A senior White House official said any Republican plan to extend or expand temporary tax cuts implemented in 2017 would likely come at the expense of ordinary Americans.
“Although congressional Republicans have not specified how they will finance these tax cuts, every major Republican tax cut for the wealthy or corporations in recent decades has burdened middle- and lower-income Americans. It’s no different,” Lael Brainard, director of the White House National Economic Council, said Wednesday.
Brainard spoke during a videoconference with reporters ahead of Thursday’s meeting between presumptive Republican presidential nominee Donald Trump and Republican lawmakers. President Trump is expected to discuss his legislative priorities if he wins and Republicans take control of Congress.
Republicans on Capitol Hill have already discussed how they will use a process called budget reconciliation to bypass the Senate filibuster and advance several possible priorities.
About $4.6 trillion in tax cuts, mainly in the form of individual tax rate cuts and more generous deductions enacted by Republicans in 2017, are set to expire in 2025, according to the nonpartisan Congressional Budget Office. Brainard’s NEC set the tab higher. 4.9 trillion dollars.
Republicans want to extend the temporary tax cuts, and Trump has talked about lowering corporate tax rates even further. But it’s not clear how those changes will be paid for, or even if they can, to prevent the budget deficit from growing.
Brainard told reporters there are four ways Republicans could try to offset at least some of the costs. She said revenue from Trump’s proposed 10% across-the-board tariffs on imports could be used. It could also cut entitlement programs like Social Security and Medicare. Allows cuts to annual spending for federal agencies and programs, excluding defense. Or they could simply borrow money and add the cost of the tax cut to the public debt.
Brainard said the tariffs will cost the average household about $1,500 a year as importers pass the tariff costs on to consumers. Cutting the annual agency budget would mean a reduction in spending by at least 50 percent, she said.
“One way or another, the American people will pay the price for the Republican approach in Congress,” she said.
President Joe Biden has said he will maintain tax cuts for households earning less than $400,000 a year. Brainard said Biden would raise revenue by allowing other temporary tax cuts to expire as scheduled for people making over the $400,000 limit, and would also raise revenue by raising taxes on businesses and strengthening IRS enforcement.
Brainard said letting some of the tax cuts expire could have an economic impact, but it wouldn’t be a major one.
“We think the impact on the economy will be good,” she said.
