Arnold Ventures Issues Statement Regarding Ways and Means Reconciliation Proposal

Callas: Important to ​‘Hold that Line’ on Pro-Growth Reforms and the Deficit Impact 

George Callas, executive vice president for public finance at Arnold Ventures, provided the following statement in response to the House Ways and Means Committee’s amendment in the nature of a substitute for budget reconciliation: 

“As recent volatility in the bond markets reveals, pro-growth tax policy and fiscal responsibility are not a tradeoff; they are mutually reinforcing. Pro-growth reforms combined with savings from cutting wasteful spending and closing tax loopholes maximize economic opportunity and prosperity, while an exploding national debt jeopardizes that prosperity. That’s why we at Arnold Ventures have been encouraging Congress to ​‘do both’ —preserve the benefits of pro-growth tax reform without adding to the national debt. 

“Given these priorities, we appreciate the House’s insistence on tying tax cuts and spending cuts together to mitigate the deficit impact of making the TCJA permanent. As 32 House Republicans came together to state last week, Congress ​‘must hold that line on fiscal discipline to put the country back on a sustainable path.’ 

“We are encouraged by how the bill text released by the House Ways and Means Committee, led by Chairman Jason Smith, seeks to ​‘hold that line’ by reducing the size of the net tax cut to maintain a link with the savings achieved by other committees and by avoiding dangerous budgetary gimmicks. We also support the committee’s work to close specific loopholes and wasteful tax subsidies, such as those relating to the fraud-riddled Employee Retention Credit; workarounds of the cap on the state and local tax deduction; electric vehicles; overpayments of health insurance exchange subsidies; and rules for tax-exempt organizations such as universities, private foundations, and unrelated business income. These changes represent sound tax policy that reduces windfalls while also addressing waste, fraud, and abuse. 

“We do remain concerned that some of the tax policy extensions in this legislation will be short-term and leave a door open for irresponsible budgetary gimmicks in the future, such as recklessly scoring from a current policy baseline. If Congress reduces the cost of a provision by making it expire early, then it must recognize that cost when it considers a future extension. Contrary to certain narratives making the rounds, this is how mandatory spending is treated under the budget rules. As House negotiators continue to work with the Senate and the White House towards a final reconciliation bill, we encourage the House to ​‘hold that line’ and insist on legislation that is fiscally responsible and ensures a path to prosperity for American families and businesses.” 

Earlier this year, Arnold Ventures released a report on 20 spending cuts and loophole closures that would save up to $4 trillion and allow Congress to both extend the TCJA’s pro-growth tax policies and pay for them. Callas is available for interview or comment on this and related public finance policy issues. 

Visit our website to learn more.