Because federal law requires the government to sequester funds in response to net increases in the deficit, the cost of Republicans' tax plan could cause one of the nation's largest entitlement programs to lose $25 billion.
According to the nonpartisan Congressional Budget Office, the tax plan's $1.5 trillion in deficits over 10 years would, under the Pay-As-You-Go Act, prompt the Office of Management and Budget to reduce Medicare funding by 4 percent.
The CBO explained the law in more detail:
The PAYGO law requires that new legislation enacted during a term of Congress does not collectively increase estimated deficits. The Office of Management and Budget (OMB) is required to maintain two so-called PAYGO scorecards to report the cumulative changes generated by new legislation in estimated revenues and outlays over the next five years and ten years. If either scorecard indicates a net increase in the deficit, OMB is required to order a sequestration to eliminate the overage.
News of bill's cost came amid bipartisan concern over the cost of reforming the tax code according to President Donald Trump's vision. At least three Republican senators indicated that a costly proposal would concern and possibly dissuade them from giving it their votes.
Democrats have similarly derided the president's tax plans as a way to siphon money from taxpayers in order to benefit wealthy Americans.
When the CBO analyzed the cost of House Republicans' tax plan, it estimated a 10-year deficit of $1.7 trillion. That analysis put the cost just above what the Senate allowed — $1.5 trillion in deficits — in the budget resolution it passed in September.