Will The Senate Dispense $4 Trillion More By Tweaking The Baseline?

The Senate will shortly come, relatively quietly, to a momentous and hazardous action. Above and beyond the tentative budget outline which would extend the Trump tax cuts another four years – itself costing perhaps $4-6 trillion dollars – President Trump urges that his tax cuts be made permanent. The method for this would cost something like another $4 trillion through FY 2034.

ecause this could not possibly be accommodated in the tentative budget outline, advocates have made a breathtaking proposal: to change the baseline for calculating the cost of the tax cuts. They would abandon the long-established baseline of current law – current laws being the permanent tax laws. They would change the baseline to a “current policy baseline,” meaning, taking the existing temporary Trump tax cuts to be as if permanent, and use the cut level as being the level it costs nothing to maintain. This simply blows away, wishes away, the cost of the permanent tax cut, it says that, since there is a temporary tax cut now, making it permanent is just following current policy, is free, and costs nothing. The national debt would rise unsustainably. The fisc would empty. The government would not be paying its way.

Before critiquing this, it should be recognized that extreme as it is, it is not without support. The Chamber of Commerce has come out with a full-throated defense of “current policy baseline” as, not surprisingly, “pro-growth.” As the Chamber says, “Adopting a current-policy baseline would remove this undue bias against tax relief and better protect American taxpayers from the unchecked growth in the size of government.”

Moreover, something should be recognized now that President Trump has been in office several months: the Republican Senate likes to give him what he seeks. Not one single nominee was defeated on the Senate floor. The Senate commitees have shown virtually no interest in critical oversight of what he has done to the federal departments and agencies. And while it is not possible to do meaningful headcounts in the Senate because so many Republican Senators are not committing themselves publicly until the issue is squarely presented, there are Senators, like Majority Leader John Thune, who have expressed support for the “current policy baseline.”

So could it happen? Could we just give away another $4 trillion by playing with the baseline? Let us take it step by step. First, as a Senate procedural question, the use of the “current policy baseline” goes to the Senate Parliamentarian, Elizabeth MacDonough. She has not yet indicated where she stands. She has been given respectful independence by the majority leadership. (I wrote of the role of the Senate Parliamentarian in the Budget Act, notably in the “Byrd Rule.” Charles Tiefer, Congressional Practice and Procedure 893 (1989).) I suppose there is a possibility she would OK the “current policy baseline,” saying something like that there is no textual language in the Budget Act forbidding it. But, the odds seem against her ruling that way. The Budget Act was enacted in 1974, fifty years ago. Tax cutting was going on hot and heavy as soon as 1981, seven years into the Budget Act. It is a little late in the day to discover such a wonderful yet previously overlooked way to make it so much easier to give away the fisc.

The next step, the moment of truth, is whether President Trump has enough power in the Senate to go around the Parliamentarian. This has been done when, for example, Majority Leaders Reid and McConnell ended the filibuster for nominees. The mechanics are simply enough. Majority Leader Thune would offer a proposition from the floor about the current policy baseline, and not getting a favorable ruling from the Senate Chair, would hold an appeal vote. This would require majority support. The vote would establish the new rule.

There is yet another proposition to be pointed out. In this situation, President Trump has a lot of support in the Senate Republican party, but, for several reasons, he faces difficult odds. For one thing, Senate Republicans are probably divided. “Current policy baseline” means a huge amount of deficit, and, there would be Senators who would just say no to that, however convenient. For another, this maneuver takes a majority vote on the Senate floor of all the Senators present and voting. If even four Republican Senators opposed it, they would, together with all the Democratic Senators, suffice to defeat it. (It need hardly be mentioned that Senate Democrat condemn the “current policy baseline” as not just a giveaway to billionaires but as “magic math.”) That is not a total show-stopper. Recall that no nomination has been defeated on the floor. But still, it is a barrier.

So let us keep one other tactic in mind. What is offered as a floor proposition can be simple, like, current policy baseline, but, alternatively, it can be drafted in a complex way. Make a compromise. Try to bring the whole party on board by a compromise. One might draft the motion on the floor, for example, to provide for current policy baseline for only the next two years. In that way, President Trump could get half a loaf – the extension of tax cuts in the proposed budget, plus, another two years, as few trillion dollars. This need not be belabored. It is much less tax cut than he wants, and, much more debt than fiscal conservatives want. Perhaps worse, having tasted the fruit of the poisonous tree, tax-cutters might come back in the future for more and more slices. Once the party gives up the safe harbor of the Parliamentarian, it is tossed upon stormy seas. I do not support doing this. I merely suggest it to gain a more complete understanding of just how hazardous this upcoming Senate action is. This is no mere technicality. The stakes are huge.