By Susan Cornwell and Amanda Becker
WASHINGTON (Reuters) – A sweeping Republican tax bill would not boost the U.S. economy enough to offset a large deficit expansion that the measure would trigger, congressional analysts said on Thursday, as the Senate moved toward a decisive vote.
The new analysis complicated debate over the legislation, which won the backing earlier in the day of influential Republican Senator John McCain. Republican leaders were scrambling to make last-minute changes to win over remaining holdouts.
Stocks surged on hopes that Republicans were on the brink of the biggest tax code overhaul since the 1980s. The S&P 500 hit a record closing high and the Dow Jones industrial average topped the 24,000 mark for the first time.
Behind closed doors on Capitol Hill, concerns were mounting, however, about Republican Senator Bob Corker’s push for a snap-back “trigger” amendment to the bill that would raise taxes automatically, possibly on corporations, if economic growth targets are not hit in the future, to offset a higher deficit.
Conservative Republican Senator Ted Cruz said at mid-afternoon that there were problems with the “trigger” proposal, and “a significant number of members would have a serious problem” if it only triggered tax hikes and not spending cuts.”
The Joint Committee on Taxation, or JCT,, a nonpartisan fiscal analysis unit of Congress, said the bill, as passed by the Senate Finance Committee, would generate $407 billion in new tax revenue from increased economic growth.
JCT previously estimated the tax bill would balloon the $20 trillion national debt by $1.4 trillion over 10 years. The new estimate, counting “dynamic” economic effects, put the deficit expansion at $1 trillion, falling far short of assertions by some Republicans that the tax cuts would pay for themselves.
The new estimate gave Republican deficit hawks further cause for concern about how much the tax overhaul plan, which has evolved from the measure passed by the Finance Committee, would add to the budget deficit and the debt.
House of Representatives Democratic leader Nancy Pelosi said the new JCT estimate showed “no amount of dynamic scoring fairy dust will fix the catastrophic deficits of the GOP tax scam.”
Democrats, expected to unanimously oppose the tax bill, have dismissed it as a giveaway to the wealthy and corporations.
McCain, a key player in July’s collapse of a Republican effort to gut Obamacare, backed the tax bill. While “far from perfect,” the…