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The GOP tax bill cuts taxes by $1.5 trillion over the next decade and will accelerate growth of the federal debt under any forecast.

Expand chart
Reproduced from the Committee for a Responsible Federal Budget; Chart: Axios Visuals

The bottom line: Expect Republicans to defend these tax cuts while Democrats step up a defense of government spending — particularly if Republicans turn next to welfare reform next year. But at some point, a reckoning is coming, and the only way to raise taxes or reform popular government programs is to do it on a bipartisan basis, which isn't how things have been working in Washington.

Congressional Republicans, most of whom are self-described budget hawks, are set to today pass into law a tax cut bill that will add between $1.5 and $1.7 trillion to the federal deficit when taking into account both economic growth and expirations no one expects to take effect, according to the Committee for a Responsible Federal Budget, a group that favors shrinking the deficit:

  • Looking ahead, this worsens the country's fiscal outlook, but it was going to be a problem regardless.
  • Entitlement spending is set to balloon in the near-term future as baby boomers hit retirement age and their Medicare and Social Security benefits kick in.

What happens next, part I: Democrats are enraged by the Republican process on tax reform. They'll fight back if they retake control of Washington:

  • "Democrats are going to have to rejigger their internal process and forget about being the only party that believes in responsible government, because we can't take much more of this massive assault on domestic spending," said Jim Manley, a former aide to Democratic Senate Leader Harry Reid.
  • And while House Speaker Paul Ryan has said he wants to do entitlement reform next year, most people say this is highly unlikely to be successful.
  • "I don't see the political environment in 2018 supporting something like this," said Doug Holtz-Eakin, president of the American Action Forum, and a Republican economic adviser.
  • That also means a $1 trillion-dollar infrastructure package is unlikely to happen next year.

What happens next, part II: At some point the growing deficit will have to be faced, and whether that's future tax increases to raise revenue, or entitlement reform to decrease spending, it's going to be very difficult to pull off.

  • "In order to meet the criteria of not increasing poverty and hardship … there will have to be a mix of increased revenues as well as a mix of" decreased spending, said Sharon Parrott of the Center on Budget and Policy Priorities, a left-leaning group. And pulling that off will "require a different policy-making environment."
  • "It's the hardest problem," Holtz-Eakin told me.

Bottom line: "We're not going to make it 10 years. Somewhere, someone's going to have to do it ... With or without tax reform, this was in the cards," Holtz-Eakin said.

Go deeper

3 hours ago - World

Scoop: Iran preparing to enrich weapons-grade uranium, Israel warns U.S.

Iranian President Ebrahim Raisi holds a press conference. Photo: Presidency of Iran handout via Getty

Israel has shared intelligence over the past two weeks with the U.S. and several European allies suggesting that Iran is taking technical steps to prepare to enrich uranium to 90% purity — the level needed to produce a nuclear weapon, two U.S. sources briefed on the issue tell me.

Why it matters: Enriching to 90% would bring Iran closer than ever to the nuclear threshold. The Israeli warnings come as nuclear talks resume in Vienna, with Iran returning to the negotiating table on Monday after a five-month hiatus.

Biden: Fight against Omicron won't include "shutdowns or lockdowns"

Photo: Mandel Ngan/AFP via Getty Images

President Biden on Monday said that the new coronavirus variant, Omicron, is "a cause for concern, not a cause for panic."

Driving the news: Biden said later this week the administration will be releasing a strategy on how "we're going to fight COVID this winter. Not with shutdowns or lockdowns, but with more widespread vaccinations, boosters, testing and more."

Updated 5 hours ago - Politics & Policy

Omicron dashboard

Illustration: Aïda Amer/Axios

  1. Health: WHO says Omicron poses "very high" risk — Fauci says Omicron variant will "inevitably" be found in U.S. — U.S. restricts air travel from 8 countries over Omicron concerns.
  2. Politics: Biden says fight against Omicron won't include "shutdowns or lockdowns."
  3. States: New York declares state of emergency amid concerns over Omicron.
  4. World: Omicron adds urgency to vaccinating worldWHO warns against travel bans on southern African countries — First North American Omicron cases identified in Canada.
  5. Variant tracker: Where different strains are spreading.