Adding to the GOP’s challenge, the Congressional Budget Office on Thursday released a new analysis finding the Senate bill would cut Medicaid even deeper in the second decade after its enactment. While federal Medicaid spending would drop by 26 percent through 2026 under the bill, it would fall by 35 percent in the 10 years after that. The CBO’s initial report issued on Monday found that the Senate bill would cut the program by $770 billion compared to current law.
The Senate bill cuts taxes by about $700 billion over 10 years, according to the budget office, with most of the relief going to the wealthy and businesses. But repealing the 3.8 percent tax on net investment income was the largest cut in the bill, reducing federal revenues by $172 billion.
The fact that Republicans are reconsidering what had been a core element of their bill underscores how far the party has moved off the promise of full repeal. Any compromise that passes the Senate—which still remains a big question mark—is now likely to retain the structure of the current law, albeit with significant modifications. And while Majority Leader Mitch McConnell initially wrote the bill to appeal to conservatives in his conference, the changes that have come so far have mostly driven the proposal to the left and in the direction of the status quo. The bill repeals Obamacare’s individual insurance mandate, for example, but on Monday the GOP leadership added a provision design to replicate its effect by penalizing people who go without insurance for more than two consecutive months. The idea is to induce as many people as possible to sign up for insurance before they get sick.
Conservatives have prioritized repealing the tax increases in Obamacare both out of principle and because it is seen as critical to the GOP’s next project: comprehensive tax reform. But there are signs that some on the right could relent on the capital gains tax cut, which disproportionately benefits the wealthy, and unlike some of the other taxes in the Affordable Care Act, does not directly affect the cost of health care.
Senator Mike Lee of Utah, a conservative critic of the Senate bill, seemed to open the door to scaling back the tax cuts when he cited them skeptically in a statement after McConnell delayed a vote on the legislation earlier this week. “The first draft of the bill included hundreds of billions of dollars in tax cuts for the affluent, bailouts for insurance companies, and subsidies for lower-income Americans,” Lee said. “But it ignored the middle-class families who have borne the brunt of Obamacare, and who have been left behind by both parties in Washington for too long.” Asked if Lee would support keeping Obamacare’s tax on investment income, spokesman Conn Carroll told me: “We would be open to it. It is not something we are asking for, but if our priorities were included in the bill it is something we would tolerate.”