Republicans are making ready for the upcoming battle over the price of the $5 trillion tax lower

As Republicans on Capitol Hill lay the groundwork for extending the 2017 tax cuts, cracks are already beginning to appear on one of the biggest questions: How to deal with the costs.

According to the nonpartisan Congressional Budget Office, the expansion of tax provisions is expected to add $5 trillion to the deficit. Still, many lawmakers are quick to ignore or explain away the number, arguing that the tax cuts will ultimately benefit the economy and, in turn, government revenue.

The cost debate is one of the first big questions lawmakers will have to grapple with as they seek to expand and potentially build on the Tax Cuts and Jobs Act of 2017, which increased the standard deduction, lowered income tax brackets and a deduction introduced for small business income. All of these provisions are scheduled to expire at the end of 2025, although some other changes in the bill would be retained, including the 21% corporate tax rate.

House Majority Leader Steve Scalise, R-La., criticized the CBO, saying the agency doesn't always use a dynamic assessment that would consider both primary and secondary economic impacts.

“You're seeing a lot of these tax breaks, regulations, rules and regulations that are creating huge costs to families in the economy that we want to reduce to get the economy back on track,” he said in a recent interview with CNBC at the Capitol.

Some top tax leaders, including Sen. Mike Crapo, R-Idaho, the new chairman of the Senate Finance Committee, have done so downplayed the $5 trillion estimate, which assumes the 2017 tax provisions set to expire at the end of 2025 have already done so.

But Crapo said the tax measures are a continuation of current policy and that preventing a tax increase should not be viewed as increasing the deficit – and therefore does not have to be paid for.

“If you just extend current law, we will not increase or decrease taxes. That’s a $4 trillion deficit, that’s ridiculous,” he said on Fox Business.

Still, a group of deficit hawks worry about the exploding deficit and believe any fiscal package must be fully balanced.

It's unclear how many lawmakers will be willing to hold off if they think the package is too costly, but narrow margins in the House and Senate mean even a few lawmakers can effectively stall the process.

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Assuming no Democrats support the GOP bill, Republicans can only lose four senators. The margins in the House of Representatives are unclear as there are still some very close races to be fought. Making matters worse, President-elect Donald Trump has selected two House Republicans for his administration: Reps. Elise Stefanik of New York and Mike Waltz of Florida.

A third Republican, former Rep. Matt Gaetz of Florida, resigned from the House of Representatives hours after Trump announced he would nominate Gaetz as attorney general on November 13. The Senate's opposition to Gaetz quickly led to him withdrawing from consideration for AG but losing his House seat. The position remains vacant until filled by the winner of a special election.

Another supporter of dynamic assessment, Rep. Chip Roy (R-Texas), said it is critical to ensure the deficit is addressed through the tax package.

“We need to make sure that it is not only deficit neutral, but more importantly that it actually reduces the deficit,” he told reporters on the House steps last week. “So I will be a voice that these need to be taken into account.”

Other members, like Rep. Greg Murphy, R-N.C., said Congress needs to be “intellectually honest” about which tax cuts will boost growth and whether the government is doing enough to get the debt under control.

“I want everything to be balanced,” he told CNBC at the Capitol. “It’s killing our nation. It's the biggest silent cancer we have. And we have to be honest. The government needs to generate revenue to finance itself.”

But Murphy was noncommittal about whether he would support legislation that increases the deficit.

Rep. Jodey Arrington, R-Texas, chairman of the House Budget Committee, said there are debates within the Republican caucus about how best to evaluate the tax bill to determine how much it will ultimately add to the debt.

“There are a lot of opinions on both sides,” he told CNBC at the Capitol. “I suspect you'll hear people leaning more on their worries about the deficit. There are others who say, 'If we don't grow, we'll never get out of this hole.'”

Negotiations on the tax bill are still in the early stages, as are discussions about what tax revenue should be included in the bill.

Many Republicans support rolling back the electric vehicle tax credits that were part of outgoing President Joe Biden's Inflation Reduction Act, a sweeping climate and economic package that took effect in 2022.

But it's unclear exactly which clean energy proposals will be rolled back. Republican-leaning congressional districts have benefited from the programs, and 18 lawmakers urged House Speaker Mike Johnson, R-La., in an August letter to maintain some IRA tax credits that already benefited their constituents. Johnson told CNBC that he had to use “a scalpel, not a sledgehammer” to choose what to keep from the package and what to cut.

Republicans are also considering some more unconventional countermeasures, such as tariffs, which Trump plans to use as both a revenue raiser and a geopolitical negotiating tool during his presidency. However, it could be difficult to measure the impact of tariffs because an increase in the prices of certain goods from certain industries or countries would likely have unforeseeable knock-on effects, such as changing consumer habits or triggering retaliatory tariffs.

Lawmakers are also debating whether to include some of Trump's campaign promises in the bill, including eliminating taxes on tips, lifting the cap on state and local tax deductions and not taxing Social Security benefits.

Adding any of these measures would increase the cost of the legislation and reduce overall government revenue.