House Republicans are pushing Senate GOP negotiators to find a solution to the question of how long to extend President Trump’s tax cut, which is due to expire in 2025.

Sources familiarized with early discussions between Senate Republicans and House Republicans report that the House GOP is promoting the idea of a 4-year extension of the tax law to ensure its impact on federal deficit as determined by Joint Committee on Taxation won’t cause sticker shock for House conservatives.

Sources who are familiar with the talks say that they are still fluid and there has not been a decision made yet.

John Thune, the new Senate Majority leader (R-S.D. ), said: “We are having discussions with them and our colleagues about this and those conversations continue.” “We’re having conversations with them and our colleagues about that, so those are continuing,” incoming Senate Majority Leader John Thune (R-S.D.)

Speaker Mike Johnson, R-La. Speaker Mike Johnson (R-La. ), House Ways and Means Committee Chairman Jason Smith(R-Mo. ) House Budget Committee chair Jodey Arrington, R-Texas, knows that they will be operating with only a small majority in 2013. They won’t have the luxury of more than a handful of fiscal conservatives leaving the GOP conference.

They’re also aware of the potential impact a particular package may have on the deficit.

The 10-year extension of Trump’s tax cuts will add over $4 trillion to the national debt, and this might not be acceptable to fiscal hawks who are concerned about the size of our nation’s $36 trillion debt. The public holds $28.5 trillion of that staggering amount, and the government $7.4 trillion.

Joint Committee on Taxation would score a shorter-term extension to the expiring tax laws — say, a four-year-extension — as adding less to the deficit.

A smaller tax package would be easier to pass in the House, and require fewer offsets. This would placate conservatives worried about the fiscal and political implications of adding over $4 trillion to our debt.

Senate Republicans who will have a 53-seat majority in the Senate next year want to extend Trump’s tax cuts, which expire at the end of this year, for another 10 years. This would provide more certainty and security for individuals, families, and businesses.

Thune, who is a member of Finance Committee and was one of the key architects of the 2017 tax reform, has indicated that he prefers a 10-year extension. He warned that leaders must figure out which package will get enough votes to pass.

He said that a 10-year extension was “certainly aspirational”. “But the traffic will always dictate what happens.”

He said, “We have to determine what the House will pass and what we will pass. We are currently having these discussions.”

One Senate Republican called the House GOP’s concerns over the budgetary impact and desire to limit the package’s duration “bananas,” arguing that any discussions should begin with a 10-year extension.

Sen. Mike Crapo, R-Idaho, who will be taking over as the chair of Senate Finance Committee in the coming year, has called on Republicans to adopt an innovative budget concept.

He said the GOP should score tax reform as a continuation to current policy. This means that if the cuts are extended, they won’t be counted. This interpretation would result in a lower budget score.

The current tax law has allowed Congress to always achieve tax reductions.

The Trump tax cuts expire next year. To extend them for another decade, it would cost more than $4 trillion under the current law.

Crapo claims that the traditional scoring system which calculates the tax package adding to the deficit is not working.

In an interview with Larry Kudlow on Fox Business he said that under the current scoring system, the failure to prevent tax increases is considered a deficit. He warned that if Trump’s tax cuts expired, it would be a “$4 trillion increase in taxes for Americans. $2.5 trillion will fall on those who make less than $400,000 per year. ]”

He said, “There’s a big difference between an increase in taxes and spending $4 trillion. We just need to make sure that Americans understand this.”

Crapo claims he has spoken to Trump about this issue, and the president-elect shares his opinion.

“He agrees. He wants to “go big” and is aware that we need to be strong and bold to tell the American public what’s going on in this battle.

“We could change the baseline, and we might be able do that and force the Joint Committee on Taxation to score it in a different way,” Crapo said about the steps GOP legislators could take to direct the Congressional Budget Office (CBO) and the Joint Committee on Taxation. These agencies will calculate the final price of the tax bill.

A spokesperson from the Senate Finance Committee Republicans stated that they wanted to extend Trump’s tax cuts as long as possible.

Amanda Critchfield stated that “many Senate Republicans expressed a wish for as much permanence as possible.”

Conservative Republicans have already criticized Crapo’s claim that the impact of the tax bill on the deficit could be ignored by treating it as an extension of current policies. They call it a “gimmick” in terms budgetary.

A conservative GOP aide said, “The need to offset certainly is something we are on the radar.” “I would love to pay for all of this by following through on President Trump’s pledge to reduce government.

Source: “Reconciliation is a good opportunity to achieve this,” she added.

The aide stated, “the Finance Committee and Ways and Means people may be fighting over how to reduce the score as much possible because they do not want to go as further as we should pay for it.”

Sources warn that conservatives may have trouble voting for a tax plan that adds trillions to the deficit, if it’s not accompanied by major spending cuts.

If Democrats vote against a tax plan, they can sink it with just a few votes.

Rohit Kumar is the co-leader of PwC’s national tax office, and a former Senate GOP leader aide. He said that while Crapo’s strategy to not score the budgetary impacts of the tax package upfront may be difficult politically, it will avoid future tough decisions.

“If we use the current policy baseline, then we don’t have to worry about the beyond-the-budget-window effects and we can do permanence and if we can’t do permanence we can at least do 10 years,” he said. “His argument was that if we made one decision upfront, it would make all the decisions we had to make in the future much easier.

“The opposite approach is that the first decision is just too difficult, we cannot make it. We have to stick with current law baseline. Then you have to make a series of smaller, but perhaps more difficult choices: which provisions should be extended? How long?