Republicans pass tax breaks, but don’t pay for them
Washington (CNN) – Republicans want to cut the deficit. And Republicans want to cut taxes. Tuesday, those two sweeping goals collided as a GOP-controlled House committee voted to advance hundreds of billions in tax cuts at the cost of adding those billions to the deficit.
The House Ways and Means Committee voted almost entirely along party lines to make six tax breaks permanent at a cost of $310 billion over the next 10 years.
The top Democrat on the committee pounced.
“To say that Republican action today is hypocritical is a serious understatement,” Rep. Sandy Levin of Michigan said. “This approach today of Republicans flies smack in the face of fiscal responsibility.”
But the committee’s Republican chairman, Dave Camp, also of Michigan, did not blink. He responded that the tax breaks have been passed year after year without any offsets.
“This bill has been extended, unpaid for, probably 30 times,” Camp said of a research tax credit. “I think it’s important we extend this … supporting permanency, not a temporary extension.”
Team Camp also points to another argument: They believe the jobs that come from tax breaks are worth adding some red ink to the deficit.
“These are things that people feel are extremely worth adding to the economy,” said Camp spokeswoman Sarah Swinehart.
What’s $310 billion get you?
These six so-called “tax extenders” that the Ways and Means Committee approved Tuesday were plucked from a larger group of 55 tax breaks that expired at the end of 2013 and have been waiting for congressional renewal.
Among those passed Tuesday were three biggies: the research and experimentation deduction, the credit that helps small businesses with major equipment costs, and the break for businesses earning rent and interest overseas.
Camp was correct. In recent years, Congress has extended the breaks year after year without offsetting their costs. But in the 90s, most of them were offset.
Why the flashpoint now?
Democrats are particularly pressing the issue now because they see a conflict between the Republican demands that spending, especially on Democratic priorities like unemployment benefits, be offset while the GOP allows their own priority – tax cuts – to add to the deficit.
“It’s a clear double standard, particularly when you hold up unemployment,” said Chuck Marr, director of tax policy at the left-leaning Center on Budget and Policy Priorities.
But Democrats also have exceptions to pay-for pushes, notably, many Democrats believe that unemployment benefits are emergency spending and do not need to be offset.
When asked if that is a double standard from the left, Marr said no.
“Unemployment insurance is a temporary, countercyclical move,” he replied. “What Republicans are doing here is pushing for something permanent and unpaid for.”
GOP chooses tax cuts at expense of deficit
Republicans insist their decision to choose tax cuts over trimming the deficit is nothing new.
“(Chairman Camp) has the position that extensions of current policy and tax cuts don’t have to be paid for,” said Swinehart. “Pay-fors are for spending. New spending. That’s his position.”
Yet, in Camp’s recent sweeping tax reform proposal, he did pay for all the tax cuts he extended. He did that largely by repealing other tax cuts. But that proposal is not going anywhere.
Camp insists that’s not a contradiction. His office argues that paying for tax breaks is only possible in a comprehensive revision of the tax system, not when tax breaks are taken one by one as the House is preparing to do now.
The result: On Tuesday, Republicans on the Ways and Means Committee choose their anti-tax crusade over their image as deficit hawks.
Next, all Republicans in the House will face a similar choice.
Multiple GOP sources tell CNN they expect all six tax credit bills to get votes on the House floor and that leadership is still working out the exact timing.