Politics & Government

Big deficits? No problem, say conservatives, if it means big tax cuts

Rep. Kevin Brady, R-Texas, right, listens as President Donald Trump speaks during a meeting with members of the House Ways and Means committee in the Roosevelt Room of the White House, Tuesday, Sept. 26, 2017, in Washington.
Rep. Kevin Brady, R-Texas, right, listens as President Donald Trump speaks during a meeting with members of the House Ways and Means committee in the Roosevelt Room of the White House, Tuesday, Sept. 26, 2017, in Washington. AP

The drumbeat from Republican conservatives has been relentless – trim the federal deficit. But now that Republicans see a huge opportunity to cut taxes, the deficit's not such a big deal.

As the White House and Republican congressional leaders prepare to roll out the outlines of a tax overhaul package Wednesday, some conservatives made it clear they're willing to accept deficit increases in return.

After all, they argue, lower taxes will boost the economy, create jobs and shrink deficits.

And help their reelection efforts by, for the first time this year, fulfilling a major 2016 campaign promise.

"We can live with it," Rep. Dave Brat, R-Va., a member of the conservative House Freedom Caucus said of an estimated hit to the deficit. Growth in the economy, Brat said, "will pay for the deficit pain."

Brat, who is pushing for "deep cuts so we get the economy going," nevertheless acknowledged that "some of us have been nervous" about forging ahead with tax breaks without paying for the tax cuts.

But he said he expects tax writers to eliminate some loopholes and deductions in the tax code thicket and he said cutting taxes for individuals and corporations will lead to jobs.

"That’s why I can forgo a bunch of deficit pain in the short run to get the economy growing," he said.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, dismissed worries about adding to the deficit, telling reporters on Tuesday that Republicans will balance the budget "over time" with "accurately measured economic growth" along with eliminating loopholes and deductions.

Some Republicans are still talking the deficit-cutting talk. House Budget Committee Republicans this year offered a plan that would balance the budget within 10 years. President Donald Trump’s proposal claims a surplus after a 10 year period.

Last year’s deficit was $585.6 billion. In the first 11 months of the current fiscal year, which ends Saturday, the deficit has totaled $673.7 billion.

The push for tax reform comes as Republicans have failed this year to deliver on most of their campaign promises, most visibly health care.

Senate Republican leaders last week agreed to a deal that would add to the federal deficit in order to pave the way for a $1.5 trillion tax cut over the next 10 years – and few Republican colleagues blanched.

"At the end of the day we’ll probably focus more on tax reform and trying to get the economy going," said Rep. Mark Meadows, R-N.C., Freedom Caucus chairman. "A casualty of that potentially will be some of the spending cuts."

That’s led some to protest, noting that Republicans have long been quick to call for a need to pay for vastly smaller packages, including the renewal of unemployment benefits.

"Seeing a total erosion of caring about the debt is incredibly hypocritical," said Marc Goldwein, head of policy and senior vice president at the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group. "Some recognize that debt is important, but it’s too many who have spent a long time railing about debt, than tax reform comes along and they’re ‘Sorry, I like that.’”

Goldwein called it "false and flawed" to surmise, as many conservatives do, that tax cuts would pay for themselves. He said that for every $1 of tax cuts, the economy would need to generate $6 in economic activity: "I share the view tax reform will grow the economy, but not at that rate," he said.

Some reports have suggested that the White House is open to raising the rate on higher income taxpayers, but many Freedom Caucus members are balking.

"I personally oppose increasing taxes on anyone," said Rep. Andy Harris, R-Md. "The purpose of tax reform is to cut taxes and that’s what America expects."

Trump promised at a meeting with Democratic and Republican members of the House Ways and Means Committee Tuesday that the tax plan would include "massive tax cuts," simplify tax filing, increase the child tax credit and nearly double the standard deduction.

Conservatives cheered the push to cut taxes.

"Our point is go big with the cuts, the growth is going to take care of everything else," said Tim Phillips, president of Americans for Prosperity, which is launching a major campaign to lobby members of Congress. "Go big with the cuts as long as you clear out a lot of these deductions and carve outs."

Not all lawmakers are comfortable with higher deficits. Rep. Carlos Curbelo, R-Fla., a House Ways and Means Committee member, said members have already been meeting to find ways to pay for tax cuts.

"Our goal in the House is as much permanency as possible and we know to achieve that you need revenue neutrality," Curbelo said. "We’re in search of it and we’re getting close, very close."

Andrea Drusch contributed to this report.

Lesley Clark: 202-383-6054, @lesleyclark