Some Trump administration officials and Capitol Hill Republicans are discussing the possibility of passing sweeping tax cuts without offsetting revenue increases — an idea that threatens to balloon the deficit and undermine the GOP’s reputation as the party of fiscal discipline.

A number of Trump advisers in recent weeks have privately questioned whether tax reform needs to be “revenue neutral,” according to multiple people familiar with early-stage tax reform discussions. Sen. Rand Paul (R-Ky.) personally reached out to administration officials to argue that tax cuts without corresponding offsets would spur faster economic growth, and conservative groups such as Club for Growth and Heritage Foundation second that idea, bolstering the argument in the eyes of the right.


“I think the government should be smaller, and I’m for tax cuts and spending cuts that reduce the overall size of the government,” Paul told Politico in a short interview Tuesday. “Trump’s [campaign] tax cut was large and not ‘revenue-neutral.’ I support what Trump ran on.”

But top Hill sources close to the high-stakes tax negotiations say such a proposal will go nowhere for several reasons: For one, it would pose huge practical complications, since any plan that increases the deficit would need significant Democratic support to clear the Senate, a heavy lift for Republicans.

The idea could also exacerbate Republicans’ looming budget problem: Trump wants to cut taxes, hike military spending, fund a massive infrastructure package and build a border wall — proposals that all cost a lot of money. It’s unclear how Republicans would pay for these items without adding to the nearly $19 trillion debt.

“I don’t think that anyone is a slave to budget neutrality, but when you look at how this is necessarily going to go down, you have to play with the system we have, which means we’re probably not going to get any Democrats,” said one person close to the discussions, who dismissed talk of tax reform not paying for itself as a nonstarter.

Any push for such a plan is sure to meet stiff resistance from Speaker Paul Ryan and Ways and Means Chairman Kevin Brady, who have long insisted that any tax-cut must maintain the current revenue stream to the U.S. Treasury. Their plan even accounts for dynamic scoring, an assumption that, over the long run, tax reductions will grow the economy and therefore federal tax revenue.

It’s unclear how pervasive the sentiment that tax reform need not be offset is among the Trump administration. Trump's campaign tax plan would have cost $10 trillion over a decade, according to the Tax Foundation, a conservative tax think tank in Washington.

During a private tax reform meeting with Trump’s chief of staff, Reince Priebus, strategic adviser Steve Bannon, and son-in-law Jared Kushner two weeks ago, Ryan reiterated that stance. And sources familiar with the talks said nobody objected.

“That’s been our blueprint; we’re working off that blueprint here in the House, and that blueprint is revenue-neutral,” the Wisconsin Republican said during a news conference Tuesday.

Several lawmakers and Trump officials who agree with Ryan say his position is the only way to ensure a tax bill passes. Democrats will argue that the tax proposal benefits top earners and corporations, and thus they’ll be unlikely to sign on. That’s why Republicans are eyeing a fast-track tool that will allows lawmakers to push tax reform through Congress on a party-line vote.

But in order to use reconciliation, the GOP tax plan must not add to the deficit over the long term. President George W. Bush ran into that very problem in the early 2000s with his own tax cuts, an obstacle lawmakers sidestepped by having the bill sunset after 10 years. Conservatives complained that Bush and the GOP ballooned the deficit, with massive spending on wars and and an expansion of Medicare.

Sources familiar with the ongoing discussions say Ryan and top tax writers in Congress do not want to sunset tax reform like Bush did with his plan, saying to do so would eventually cut off the economic benefits. The point of tax reform, they argue, is to change the way businesses operate in such a way that gets the economy moving — but companies won’t restructure if they believe the plan is temporary.

“That’s always been the plan: You have to be [revenue-neutral], really, for reconciliation, so there’s really no option other than that,” said Rep. Devin Nunes (R-Calif.), a Trump transition official who sits on the Ways and Means Committee.

Contrast that with comments by Heritage Action’s Dan Holler, who argued that less revenue is better and more akin to GOP values: “The federal government has a spending problem, not a revenue problem. Lawmakers do not need to be constrained by ‘revenue neutrality’ as they pursue much needed, pro-growth tax reform.”

Adamant Trump supporter Steve Forbes argued in an op-ed Monday that Republicans are too obsessed with paying for tax cuts.

“Great tax cutters of the past, such as Ronald Reagan and John F. Kennedy, were wise enough to never make tax cuts contingent on spending cuts,” Forbes wrote. “[T]hose two great leaders knew that it can take time for new investments to come to full fruition. … Even though a properly structured major tax cut will start showing big, positive results right away, its full benefits will flow in over several years.”

Appearing Wednesday at the Financial Services Roundtable, an industry trade group in Washington, to discuss his plan, Brady was asked whether Trump’s team wanted to keep tax reform "revenue neutral."

“That’s part of that discussion," Brady replied.

One administration official sympathetic to Ryan’s argument said, in theory, it’s great to cut taxes without paying for it. The source wholeheartedly agrees with the GOP mantra that tax cuts grow the economy and that’s good enough.

But the same person noted that there’s a serious question about whether Congress could pass such a bill because of Senate rules, so Ryan’s way is better than no tax reform at all.

Former Freedom Caucus Chairman Jim Jordan (R-Ohio) agreed with that sentiment, referring to a “revenue-neutral straitjacket.”

“I’ve never subscribed to the Washington ‘revenue-neutral thinking,” he told Politico on Tuesday. “It’s like: Put together a tax plan that produces economic growth; don’t let it be constrained by anything else.”

Asked whether he’d settle for such a plan if it ensured passage, however, he said perhaps: “We need to get it done.”

News of this debate comes days after Trump criticized one of Ryan’s main ways of paying for tax reform: a proposal to increase levies on imports and lower them on exports, which the speaker’s office estimates would generate an estimated $1 trillion over a decade.

That, combined with the fact that Ryan is having to explain the need for tax receipts to remain the same over the long run, highlights the heavy lift that tax reform will be. For years, Washington insiders have predicted that tax reform would lower tax rates for Americans and corporations — reductions paid for by closing loopholes, getting rid of deductions and credits and essentially keeping total revenue receipts the same.

Some Republicans on Capitol Hill say they’re flabbergasted that anyone is talking about ditching that framework.

“We should take no action that increases deficits or that increases the debt,” said Rep. Bill Flores (R-Texas).

Colin Wilhelm contributed to this report.