Republicans weigh 'magical thinking' to fund Trump's tax cuts: report

Republicans were reportedly resorting to "magical thinking" to push through an extension of President-elect Donald Trump's 2017 tax cuts, set to expire this year.

The Tax Cuts and Jobs Act, signed into law by Trump in December 2017, was the largest tax code overhaul in decades, making sweeping changes to individual and corporate income taxes.

The legislation reduced the maximum corporate income tax rate to 21 percent, provided tax cuts for individuals and businesses, redesigned international tax rules and provided a deduction for pass-through income. They also increased the standard deduction and estate tax exemption.

The reforms are set to expire on Dec. 31, however, and more than 60 percent of taxpayers could see tax hikes next year if they aren't extended.

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As such, Axios reported Friday that Republican tax writers are weighing "creative ways to make the price tag $0" for such an extension. Doing so, the report said, would allow Republicans to avoid slashing $4 trillion out of the budget — an approach that could irk hardline deficit hawks.

Scott Bessent, Trump's nominee for Treasury secretary, has reportedly said behind closed doors that he agrees the cost ought to be $0 to extend the tax cuts.

"Congress will face a roughly $4 trillion challenge in figuring out how to offset the cost of extending the expiring provisions of the 2017 tax law and even more if policymakers want to enact several other business tax cuts related to the law such as restoring bonus depreciation," a report from the Center for American Progress said, according to the House Ways and Means Committee.

One way to soften the blow: change how the impact is calculated.

"Current policy has the tax cuts in place (at least until the end of the year). Among friends, say Republicans, what if we use current policy as the baseline? Then extending the tax cuts will cost … zero," Axios wrote, noting that Republicans are "seizing" on a "current policy" approach.