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Megabill debt warnings fall on deaf ears inside the GOP

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Senate Republicans are fielding mounting warnings from economists that their signature legislation would add trillions of dollars to the deficit. It appears to be the last thing on their minds.

As Senate Majority Leader John Thune prepares to jam through the GOP’s sprawling border, energy and tax package to President Donald Trump’s desk, fellow Republicans are largely ignoring a host of reports warning that their bill would worsen the nation’s fiscal trajectory in a serious way.

They’re instead relying on estimates from the White House that assume vastly greater economic growth than virtually every other economic model — while trashing the credibility of Congress’ nonpartisan budget scorer, the Congressional Budget Office, which said on Tuesday that the House-passed border, energy and tax bill would add around $2.8 trillion to the deficit over a decade.

“It’s a model. And obviously, they’ve been famously wrong before,” said Sen. Kevin Cramer (R-N.D.) of the latest CBO report. “We do have more debt now than we had before, for sure, but I think they grossly underestimate the economic benefits.”

The problem highlighted by CBO and other economists is this: While the GOP’s tax cuts may provide some economic growth, they will likely not juice the economy as much as when Republicans first enacted Trump’s tax cuts in 2017. On the flip side, with federal debt closing in on $37 trillion, the rising costs of servicing more expensive interest payments will far outweigh any additional revenue that is generated from increased economic growth.

“The economic and fiscal state is not what it was in 2017,” said Paul Winfree, president and CEO of the Economic Policy Innovation Center, who was previously a top economic official in the first Trump administration. Winfree added in a text message that “the stock of debt is so large that anything we do to modestly increase productivity (and growth) without reducing spending … will lead to higher costs.”

That was underscored Tuesday when CBO put a number this week to the warning economists have been making for months: that the GOP package would hike interest rates and in turn increase borrowing costs.

Higher interest rates would boost payments on the national debt by an estimated $440 billion over a decade, CBO predicted, while the megabill would drive yearly economic growth of just 0.5 percent on average during that time. House Republican leaders are claiming the bill would generate $2.5 trillion by banking on total average growth of 2.6 percent.

That finding prompted an unusual phenomenon. Usually tax-cutting bills tend to cost less under so-called “dynamic” scores that include economic effects. Not so here: The $2.8 trillion figure released Tuesday outstripped the CBO’s prior $2.4 trillion estimate that did not include economic analysis — mostly attributable to the fact that, in their words, the bill “would increase interest rates.”

Lack of recognition of the dynamic has upset at least one Republican, Sen. Ron Johnson of Wisconsin, who dropped his own report Wednesday illustrating that the GOP’s megabill has little shot of bending the deficit trajectory downward, even in the rosiest of economic circumstances.

Johnson, who said he will vote against the massive tax and spending package as it’s currently written, is challenging his colleagues in the Senate and in the administration to show him where he’s wrong.

“The whole point of laying out the report was to get everyone to acknowledge and admit reality,” Johnson told reporters. “Nobody’s pushed back on my numbers. Here’s an opportunity to do it. … I’ve shown people my work. Who else has shown people work?”

But Thune took to the Senate floor on Wednesday to argue that the party-line megabill would generate enough revenue — around $4.1 trillion — through economic growth to completely make up for the deficit impact from the reduced revenue, citing a report from the White House’s Council for Economic Advisors that asserts the bill would lead to long-run GDP growth of up to 3.5 percent.

Thune added that CBO “characteristically, I should say, underestimates the economic growth, and hence the revenue, that this bill would provide.”

The White House figures are outliers compared with other economic models. The conservative-leaning Tax Foundation found, for instance, that the GOP’s plan would boost economic growth by 0.8 percent in the long-run but still, on a dynamic basis and after $1.5 trillion in net spending cuts, add $1.7 trillion to the deficit over 10 years.

The Penn Wharton Budget Model estimates that the bill would spur economic growth of 0.4 percent over 10 years and add $3.2 trillion to the deficit over a decade, all things considered.

Kyle Pomerleau of the American Enterprise Institute called the White House estimates “outrageous” and “way higher than everyone else’s.” He said the in-house analysis takes into account tax incentives, like those for domestic manufacturing, that didn’t end up in the bill that passed the House in May.

“They just say that, ‘well, the individual income tax — that’s going to make people work more and that’s it,’” he said. “But it misses so many different details of the actual reform itself.”

Democrats say voters will notice if the GOP package becomes a drag on the economy rather than the boon Republicans are marketing. Reiterating a claim party leaders often voice, Sen. Chris Murphy (D-Conn.) said the 2017 tax bill “ended up being a stone” around Republicans’ neck “that helped lead to their bloodletting” in the 2018 midterms.

“At some point they have to look at all this new information and decide to stop and go back to the drawing board,” Murphy said in a brief interview. “Because what they’re designing is not going to help our economy and is going to hurt a ton of people.”

The release of the CBO report comes as Senate Finance Chair Mike Crapo (R-Idaho) fields requests from several of his GOP colleagues to scale back changes to taxes that fund Medicaid and cuts to green energy credits. Crapo has been also pushing to use an accounting maneuver known as a current policy baseline, which would effectively zero out the cost of around $3.8 trillion in tax cut extensions.

It would allow Senate Republicans to make Trump’s tax cuts permanent without having to offset much of their deficit impact, which would otherwise be required by the Senate’s budget rules.

Asked for his reaction to the new CBO report, Crapo said he has “the same reaction I’ve always had” to the official scorekeeper’s numbers: “They’re not using the right baseline, and they aren’t analyzing it dynamically.”

Jordain Carney, Jennifer Scholtes and Katherine Tully-McManus contributed to this report. 

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Congress

WHCD shooting fuels new efforts in Congress to get Trump his ballroom

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President Donald Trump’s allies in Congress want to quickly authorize completion of the White House ballroom after the Saturday shooting at the White House Correspondents’ Dinner. But it’s not going to be simple.

Trump’s ambitious ballroom project was put on hold earlier this year after a federal judge said Congress needed to explicitly approve it. Responses from lawmakers were relatively muted at that time. Then over the weekend, Trump and several members of the presidential line of succession were sitting down to their salads at a Washington hotel when a gunman tried to storm past a security checkpoint.

Now, what was once regarded by many lawmakers as a nice-to-have is being viewed as a necessary venue for future events and celebrations. Multiple Hill Republicans have made public promises to try to approve the ballroom’s construction as soon as this week despite there being no clear path to getting a bill quickly to Trump’s desk.

Sen. Lindsey Graham (R.S.C) said he has been hearing from Trump directly about the ballroom and wants Senate Majority Leader John Thune to “expedite” consideration of his new bill with GOP Sens. Katie Britt of Alabama and Eric Schmitt of Missouri that would provide up to $400 million for the project.

Schmitt told reporters that while the ongoing legal battle isn’t over and that he believes Trump has the authority to build the ballroom on his own, Saturday’s shooting “renews the focus” on finding ways to finish the project without delays or complications.

Sen. Rand Paul (R-Ky.), who chairs the Senate Homeland Security and Governmental Affairs Committee, is expected to try Tuesday to pass his bill that would authorize construction of the ballroom. Sen. Tim Sheehy (R-Mont.) is also expected to go to the Senate floor this week to try and pass his own bill.

Yet Republicans are facing multiple hurdles, the most serious of which is that senators don’t have support to overcome a filibuster. Democrats are furious the ballroom is being built on the rubble of the East Wing that Trump bulldozed without consulting with lawmakers or planning and preservation review boards.

That’s giving way to talk among some Republicans about trying to jam it into the party-line immigration enforcement bill Trump wants on his desk by June 1 — a maneuver that might not work or could, at the very least, complicate the GOP’s ability to meet its deadline as the Department of Homeland Security shutdown drags on.

Trump himself urged the House to approve the budget blueprint as-is that the Senate advanced last week, which would tee up a bill through the filibuster-skirting budget reconciliation process to fund Immigration and Customs Enforcement and Border Patrol activities — part of a two-step plan to reopen DHS after bipartisan negotiations fell through.

Even House Budget Chair Jodey Arrington, who has called for expanding the pending reconciliation bill, is warning against making changes.

He said Monday the package will be “completely focused” on ICE and Border Patrol funding. And he warned that if Republicans start adding things now, it would open the door to adding items from a much larger conservative wish list.

“Listen, if we were going to add stuff to this, I’ve got a list and it’s going to start with fiscal reforms on preventing more fraud, and then you’ve got a host of other reforms on health care and housing affordability,” Arrington said.

Three Senate aides said Monday that a ballroom-related provision would not comply with the chamber’s rules for inclusion in the measure under the budget reconciliation process, anyway. Further complicating matters is that Republicans aren’t united behind one specific ballroom proposal, with Paul noting he would support putting a nominal amount of funding in but not hundreds of millions of dollars like Graham is envisioning.

Thune kept his options open Monday, telling reporters his conference would see what was “achievable.” But he acknowledged that the budget blueprint his chamber drafted did not task all of the relevant committees with oversight of the ballroom project to draft the reconciliation bill itself.

“I don’t know,” Thune said when pressed if it could be included in the immigration enforcement package.

Sen. Mike Rounds (R-S.D.) also urged his colleagues to tread carefully on the reconciliation plan.

“If we change it, then we put it in jeopardy. So I would prefer not to put it in jeopardy,” he said to reporters Monday evening. “I understand that there’s a desire to move forward with some of the construction over there, but let’s get a win under our belt.”

Graham, who chairs the Budget Committee, didn’t close the door to trying to tackle the ballroom through the party-line process but appeared to be frustrated about the prospect that it could come to that.

“I’d like to do it as a freestanding bill with an offset,” Graham said at a news conference Monday. “Let’s give it a chance, and if we fail, we’ll have to go to Plan B.”

Yet so far, with the exception of Sen. John Fetterman (D-Pa.), no Senate Democrat is biting.

“If Republicans truly want to improve security, they should join Democrats in funding the Secret Service, not Donald Trump’s luxury ballroom,” Senate Minority Leader Chuck Schumer said Monday on the Senate floor.

Meredith Lee Hill contributed to this report.

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Florida Republicans make peace with proposed new House map

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Some House Republicans spent weeks warning against a drastic redraw of Florida’s congressional map.

Now that it’s out — with Gov. Ron DeSantis targeting as many as four Democratic seats for a GOP takeover — they’re mostly keeping any criticism to themselves.

“I think they did a pretty good job,” said Rep. Gus Bilirakis, who said he was one of the Florida Republicans whose district changed “quite a bit.”

“But I think they could touch it up a little bit, too,” he added.

Rep. Scott Franklin said he is set to represent his third constituency in four terms. He still lives within the confines of the 18th district, he said, though it is much smaller in area.

“Mine gets significantly less red than it was,” Franklin said. “But it’s still a conservative performing seat.”

DeSantis’ map still has to be approved by the Florida legislature, and it’s almost certain to face challenges in court. But many of the states’ 20 Republicans are already making peace with new districts that will be at least slightly more competitive.

Many warned that redrawing the existing GOP-favored map to pick up more than one or two Democratic seats could dangerously dilute the Republican vote. And at least one, Jacksonville-area Rep. John Rutherford, said targeting four “could be a bit much.”

Down the Atlantic coast, the reviews were more positive. Rep. Maria Elvira Salazar’s Miami-area district remains largely untouched under the new maps, while her neighbor Rep. Mario Díaz-Balart could see his safe Republican seat only slightly diluted.

“Not bad, right? I’m used to those lines, so I’m happy,” Salazar said. “And I was one of the people that could have been highly damaged.”

She declined to comment on whether she expects the new map to net the four seats the GOP is craving: “God knows what’s going to happen.”

Several of the Florida Democrats who are now in danger expressed more concern. They now face running in unfriendly districts or switching districts and possibly running against a current colleague.

Rep. Jared Moskowitz, a South Florida Democrat, said he plans on running again and that he believes DeSantis’ effort will backfire by creating more tossup districts. Rep. Darren Soto called the map a violation of state and federal law but said he plans to run in his current Orlando-area district nonetheless.

Rep. Debbie Wasserman Schultz, a veteran Democrat representing a district south of Fort Lauderdale called the new map “a completely unconstitutional partisan gerrymander” and said she was waiting to review detailed data on her redrawn district.

“But the main thing is that this is illegal, and we’re going to sue,” she said.

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Charles to argue for a strong US-UK partnership in address to Congress

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King Charles will use his speech to Congress to help repair the “special relationship” between the U.S. and Britain that has been under strain over the Iran war.

The king plans to focus on reconciliation and renewal in a speech Tuesday before the House and Senate that is expected to run about 20 minutes, according to royal aides.

Charles will celebrate “one of the greatest alliances in history,” which has been tested as President Donald Trump complains about Prime Minister Keir Starmer’s reluctance, along with other NATO allies, to provide assistance to the U.S.-led attacks on Iran, the aides said.

He will reference the shared national security interests of the U.S. and the U.K., including NATO, the Middle East, Ukraine and the trilateral AUKUS pact with Australia.

Starmer’s handling of some of those issues has provoked criticism from Trump, who derisively referred to the prime minister as “not Winston Churchill” after the U.K. initially didn’t allow the U.S. to use its bases to bomb Iran at the beginning of the war.

When asked earlier in this month about his relationship with Starmer and the state of the U.S.-U.K. partnership, Trump told ITV News it was “not good at all.”

Charles is expected to acknowledge that tension by noting that the two nations have not always seen eye to eye, but that “time and again, our two countries have always found ways to come back together,” according to royal aides.

In his address, Charles also plans to tout the need to respect the rule of law and democratic traditions, and argue for the importance of trade and technology deals — a message that may go over less well with the administration.

Royal aides said the king’s remarks will also include a brief message of sympathy for Saturday’s shooting at the White House Correspondents’ Dinner.

Dan Bloom contributed to this report.

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