Trump's Tax-Cut Bid Hits Obstacle: Hurricane Harvey's Costs

Before President Donald Trump launched his latest call for major tax cuts, he took a moment to offer support to Texas and Louisiana in the wake of Hurricane Harvey.

“We are here with you today, we are with you tomorrow and we will be with you every single day after, to restore, to recover and to rebuild,” Trump pledged during a speech at a Springfield, Missouri, manufacturing plant Wednesday.

(Related:3 Ways Harvey Is Touching the Life and Health Community Now)

That moment revealed how the storm — which has claimed more than 30 lives, according to the Associated Press, and caused as much as $90 billion in damage — may add new limits to Trump’s goal of delivering historic tax cuts. The president has already called on Congress to quickly deliver a Harvey aid package, but its multibillion dollar cost will stiffen resistance among lawmakers to any tax changes that aren’t offset with new revenue.

“Tax cuts not offset or at least partially offset just took a huge hit from Hurricane Harvey, although Republicans may not know it yet,” said Stan Collender, a former Senate Democratic budget aide.

Republicans in Congress, who were already tentatively planning to combine a debt-ceiling increase with a short-term spending bill to keep the government open, may now feel urgency to add Harvey-relief provisions into that mix — creating a brand-identity problem for some in the party.

“That has everything you want except Republican fiscal responsibility,” said Rep. Dave Brat, a Virginia Republican and a spending hawk. “We’ve got to help the victims of Harvey, we’ve got to raise the debt ceiling, but where is the responsibility for not leaving a fiscal mess to our children and grandchildren? That bill could come from Democrats.”

Pelosi’s Concern

On Wednesday, the House’s chief Democrat eagerly voiced concerns over the deficit in a response to Trump’s tax speech. “If Republicans have their way, they will blow a huge hole in the deficit, gut Medicare, Medicaid, Social Security and the Affordable Care Act — all just to fund deficit-busting tax breaks for the high-end,” House Minority Leader Nancy Pelosi said in an emailed statement.

GOP leaders had already said that any tax plan would have to pay for its cuts with new revenue. “It will have to be revenue-neutral,” Senate Majority Leader Mitch McConnell said in May. “We have a $21 trillion debt.”

Rep. Peter Roskam, a Republican who chairs the House Ways and Means Committee’s panel on tax policy, stuck to that line on Wednesday during an interview with Bloomberg Television — though he added that it’s an “open question” as to whether Congress will adhere to revenue neutrality in tax legislation.

The question is not just academic. Republicans, who have a slim 52-seat majority in the Senate, plan to pass a tax bill under a budget procedure that would allow them to bypass Democrats’ opposition. But that procedure, known as “reconciliation,” also holds that any tax cuts that add to the nation’s long-term deficit would have to be set to expire.

‘Better Than Nothing’