President Donald Trump may have to wait until after the New Year to sign a sweeping tax reform bill to avoid triggering automatic cuts to Medicare and other programs.
The Tax Cuts and Jobs Act of 2017, which Congress approved this week, is a $1.5 trillion package that slashes taxes for businesses and the wealthy, as well as more modest cuts for middle- and low-income families.
Trump has promised to sign the tax bill before Christmas. However, a House Republican aide told Bloomberg that Trump will sign the bill on Jan. 3. The White House has pushed back on that claim.
Why wait? House Republicans left the PAYGO provision out of a year-end spending deal to avoid a government shutdown before Friday. PAYGO, or pay-as-you-go, is a budget rule requiring that tax cuts as well as increases in mandatory spending and entitlement programs like Medicare and Social Security must be covered by tax increases or cuts in mandatory spending, according to the Tax Policy Center.
By leaving out the provision, automatic cuts to Medicare and other mandatory spending programs would be activated by the tax reform bill in January because the bill increases the deficit by $1.5 trillion over 10 years. Waiting to sign the bill would delay those cuts until 2019.
Republican leadership has said those cuts would not be triggered if Trump signs the bill before the end of the year. However, it would require a waiver, meaning support from enough Democrats in the Senate to deliver 60 votes.