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Law known as Paygo could trigger $25 billion in automatic spending cuts next year to Medicare, plus another $111 billion in the programs, including farm subsidies.

Bloomberg, Content provider

November 17, 2017

2 Min Read

by Erik Wasson

Senate Republicans may face a political problem in the final push for their tax-cut plan, and they might need Democrats to help fix it.

The Congressional Budget Office says the $1.5 trillion tax-cut proposal would trigger $25 billion in automatic spending cuts next year to Medicare, plus another $111 billion in reductions to other programs, including farm subsidies. That’s because of a law known as Paygo.

While some conservative Republicans would welcome the cuts, moderates in the party are likely to balk -- and President Donald Trump has promised repeatedly not to cut Medicare. 

Waiving the automatic cuts could take 60 votes in the Senate, requiring support from at least eight Democrats in a chamber Republicans control 52-48.

The GOP could try to waive the cuts as part of the tax bill -- although that could anger the party’s deficit hawks -- or they could promise to do it later, which could worry moderates who in the meantime would be voting for a bill that cuts benefits to senior citizens.

Here’s the dilemma for Democrats: Should they help waive the spending reductions, even though that would help the GOP enact the tax cuts? Or should Democrats continue doing all they can to make the tax-cut plan difficult for Republicans to pass, even though recipients of Medicare and other programs would suffer and they could be blamed?

A number of Democratic and Republican lawmakers said Wednesday they weren’t aware of the issue.

If the Republicans enact the tax bill without the waiver, the matter would likely become part of a chaotic year-end pileup of legislation, including reauthorizing children’s health insurance and funding the government to avoid a shutdown.

If Democrats sense Republican need their votes to waive the cuts, they could use that as a bargaining chip on the spending bill to keep the government open after Dec. 8.

"Why should we go along with it?" said John Yarmuth of Kentucky, the top Democrat on the House Budget Committee. “They will need us just like they need us to keep the government open.”

Yarmuth and others are seeking immigration policy changes and domestic spending increases in that bill.

--With assistance from Steven T. Dennis.

To contact the reporter on this story: Erik Wasson in Washington at [email protected]

To contact the editors responsible for this story: Joe Sobczyk at [email protected]

Laurie Asséo, Justin Blum

© 2017 Bloomberg L.P

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