'Growing momentum' for tax cut after GOP senators meet with Trump

After a closed-door meeting with President Trump and Vice President Mike Pence Monday afternoon, Republican members of the Senate Finance Committee expressed optimism a tax-reform bill will be passed as early as this week.

"There is growing momentum for this, and I'm confident that we're going to get this done soon," Sen. Pat Toomey, R-Pa., told reporters outside the White House.

While the House passed its own version earlier this month, Senate Republicans, with a narrow 52-48 majority, have struggled to round up the required 50 votes.

But the lawmakers intend to put a bill on Trump's desk before the end of the year, said Sen. John Cornyn, R-Texas.

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The chairman of the Senate Finance Committee, Sen. Orrin Hatch, R-Utah, said that once the Senate passes its bill, he believes Republicans in both chambers will work out a compromise.

"We're generally able to get together and solve these problems, and I think we will," Hatch said.

The Utah senator said he believes the handful of Republican senators who have expressed opposition to the bill can be persuaded to support it.

"We intend to get to 50," the Utah Republican said.

In case of a tie, Vice President Pence would be called on to cast a vote.

Prior to the White House meeting Monday, in a tweet, President Trump said the tax reform plan is getting "great support."

"With just a few changes, some mathematical," he wrote, "the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!"

Unlike the House version, the Senate version includes the controversial elimination of Obamacare's individual mandate. President Trump has pushed for repeal of the mandate, which requires most people to purchase health insurance or pay a penalty.

According to the Congressional Budget Office, the Republican budget outline allows for a net tax cut of $1.5 trillion over a decade on a statically scored basis, meaning the estimate does not take into account revenue generated by any growth in the economy stimulated by the tax plan.

Sen. Rand Paul, R-Ky.

Sen. Rand Paul, R-Ky., in a FoxNews.com column, declared his support for the Senate bill, explaining he was "pleased to work directly with President Trump to push this important change that lets us keep multiple promises in one bill — cut taxes and repeal the ObamaCare mandate we’ve been fighting against for years."

"This bill is not perfect. I would prefer a larger cut. I would prefer that the Senate bill match the House bill and keep some form of state and local deductions so that no one gets caught in the trap of losing too many deductions at once and failing to benefit from the tax cuts. Lastly, I’d like to see more permanence on the individual side," he said.

"Some of that is still achievable. Some of it is due to the peculiarities of the budget and Senate rules and will have to wait for another day."

The good news, he said, is that Congress can cut taxes every year.

"Want a bigger tax cut? Urge your legislators to do one every single year. I'll sponsor it. Want them to be permanent? Well, one good start is to keep extending them, every single year."

CBO 'underestimated growth'

The Wall Street Journal editorial board, in an editorial featured on the White House website, criticized Democrats "and their media chorus" for using CBO's $1.5 billion figure "to claim that reform will bust the budget and add to the federal debt."

"This comes with ill grace from people who cheered Barack Obama's doubling of the national debt in eight years, but it’s also overwrought," the board said.

CNBC's John Harwood, for example, contends the Republican plan would "only modestly boost economic growth," "significantly increase the national deb" and "give the most money to the richest Americans."

But the Wall Street Journal said CBO "has typically underestimated the growth and revenue feedback from tax cuts," citing the 2003 cut in the tax rate on capital gains as an example.

In January 2004, eight months after the tax cut passed, CBO predicted $215 billion in capital-gains revenue through 2007. The actual figure, however, was $377 billion.

"CBO underestimated economic growth and how much investors would cash in their gains," the Journal explained.

In its analysis of the current tax-cut plan, CBO estimates $43 trillion in revenue. But that assumes an average economic growth of 1.9 percent a year.

The Journal argues the U.S. economy has never grown that slowly for so long. If, as CBO says, every 0.1 percent increase in GDP adds about $270 billion in revenue over 10 years, just four years at 3 percent growth, the U.S. historical norm, could fill a $1 trillion hole.

Since Trump was elected, GDP has been at least 3 percent in each quarter.

The Journal, calling the bill the most far-reaching business-tax reform since 1986, also contends the left is falsely charging that the GOP bills are merely a tax cut without any reform. The board notes the bills eliminates trillions of dollars in loopholes, such as the state and local tax deduction. Some Republican lawmakers from high-tax states such as New York and California, however, have said the elimination of those deductions is a dealbreaker.

The Republican bills also eliminate business carve-outs, including cuts in the deductibility of interest, that are used to pay for lower business tax rates,

"The question Senators need to ask themselves in the end is whether this reform, all things considered, is a net benefit for the country," the Journal said. "We think it is — not least because it is a vote of confidence that better policies can restore America’s traditional economic vigor.

"Democrats and their media friends have given up on that score, concluding that we are doomed to 'secular stagnation' and that our politics must devolve into a brawl to divide up the spoils of whatever meager growth we can muster," the paper said.

'Failure is not an option'

On CNN's Sunday show, Republican Sen. Lindsey Graham of South Carolina and Democratic Sen. Dick Durbin of Illinois squared off over tax reform.

Host Dana Bash, pointing out that Republican senators such as Jeff Flake of Arizona and Bob Corker of Tennessee have expressed concern about the bill increasing the deficit, asked Graham if he thought there were enough votes.

"Yes, I think so," he said. "I think what they are concerned about is that the personal tax cuts expire in 2025, and that's a bit of a gimmick. But we will get there because failure is not an option when it comes to the Republican Party cutting taxes."

Bash pointed out the tax bill's doubling of the standard deduction to $24,000 for a married couple and the increase of the child tax credit to $2,000 per child appears to help working families.

"For the rest of the story, though, there's a real problem, a trillion-and-a-half dollars added to the deficit, threatening Medicare and Social Security, tax breaks for the wealthiest people in America and the biggest corporations," Durbin said.

"Meanwhile, the tax breaks for working families, half of them will see a tax increase, half a tax break. Those disappear, as Senator Graham just mentioned. But the tax cuts for wealthiest people are permanent. That's just unfair, and that's why half of the American people are skeptical about this Trump tax plan," the Democratic senator said.

Rep. Diane Black, R-Tenn., chairman of the House Committee on the Budget and a member of the House Committee on Ways and Means, wrote in a FoxNews.com column that along with President Trump, Republicans in Congress "clearly recognize that something must be done about the heavy tax burden weighing down hardworking Americans and holding back job creators."

She contends the average middle-class family of four will see a reduction in taxes of nearly $1,200 along with an average increase in wages of $2,200.

Obamacare mandate 'hurts lower-income Americans'

While the Democrats are crying foul on the Senate's inclusion of the elimination of the Obamacare individual mandate in its tax bill, an analyst for the conservative Heritage Foundation insists it makes perfect sense.

Rachel Greszler, a senior policy analyst in economics and entitlements at Heritage's Center for Data Analysis, pointed out in the think tank's Daily Signal that the mandate survived the Supreme Court’s 2012 ruling on Obamacare solely because the court interpreted the insurance requirement as a "tax."

Chief Justice John Roberts wrote in the Supreme Court’s decision that the individual mandate "cannot be upheld as an exercise of Congress’s power under the commerce clause," because Congress can only regulate interstate commerce, not order individuals to engage in it. But he said, famously, it was reasonable to construe that the intent of Congress was to increase taxes on those with a certain amount of income who choose to go without health insurance. Congress has such authority, he argued.

Greszler said eliminating the individual mandate "would put between $695 and $13,100 of individuals’' and families' earnings back into their pockets if they decide it is not beneficial for them to purchase the type of health insurance that Obamacare requires."

"Tax reform is also about reducing the government’s undue influence over people’s personal choices, so that they are freer to work, invest, and spend more of their own money based on what’s best for them," she said.

The individual mandate, Greszler noted, has a particularly disparate impact on lower-income Americans.

Of those who paid the individual mandate penalty in 2014 and 2015, 42 percent were families making less than $25,000 a year, and 82 percent made less than $50,000 a year, according to the IRS.

In "The Politically Correct Guide to Socialism," Kevin Williamson unfolds the grim history of an ideology that has spawned crushing poverty, devastating famines and horrific wars.