 10 years.
Mr. Johnson said Republicans are working out the final details of their budget blueprint and will be sure to handle tax cuts responsibly.
“We have to be good financial stewards,” the Louisiana Republican said on “Fox News Sunday.” “We are going to make sure we find the offsets to do this in a responsible manner.”
Mr. Trump is also calling for a balanced budget as he simultaneously pushes for the extension of the tax cuts he signed into law in 2017 plus new breaks that eliminate taxes on tips, overtime pay and Social Security benefits.
“BALANCED BUDGET!!!” the president posted on social media Friday.
The Committee for a Responsible Federal Budget, a nonpartisan budget watchdog, says the Trump plan would cost $5 trillion to $11.2 trillion over 10 years.
Republicans are looking to use the budget reconciliation process to circumvent the threat of a Democratic filibuster in the Senate and pass a Trump-inspired spending plan along party lines.
But Republicans have a paper-thin majority in the House, leaving them with little leeway.
Mr. Johnson has been trying to get hardline and more moderate-minded Republicans to agree on the best path forward.
Congress faces a March 14 deadline to keep the federal government operating. It also faces a deadline likely this summer to raise the federal debt ceiling or risk default.
The national debt is $36 trillion.
Mr. Johnson recently said that raising the debt limit, another of Mr. Trump’s priorities, will likely be part of the budget negotiations.
A balanced budget generally means that revenues the federal government takes in are enough to offset its spending.
The federal budget hasn’t been balanced since the Clinton administration. The deficit for the current fiscal year, which started Oct. 1, is $711 billion, according to the Treasury Department.
It’s especially tough to balance the budget without cutting Social Security and Medicare, which Mr. Trump has promised not to do.
What Mr. Trump appears to be demanding, and Mr. Johnson attempting to satisfy, is ensuring that the new spending and tax proposals don’t add to the deficit. That’s not truly balancing the federal budget.
But even that task is daunting.
The Committee for a Responsible Federal Budget said the wide range of the price tag for Mr. Trump’s tax priorities, $5 trillion to $11.2 trillion over 10 years, depending on how they’re structured.
The bulk of that cost, $3.9 trillion to 4.8 trillion, comes from extending 2017 tax cuts, including lower rates for individuals and small businesses.
Republicans have talked about using a current policy baseline that would assume those tax cuts remain baked into law, effectively wiping the cost down to zero.
Even if they do that, Mr. Trump’s plan to cut taxes on income from tips, overtime pay and Social Security benefits would cost $900 billion to $5 trillion.
The CRFB said the range is so wide because Mr. Trump and lawmakers have yet to provide details. The costs will depend on “if these forms of income are exempt from taxation only for income taxes or for both income and payroll taxes, if these exemptions are subject to strict guardrails to limit cost and make it harder for taxpayers to reclassify income as tips and overtime, and how taxpayers react to these proposals,” the group said.
Another wide range, $200 billion to $1.2 trillion, comes from lifting the $10,000 cap on the state and local tax (SALT) deduction enacted as a partial offset to the 2017 tax cuts. Mr. Trump has sided with lawmakers from high-tax states who want to provide SALT relief for their constituents, but they have yet to come up with a specific proposal.
Mr. Trump also floated cutting taxes on products made in America.
“This could reflect his campaign proposal to lower the corporate tax rate to 15% for domestic manufacturing — or it could represent something more modest,” the CRFB said, estimating it will cost $100 billion to $200 billion.
The president’s tax priorities also included a few proposals that would add revenue: closing the carried interest loophole that benefits private equity and reducing tax benefits for stadium owners. The CRFB assumed the latter refers to ending the tax benefit for some or all private activity bonds that can be used to finance professional sports stadiums.
Taken together, those changes “could raise between $20 and $100 billion over a decade — enough to cover 0.2 to 1.8% of the tax cuts he reportedly outlined,” the CRFB said.
• Alex Miller contributed to this report.
• Seth McLaughlin can be reached at smclaughlin@washingtontimes.com.
• Lindsey McPherson can be reached at lmcpherson@washingtontimes.com.