The nonpartisan federal agency that analyzes legislation for Congress has been a real downer for the GOP as it tries to pass President Trump’s mega tax cut and agenda bill.
The Congressional Budget Office’s analysis of the House-passed bill has provided damning fodder for the Democrats and left Republicans scrambling to prove to the public that the legislation will spur major economic growth while slashing taxes for just about everyone.
“Democrats in Washington are once again recycling the same tired talking points that House Republicans are prioritizing tax cuts for the wealthy when, in reality, extending the Trump tax cuts delivers the biggest relief to working-class Americans and small businesses in a generation,” House Ways and Means Chairman Jason Smith, Missouri Republican, said.
Democrats have seized on the CBO’s number crunching, which determined that the legislation would provide the most financial benefit to higher earners, while middle- and low-income earners, particularly those making $55,000 or less, wouldn’t save much in taxes at all.
The CBO also determined the legislation would add $3 trillion — $4.5 trillion to the national debt over 10 years, handing Democrats another powerful talking point in their effort to stir up opposition to the bill.
The president’s chief budget analyst, Office of Management and Budget Director Russ Vought, is among the Republicans criticizing the CBO’s methods. He said the agency uses gimmickry that hides a $1.4 trillion deficit reduction over the next ten years, partially achieved through $1.7 trillion in savings.
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“If you care about deficits and debt, this bill dramatically improves the fiscal picture,” Mr Vought said.
The White House and Republicans have joined forces to try to discredit the CBO as a left-leaning agency that bombed at predicting the impact of passed federal tax cuts and other key legislation.
For example, revenue following Mr. Trump’s 2017 tax cuts was on average $170 billion higher than the CBO’s initial projections, and economic growth was a full 1.6% higher than CBO projected in the two years following enactment.
The CBO’s combined revenue predictions following the tax cuts fell short by half a trillion dollars.
The CBO, created in 1974, is considered entirely nonpartisan. Staff are prohibited from making campaign contributions. The current director, Phil Swagel, worked in the administration of President George W. Bush. The GOP has long complained that the CBO favors government spending programs over tax cuts.
“They’ve always been wrong, and they’ve always ignored what tax cuts will do to grow the American economy,” House Majority Leader Steve Scalise, Louisiana Republican, said.
Mr. Swagel on Monday defended his agency in an interview with CNBC, a relatively unusual step for a CBO director.
“I am a Republican,” he said. “This is a nonpartisan organization, and we work for the entire Congress.”
Democrats have delivered a steady stream of attacks on the bill to leverage opposition, all based on the CBO’s analysis. It echoes the party’s messaging on the 2017 tax cuts: The poor and working class get robbed to benefit the rich.
The bill slashes $1.3 trillion over 10 years, mostly through reductions in Medicaid and food stamp benefits, which Democrats say will cancel out any benefit from lower taxes.
The CBO projects nearly 11 million people would lose health insurance by 2024 due to the Medicaid cuts and reductions in Obamacare subsidies.
Many of those targeted to be kicked off social welfare benefits would be illegal immigrants or people who don’t qualify for the help, Republicans said.
Democrats are trashing the measure with a broader brush.
“This bill will rip health care away from millions of people and jack up the debt to fund tax breaks for billionaires,” Sen. Elizabeth Warren, Massachusetts Democrat, said.
Democrats misrepresented the impact of the 2017 tax cut bill and are spreading lies about the proposal now working its way through the Senate, Mr. Smith said.
Lower-income earners pay far fewer taxes than high-income earners, but they enjoyed the biggest percentage cut — 13.5% — after Mr. Trump signed the 2017 tax cut bill into law.
The 2025 bill will permanently extend those cuts and add new reductions aimed at the working class by eliminating taxes on tips and overtime. The legislation would also create a deduction for some auto loan interest payments and would reduce taxes on Social Security collected by seniors.
Those earning less than $30,000 would see their taxes cut by 23%, Mr Smith said.
The reductions will increase take-home pay for lower-income earners by an estimated $13,300, he added.
The legislation is poised for modifications in the Senate, but it’s not likely to stray significantly from the House bill in cost and tax cuts.
The Tax Foundation, considered non-partisan, said the bill will only boost the economy by .8%, a fraction of the growth Republicans predict.
The White House Council of Economic Advisors projects the legislation will increase GDP by 4.2% to 5.2% over the first four years and 2.6% over a decade.
The CBO forecasted a much lower 1.8% in economic growth from the bill.
House Speaker Mike Johnson, Louisiana Republican, dismissed the prediction and said the CBO is “notorious for getting things wrong.”
Like the 2017 tax cuts, he said, the 2025 legislation “will be jet fuel for America’s economy.”
• Susan Ferrechio can be reached at sferrechio@washingtontimes.com.