The GOP Tax Plan Inches Forward
House Republicans took a necessary first step on Thursday with the passage of a long-delayed budget resolution. The Senate may not be far behind.
Nothing has come easily for Republicans in this, their first year of full power in Washington.
The party’s struggles have extended well beyond its failure to repeal the Affordable Care Act, jeopardizing an annual congressional responsibility that the GOP once relished: passing a budget. House Republicans finally approved their $4.1 trillion fiscal 2018 blueprint on Thursday—nearly six months late and over the defections of 18 of their members.
Unlike past years, the importance of the House GOP budget is not its proposed overhaul of Medicare and Medicaid, or even the trillions of dollars in cuts it envisions for federal spending. Those ideas likely won’t make their way into law. But by clearing the resolution on a party-line 219-206 vote, Republicans took the first necessary step toward their ultimate goal of enacting an ambitious tax-reform plan by the end of the year. The budget again unlocks the procedure known as reconciliation that could allow the GOP to rewrite the tax code without having to overcome a Democratic filibuster in the Senate. It’s the same process Republicans have tried—without success so far—to use to repeal and replace Obamacare.
“We haven’t reformed this tax system since 1986,” Speaker Paul Ryan said shortly before the vote. “We need to pass this budget so we can help bring more jobs, fairer taxes, and bigger paychecks for people across this country.
“The time for this is now. The opportunity is right in front of us.”
Ryan and senior Republicans have been making that same argument to rank-and-file lawmakers for months, urging them to support a measure that in many respects is similar to budgets the House majority has approved in the past (including four written by Ryan himself). But the votes for this plan, which was authored by Budget Committee Chairwoman Diane Black of Tennessee, only came together in the last week after party leaders and the White House unveiled their framework for tax reform. Distrusting the leadership, conservatives in the House Freedom Caucus had demanded details on the tax plan before supporting a budget that would move it forward. “Once you open up the door, you can’t close it. So you’d kind of like to know what’s on the other side before you open it,” Representative Jim Jordan of Ohio, a leader in the Freedom Caucus, told me over the summer.
Ryan and Black needed the Freedom Caucus because they were hemorrhaging support for the budget at the other end of the GOP conference, among moderate members who balked at an additional $200 billion in cuts to mandatory spending programs, such as food stamps, that were included to placate conservatives. In the vote on Thursday, the bulk of the GOP opposition came from representatives in three northeastern states: New York, New Jersey, and Pennsylvania.
Those defections could be an ominous sign for tax reform. Criticism from Republicans in high-tax states is already threatening the proposed repeal of the state and local tax deduction, a $1.4 trillion change that party leaders are pushing as a way to pay for the cost of reducing tax rates on individuals and businesses. But keeping the popular and expensive deduction could risk losing the support of other Republicans, particularly those who are adamant about not adding to the deficit.
Before the GOP can get to a tax bill, however, it must first pass its budget through both the House and the Senate. The Senate Budget Committee was expected to approve its own proposal later on Thursday, setting up a floor vote in mid-October after a week-long recess. The Senate’s version would allow for up to $1.5 trillion in tax cuts over a decade but does not call for the same spending cuts as in the House. The two chambers will have to reconcile their differences on the budget in a conference committee, the success of which will be another important marker in the tax-reform effort.
All the while, Republicans must fend off criticism from Democrats who have denounced their tax and budget plans as gifts to the wealthy at the expense of the middle class. “For anyone who isn’t a millionaire, this budget is a slap in the face,” Representative John Yarmuth of Kentucky, the Democrats’s point person on the budget, said in a floor speech. House Minority Leader Nancy Pelosi called the plan “miserable, deceptive, [and] horrible” while she critiqued its rosy assumptions for economic growth.
House Republicans overcame those attacks on Thursday, endorsing the party budget as a means to tax reform. But procedural hurdles and substantive disagreements still lie ahead, and achieving the kind of landmark legislative victory on taxes that eluded them on health care remains a long way off.