House Speaker Paul Ryan declined to commit Wednesday to making tax code changes “revenue neutral,” joining other Republicans in leaving the door open to raising the deficit as part of the reform effort.
It was another example of Republican leaders signaling they might not require major changes to the tax code — like closing big loopholes or eliminating certain deductions — to raise money for expected tax cuts.
Asked twice during an interview with the Associated Press if he will insist that tax reform be revenue neutral, Ryan didn’t give a yes-or-no answer but instead deferred to the tax-writing committees that are working on the details and argued that creating economic growth with the tax plan is “more important than anything else.”
“We want pro-growth tax reform that will get the economy growing, that will get people back to work, that will get middle income taxpayers a tax cut and that will put American businesses in a better competitive playing field,” Ryan said. “That is more important than anything else because if we have tax reform that doesn’t actually fix our problems, then we’ll lose more and more businesses, and the deficit will go even higher.”
During a meeting with a group of bipartisan lawmakers, President Donald Trump told reporters that working on a bipartisan tax reform is a “positive thing.”
“More and more, we’re trying to work things out together. That’s a positive thing and it’s good for the Republicans and good for the Democrats,” Trump said.
Asked by CNN’s Jeff Zeleny if conservatives should be skeptical of his meeting with Democrats, Trump said “well, I’m a conservative and I will tell you I’m not skeptical.”
Ryan said that Republicans hope tax reform could lead to 3% economic growth. “So it’s really important that we fix the massive errors we have in our tax system,” he said. “That’s more important than anything else.”
Ryan previously supported the so-called border adjustment tax to raise revenue to help pay for tax reform (the tax would have raised an estimated $1.2 trillion), and House Republicans said in the tax plan they released last year that they envisioned the plan being revenue neutral.
However, Republicans abandoned the controversial border adjustment tax this summer and multiple leaders have not committed to a major pay-for since then, arguing that tax reform will result in economic growth and help pay for itself over the long term.
AshLee Strong, Ryan’s spokeswoman, argued that Ryan’s “position has not changed” and that he intends to pursue a “permanent tax reform plan that abides by reconciliation rules,” which would require no increases to the deficit after 10 years.
Ryan is part of the “Big Six” group of Republican leaders that also include Treasury Secretary Steven Mnuchin, the President’s chief economic adviser Gary Cohn, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, and Sen. Orrin Hatch, the chairman of the Senate finance committee.
Ryan also resisted the idea that Republicans will end up simply with tax cuts, rather than a broader tax reform bill. He said tax cuts won’t help the country get the kind of growth it needs and that an overhaul to the system will help attract businesses from other countries.
“Narrow tax cuts won’t fix that,” he said.
Brady said last month at a tax reform event in Simi Valley, California, that he would be “open to losing tax revenues in these early years,” saying the budget would be balanced “over time” if reform become permanent.
Many Republicans, including fiscal hawks, have been reluctant to embrace the idea of revenue neutrality. Sen. Rand Paul, one of the most conservative members of the Senate, called it a “terrible idea” in a CNN op-ed last month, saying people wouldn’t actually benefit from tax cuts overall.
“Revenue neutral ultimately means that someone pays more for someone else to pay less. It means tax ‘reform’ without real tax cuts,” he wrote.
Rep. Jim Jordan, a member of the conservative House Freedom Caucus, said last week at an event hosted by Bloomberg that he’s “nervous” about a revenue neutral approach, calling it “Washington speak” for essentially keeping the tax burden the same while shifting around “who pays what.”
“In that scenario, my experience tells me that big corporations, big lobbyists do fine, and middle class families don’t always do so fine,” he said.
Sen. Ted Cruz, R-Texas, also railed against the idea Wednesday.
“Tax reform should not be revenue neutral,” he said in a speech. “This is important, and this a big debate in Washington right now.”
