- Mark Wilson/Getty Images
- Senate Republicans are attempting to pass their tax bill using budget reconciliation, meaning it would require only a simple-majority vote.
- A bill passed through reconciliation must also abide by the Byrd rule, which says it can’t add to the federal debt outside of a 10-year window.
- An analysis using the Penn-Wharton budget model found that the current Senate GOP tax bill failed that test.
The Senate GOP’s legislation to overhaul the federal tax code would not pass the chamber because it does not abide by a critical budget rule, a new analysis found.
The University of Pennsylvania’s Wharton School model found that the current iteration of the Senate’s tax bill, called the Tax Cuts and Jobs Act, would decrease federal revenue and add to the national debt outside of a 10-year window. That would mean the bill could not qualify for budget reconciliation, the process that Republicans are trying to use to pass it.
Reconciliation would allow Senate Republicans, who control 52 seats, to pass the bill with a simple-majority vote without being subject to a Democratic filibuster.
But to be considered under reconciliation, a bill must adhere to a slew of rules. That includes the Byrd rule, which has two key provisions: It can add only a specified amount to the debt in a 10-year window – in the Senate bill’s case, $1.5 trillion – and can’t add any debt past then.
According to the Penn model, the bill passes the first provision but fails the second:
- Senate Republicans got the bill to come in under the $1.5 trillion threshold by ending some tax cuts after the 10-year window – for instance, all the proposed individual tax cuts would end after 2025.
- But the bill’s proposed permanent cuts in areas like corporate taxes would cause it to add to the deficit outside of the 10-year window. The bill would increase the deficit for six years outside of that window.
“In each of the years between 2027 and 2033, PWBM projects that the bill will continue to reduce revenues net of outlays, not including the additional costs of debt service,” the Penn report said. “In contrast, the Byrd rule prohibits a decrease in net revenue in any year after the 10-year budget window, not just revenue neutrality across time after the first 10 years. As a result, by our calculations, the Senate’s TCJA (amended) does not satisfy one of the key requirements of the Byrd rule.”
That would require Senate Republicans to change the bill substantially to get it through the chamber – or find a way to get each member of their conference plus eight Democrats on board.
The Penn model is not the official congressional arbiter of whether the bill complies with the Byrd rule. That falls to the Joint Committee on Taxation, which has not yet released a detailed analysis or the Senate bill as it relates to compliance with the rule.