House clears first hurdle in GOP's race for tax reform

In this Sept. 26, 2017 photo, Speaker of the House Paul Ryan, R-Wis., speaks at Republican National Committee Headquarters on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)

House Republicans took the first major step toward passing their ambitious tax reform plan Thursday, but the path ahead remains uncertain and fraught with political and procedural obstacles.

By a vote of 219-206, the House passed a fiscal year 2018 budget resolution that would reduce federal discretionary spending by $200 billion over 10 years.

“This is a budget that reflects our first principles. Freedom. Free enterprise. A government accountable to the people it serves,” Speaker Paul Ryan, R-Wis., said on the House floor. “It is a budget that will help grow our economy and it reins in our national debt.... This is a budget that keeps our responsibilities to our children and our grandchildren.”

It also sets up an inevitable showdown with the Senate, where the 2018 budget resolution under consideration would allow for tax cuts that add $1.5 trillion to the federal deficit over a decade.

The Senate Budget Committee held a markup on its resolution Thursday with the aim of passing it later this month. The House and Senate would then need to negotiate a compromise version that can secure support from a majority in both chambers. In an indication of how challenging that could be, 18 Republicans sided with Democrats against the House resolution on Thursday.

Rep. Matt Gaetz, R-Fla., said Wednesday that he was excited to vote for a “conservative budget.”

“This is the largest reduction in entitlement spending since Newt Gingrich was speaker of the House and it puts us on the path to fiscal responsibility and a budget that not only balances but starts to chip away at our crippling national debt,” he said.

President Trump praised the House vote and urged Congress to pass a budget as soon as possible.

“This resolution is a key step towards Making America Great Again by supporting the Administration’s legislative agenda, as it, among other things, drives economic growth and job creation, creates a pathway to fix our rigged and burdensome tax code and establishes a framework for rebuilding our military and securing the border,” he said in a statement.

Others in the GOP are less enthusiastic about advancing these resolutions that appropriations committees will ultimately have no obligation to follow, but they recognize the procedural necessity of them.

“Look, the budget itself is always a joke. It’s a total joke. It’s not worth the paper that it’s written on,” Sen. Bob Corker, R-Tenn., said this week, according to Politico. “This is a vehicle to begin a debate on tax reform.”

Republicans are gearing up for what could be the most significant reform of the federal tax code in decades, but any tax cuts that benefit the wealthiest tax brackets face stiff resistance from Democrats. As a result, they are laying the groundwork to pass a tax bill through the reconciliation process in order to avoid a filibuster, much as they attempted unsuccessfully with repealing the Affordable Care Act in 2017.

With 52 Republicans in the Senate and Vice President Mike Pence as a potential tiebreaker, it may prove difficult to maintain a majority in support of a tax bill. Corker has already said he would not support tax reform that adds to the deficit, but others in the party insist that a deficit-neutral bill would not have a big enough economic impact.

In order to even try, though, Republicans must first pass a budget resolution that includes reconciliation instructions.

“A budget resolution gives you the ability to have reconciliation protections from a filibuster in the Senate,” said Joshua Gordon, policy director for the Concord Coalition, a nonpartisan group that advocates fiscal responsibility.

However, he said the purpose of reconciliation was originally to give lawmakers flexibility to take tough votes that reduce the deficit.originally to give lawmakers flexibility to take tough votes that reduce the deficit.

“This is a perversion of the budget process…. Deficit-increasing tax cuts are not what the budget process and reconciliation was designed to make easier,” he said.

Budget experts agree that the reconciliation instructions are the most important section of this year’s resolutions to study. Many potential changes to discretionary spending would be superseded by sequestration under the Budget Control Act anyway.

“It’s not at all a document that does anything of legal importance,” said Josh Huder, a senior fellow at Georgetown University’s Government Affairs Institute. “It’s not a law.”

Still, Caroline Bruckner, managing director of the Kogod Tax Policy Center at American University, said the documents are instructive for understanding the majority’s spending priorities.

“It sets the stage for the legislative agenda for the next year and the remainder of this Congress…,” she said. “Establishing those spending targets are going to determine what the appropriations committees’ priorities are.”

According to Joel Friedman, vice president for federal fiscal policy at the Center on Budget and Policy Priorities, the resolutions signal Republicans’ vision for future spending, in this case including deep cuts to Medicaid, Medicare, and Affordable Care Act programs relative to current law.

“It’s an indication of policies that they might otherwise support, but whether or not they’re going to pursue those policies this year, that you can divine from the reconciliation instructions,” he said.

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