House Republicans passed crucial budget legislation Thursday, setting aside months of intraparty squabbles to set the stage for an ambitious tax-overhaul bill they are planning to pass without Democratic help.
The House budget resolution includes major spending cuts demanded by the party’s conservative wing, but the party’s focus is now on passing a tax bill that could add as much as $1.5 trillion to the budget deficit. Special procedures set out in the legislation would ultimately allow Republicans to pass the bill over a potential Democratic filibuster in the Senate.
“Our budget specifically paves the way for pro-growth tax reform that will reduce taxes for middle-class Americans and free up American businesses to grow and hire,” House Budget Committee Chairman Diane Black (R-Tenn.) said during floor debate Wednesday.
The Senate is proceeding on a separate track toward passing its own budget, which would have to be reconciled with the House version in the coming weeks. The Senate Budget Committee on Thursday advanced a resolution more squarely focused on the tax legislation than the House version.
That legislation is set to reach the Senate floor later this month, with a goal of launching joint budget negotiations by the end of October. Republican leaders in the House and Senate predict that any differences in the outlines can be resolved quickly despite objections from some House conservatives. Black said Thursday that she did not expect a bicameral accord until early November.
Of particular concern is a provision in the Senate bill that would allow tax-writing committees in the House and Senate the ability to craft a bill that adds up to $1.5 trillion to the budget deficit, providing for significant tax cuts. Most Republicans argue the bill will spark economic growth that will offset the revenue loss, thus not adding to a national debt that now exceeds $20 trillion, though many economists say the evidence for that claim is thin.
The House budget envisions a tax bill that would largely pay for itself, while also allowing for up to $203 billion in spending cuts targeting financial industry regulations, federal employee benefits, welfare spending and more.
“This is the most conservative budget in 20 years,” Black said. “The vision in there, if we were to follow it, really could change the trajectory of this country.”
But according to top Republicans, those spending cuts are likely to be set aside to focus on the tax bill once House and Senate leaders meet to work out differences between the two chambers.
GOP leaders urged fiscal conservatives to set aside any ideological concerns they might have with the budget framework to clear the way for the tax overhaul, arguing that the budget is simply the first step in delivering on a key legislative priority by the end of this year.
Senate Budget Committee Chairman Mike Enzi (R-Wyo.) opened the two-day committee vetting of the outline Wednesday by telling members the budget was “first and foremost about reforming the tax code.”
Passing a budget bill would let Republicans take advantage of special Senate budget rules that allow certain tax and spending measures to pass with 51 votes rather than the 60 votes necessary for most other legislation. Republicans have a slim 52-to-48 majority in the Senate, meaning they could pass a tax bill without the help of any Democrats.
Leaders are under intense political pressure to pass a tax bill as a way to prove their ability to govern. Most rank-and-file Republicans view a tax bill as their best, and possibly only, opportunity to enact a major GOP legislative priority this year after the failure of their effort to repeal and replace the Affordable Care Act.
Fissures within the GOP have already emerged over fears that planned cuts to tax rates could add trillions to the deficit, as well as a proposal to end the deductibility of state and local taxes — a provision that could leave taxpayers in high-tax states with higher federal tax liabilities.
Sen. Bob Corker (R-Tenn.) was among those who said he was willing to back the budget to make progress in the tax overhaul, but he would not guarantee his support for an eventual tax bill.
“The fact is all that’s being talked about right now is rates,” Corker said Wednesday. “And so one of the things that hadn’t been talked about is the fact if you’re going to do what’s been laid out and really produce the kind of pro-growth reform that needs to be laid out, you’re talking about having to close $4 trillion worth of loopholes.”
Both the House and Senate GOP budgets are set to balance by 2027, largely by pursuing dramatic cuts to federal entitlement programs, but those are nonbinding proposals that would have to be implemented in future legislation.
Democrats warned that the Republican tax bill alone could set the stage for future cuts to popular federal programs.
“Tax cuts lead to significant deficits, lead to calls from Republicans for slashes in Social Security, Medicare, Medicaid and other programs to make up the deficit,” said Rep. John Yarmuth (D-Ky.), the ranking Democrat on the House Budget Committee. “That’s very much what we’re afraid of.”
Senate Minority Leader Charles E. Schumer (D-N.Y.) called on Republicans to scrap their plan for a partisan bill and work with Democrats or risk dividing their own party over taxes. He warned the GOP that Democrats will not help pass any bill that would cut taxes on the wealthy and add to the deficit without delivering equal benefits to the middle class.
“Don’t just do a Republican plan that appeals to a handful of very wealthy corporations and very wealthy individuals,” Schumer said Thursday. “We are ready. But if you do the same thing you did on health care and try to do it by yourselves, I think you will meet with the same fate that the health-care bill did.”