Senate Republicans, faced with the expiration of their 2017 tax cuts, are pursuing a novel way to make them permanent. They want to treat the price tag as cost-free using what’s known as a “current policy baseline.”

The tactic, which assumes the cuts cost $0 since the bill extends current law, is designed to solve a dilemma in the House, where GOP leadership only gave room for a partial extension: $4.5 trillion across 10 years versus the $4.6 trillion estimated by the Congressional Budget Office.

The decision is sure to invite Democratic objections, however, meaning it will be up to MacDonough, the nonpartisan arbiter of Senate rules, to play referee. 

The scoring method would represent a stark change in Senate precedent, loosening the tight restrictions that govern reconciliation, a budget process that allows Republicans to sidestep the filibuster.

Until now, reconciliation bills have been scored under a “current law” baseline that accounts for the full cost of expiring provisions.

But the tactic could be needed for the GOP-led Congress to agree on a compromise bill given the House’s narrow margins. Trump has not only asked Republicans to make his 2017 law permanent, but he’s also demanding new cuts such as “no tax on tips” that he promised on the campaign trail.

At the same time, House conservatives want steep offsets to blunt the fiscal effect of the bill, which also includes hundreds of billions in border and defense money.

Senate Republicans are projecting confidence that MacDonough will rule in their favor once a tax bill is finalized later this year, likely in the spring.

Still, there is genuine apprehension over the Senate’s strategy. Rep. Jason Smith (R-MO), the chairman of the Ways and Means Committee, expressed “huge concern” at the White House last week over the bill possibly hinging on the parliamentarian’s ruling. 

Sen. Bill Cassidy (R-LA), a member of the Senate’s tax-writing panel, told the Washington Examiner he’s reluctant to support the current policy baseline approach due to its effect on the debt.

“I’d rather pull back from that,” he said. “I do think that we have a huge problem with our nation’s indebtedness, and so we need to be very cognizant of that.”

He drafted an amendment to strike “current policy” from the budget resolution in last month’s Senate “vote-a-rama” but is open to supporting the approach if the final legislation addresses the debt.

“If we’re otherwise addressing it, I’m OK with it, but you can’t ignore our nation’s debt,” he added, “because that’s going to ultimately end up impacting, for example, mortgage rates, credit card rates, car note rates — it’s going to impact people, my people.”

House conservatives, meanwhile, have been reluctant to support so-called budget “gimmicks” that obscure the true cost of legislation and could stand in the way of the new approach. At best, Speaker Mike Johnson (R-LA) can afford to lose two votes once all vacancies are filled in his chamber.

MacDonough has stymied both parties since taking over as parliamentarian in 2012. In 2021, she repeatedly blocked Democrats from passing priorities such as a minimum wage hike or Dreamer protections through reconciliation.

Under the budget process, all provisions must directly affect the deficit to qualify.

Republicans are nonetheless operating under the perception that MacDonough allowed Democrats to crack the door open wider than it had ever been. They were able to get consequential policies, such as drug pricing reforms, into what eventually became the Inflation Reduction Act.

For the time being, Senate Republicans have begun preliminary conversations with the parliamentarian on the new scoring method.

“I mean, we’re not spending more money by letting the tax relief continue, and so I think it’s kind of a false argument. I’m hoping that the parliamentarian, in her wisdom, makes that same judgment,” said Sen. Shelley Moore Capito (R-WV), the No. 4 Senate Republican.

Importantly, Johnson embraced the Senate’s scoring method last week as the two chambers tried to smooth over weeks of tensions. 

The Senate ignored Johnson’s desire to pass tax reform in the first half of the year but changed course after he demonstrated House Republicans could adopt a framework on the floor last month.

A favorable ruling from the parliamentarian could help preserve that détente, but if MacDonough forces Republicans to use a “current law” baseline and record the full cost of the tax extension, it could split open the simmering dispute over how to pay for the bill.

Already, Republicans are at odds over the $2 trillion in spending cuts Johnson accepted to offset the legislation, a number likely to include cuts to Medicaid.

Senate Republicans could overrule the parliamentarian with a simple majority vote, but that step is regarded as a “nuclear option” that would weaken the filibuster, and Thune ruled out the possibility shortly after he became majority leader in January.

Democrats, for their part, are preemptively messaging against the scoring method. Sen. Elizabeth Warren (D-MA), the ranking member of the Banking Committee, is leading an investigation into whether there is precedent for the accounting change.

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“The deficit cost of tax cuts is real, even for those who do not like the way the math works. After hardworking Americans paid their rent in December, they still had to budget for rent in January,” Democrats said in a letter to the Joint Committee on Taxation. “Rent is not free because you paid last month’s rent.”

That letter suggested Democrats could use the new method, should it be approved by MacDonough, to extend Obamacare subsidies or child tax credits at zero budgetary cost.