WASHINGTON — The new House and Senate Republican budgets make a big boast: They both balance the federal budget within 10 years, without raising taxes.
Their own numbers, however, say millions of American families and businesses would have to pay more in taxes to make the math work — about $900 billion more over the next decade.
Both budgets also claim big savings by repealing President Barack Obama’s health law. At the same time, they rely on $1 trillion of tax revenue from the health law that would supposedly be repealed.
The House and Senate are scheduled to take up their budget resolutions in the coming days. These are nonbinding political documents that often lack details, especially when it comes to taxes. Nevertheless, they provide important insight into how majority Republicans in Congress would tackle the federal government’s finances.
The claim
“First and foremost, we balance the federal budget in less than 10 years by reducing spending by $5.5 trillion — without accounting gimmicks or higher taxes,” according to Rep. Tom Price, R-Ga., chairman of the House Budget Committee, in a published opinion article.
“Republicans have put forward a responsible plan that balances the budget in 10 years with no new tax hikes, that protects our most vulnerable citizens. It strengthens our national defense, and it improves economic growth and opportunity for hardworking families,” says Sen. Mike Enzi, R-Wyo., chairman of the Senate Budget Committee.
The Facts
Both Republican budgets say they will generate $41.67 trillion of revenue in the next decade. That is very close to the $41.75 trillion that would be generated under current law, according to the nonpartisan Congressional Budget Office.
However, current law assumes that more than 50 temporary tax breaks that expired at the start of the year will not be renewed. They include tax breaks for businesses big and small, as well as provisions that benefit commuters, teachers and struggling homeowners.
All together, the tax breaks add up to $898 billion over the next decade, according to CBO.
Do congressional Republicans want to eliminate these tax breaks? No. Most Republicans in Congress have voted numerous times to temporarily extend them. And over the past year, the Republican-controlled House has voted to make some of the more popular ones permanent.
Then why don’t the Republican budget resolutions reflect the costs of providing those tax breaks? Balancing the federal budget is hard. Doing it without more tax revenue is harder.
The House plan would cut spending by $5.5 trillion over the next decade, and the Senate plan would cut spending by $5.1 trillion.
Those spending cuts have raised loud objections from the right and the left. Defense hawks want more money for the military, and liberals are concerned about cuts to social programs. Finding the votes for an additional $900 billion of spending cuts would be a tall order.
To explain their numbers, Republican budget writers assert that they can fill the revenue gap by simplifying the tax code and making it more competitive.
Both GOP plans call for overhauling the taxes paid by individuals and businesses. Without providing many details, they count on that overhaul to spark more economic growth, which would generate additional tax revenue.
The Senate plan creates a reserve fund that could be used to help pay for a tax overhaul or to “extend certain expiring tax-relief provisions.” But the budget resolution doesn’t allocate any money to the fund.
Some policymakers in Washington say that letting temporary tax cuts expire isn’t the same as increasing taxes. But congressional Republicans don’t make that argument, especially about tax breaks that have been around for years.
To drive home the point, when Congress voted in December to extend the temporary tax breaks through the end of the year, the title of the legislation was the “Tax Increase Prevention Act of 2014.”
