STANCHING THE RED INK: The debate underscores that Republicans face a fair number of hurdles in clinching a tax bill next year — something they’ll undoubtedly do, though perhaps not as quickly as some GOP leaders might be predicting. Perhaps the biggest decision that Republicans have next year is how much their tax bill will cost. A similar decision seven years ago landed at $1.5 trillion, ahead of the GOP passing the Tax Cuts and Jobs Act. But to Arrington’s point, there wasn’t as much concern about deficits in 2017, at least among Republicans. The even more pressing matter: $1.5 trillion wouldn’t even offset half of the roughly $4 trillion that it would cost to extend the temporary TCJA provisions, at least under traditional scoring methods. And that would only allow Republicans to preserve the status quo — to keep individuals and pass-through businesses from facing higher taxes next year. That might not be nearly exciting enough for many in the GOP, particularly given that former President Donald Trump offered a variety of his own tax relief ideas during this year’s campaign. Looking ahead: This all points to another issue. A large number of the current crop of GOP lawmakers, particularly in the House, weren’t intimately involved in putting TCJA together, even if they were in Congress back in 2017. With that in mind, Republicans have been boning up on an array of issues ahead of next year’s debate. That includes potential ways to defray the costs of tax cuts next year — Arrington, for instance, has floated the idea of counting revenue spurred cutting regulations, in addition to cutting green energy incentives from the Democrats’ 2022 climate law and savings from programs like Medicaid. For their part, congressional scorekeepers have already suggested that Republicans shouldn’t expect much help from perhaps their favorite method for offsetting tax cuts — dynamic scoring, or counting the revenue generated by the economic growth stemming from tax cuts. In fact, analysts say that extending the expiring parts from the 2017 law would have a limited impact on investment and growth. Add it all together, and you can certainly envision Republicans getting to a point where they’re trying to essentially fit 10 pounds of tax cuts into a five-pound bag. That could mean GOP lawmakers have to accept a shorter-term tax deal than they might like, or make even more difficult decisions when it comes to offsets. Or they might turn to what Crapo is offering — the idea that it costs nothing to extend what’s already on the books, whether that’s by actually changing the existing scoring rules or making that point more rhetorically. Something else to think about: These are the kind of issues that Trump didn’t really get into the weeds on in his first term. But if he started doing that more in round two, his opinion would surely have a lot of influence. And in fact, Trump’s choice for Treasury secretary, the hedge fund executive Scott Bessent, has been weighing in on this very issue. Bessent told CNBC shortly after the election, when he was already widely thought to be on the short list for Treasury, that he had been speaking with key Republicans about the deficit impact of another round of tax cuts. “The Republican Congress, there’s a big appetite for pay-fors. It will be a negotiation,” Bessent said, as The Associated Press noted after Trump announced his nomination on Friday. HAS THE GUN BEEN JUMPED? Sen. Bernie Sanders (I-Vt.) announced on Friday that he would become the ranking member on the Health, Education, Labor, and Pensions in the next Congress — and join the Finance Committee. For months now, the talk has been that Sanders wants a seat on the tax-writing committee, which also has jurisdiction over key entitlement programs. One slight issue, however: Senate Democrats haven’t yet assigned committee spots for 2025, as a spokesperson for soon-to-be Minority Leader Chuck Schumer confirmed. There certainly will be space for new Democratic blood on Finance in the next Congress, though it’s not clear how many seats the party will have on the panel, after losing four members in the 2024 elections. But six of the 14 Democrats who started this Congress on Senate Finance won’t be back in 2025, at least some of whom are more centrist types. Progressives have been itching to replace those departing tax writers with more aggressively liberal Democrats, though that likely seemed more important before Republicans captured all the levers of government ahead of the 2025 tax debate. There are still some good reason to think Sanders might be chosen: The Vermont senator is about to start his fourth term, and has more seniority than the other Democrats eyeing a place on the Finance roster. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.
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