Senate backs GOP budget in step forward for tax revamp

2017-10-20 17:26
President Donald Trump during a briefing with senior military leaders at the White House. (Pablo Martinez Monsivais, AP)

President Donald Trump during a briefing with senior military leaders at the White House. (Pablo Martinez Monsivais, AP)

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Washington - Republicans on Thursday muscled a $4 trillion budget through the Senate in a major step forward for US President Donald Trump's ambitious promise of "massive tax cuts and reform".

The 51-49 vote sets the stage for debate later this year to dramatically overhaul the US tax code for the first time in three decades, cutting rates for individuals and corporations while eliminating trillions of dollars of deductions and special interest tax breaks.

The tax cuts would add up to $1.5 trillion to the deficit over the coming decade, however, as Republicans have shelved fears about the growing budget deficit in favour of a once-in-a-generation opportunity to rewrite tax laws.

"These are reforms that change incentives and drive growth, and we've never done that before," said Senator Pat Toomey, a Republican from Pennsylvania.

READ: Trump vows to 'dramatically reduce income taxes'

The White House hailed the bill's passage, saying it "creates a pathway to unleash the potential of the American economy through tax reform and tax cuts".

Divisions

Divisions within the GOP indicate the process won't be easy despite the political imperative.

The upcoming tax measure, always a top item on the GOP agenda, has taken on even greater urgency with the failure of the party to carry out its longstanding promise to dismantle former President Barack Obama's signature healthcare law.

Republicans have said failure on taxes would be politically devastating in the 2018 midterm elections, when control of the House and Senate are at stake.

When reconciled with the House budget plan, the nonbinding measure would set up special procedures to pass follow-up tax legislation without the threat of a filibuster by Senate Democrats.

Pressure is mounting, however, on the House to simply adopt the Senate budget plan rather than risk lengthy negotiations that could delay the tax measure.

The House measure calls for a tax plan that wouldn't add to the deficit, as well as $200bn worth of cuts to benefit programmes that the Senate has rejected.

Democrats blasted the GOP budget, warning voters that the upcoming tax measure will shower benefits on top-bracket earners, corporations, business partnerships and people inheriting multimillion-dollar estates.

Upper-income individuals

Trump promises that the tax plan - still under development - is aimed at the middle class, but previous versions have seen upper-income individuals benefiting the most.

"The bottom line on this budget is that it's a right-wing fantasy document that paves the way for a hyper-partisan process on tax reform and trillions of dollars in handouts to big corporations and the wealthy," said Oregon Senator Ron Wyden, the top Democrat on the tax-writing Finance Committee.

"The more people learn about this tax bill, the less they will like it," said Senate Minority Leader Chuck Schumer, a Democratic from New York.

"That's what led to the demise of healthcare, ultimately, is that it was unpopular with the American people."

Only one Republican, Rand Paul of Kentucky, voted against the budget.

He said the measure permits too much spending and abandons the GOP drive to repeal the Obama health law. An amendment by Paul to revive the "Obamacare" repeal failed by a 2-to-1 margin.

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