House Republicans narrowly passed the Senate’s budget plan today, clearing a major hurdle in their quest to overhaul the tax code this year.
The budget legislation is a far cry from the plan the House initially passed, which would have required lawmakers to offset the costs of new tax cuts and slash mandatory spending by $203 billion. The Senate plan does not call for any mandatory spending cuts and, in fact, allows for $1.5 trillion in new spending.
Fiscal hawks in the House mostly suppressed their deficit-reducing demands, however, because adopting a budget is the only way Congress could employ the powerful tool of reconciliation for comprehensive tax reform, thereby eliminating the need for any Democratic votes.
Approval of the budget launches what GOP leaders say will be an aggressive timeline for passing tax reform legislation before Thanksgiving. House Ways and Means Committee Chairman Kevin Brady (R-TX) is expected to release a bill Nov. 1 and conduct a markup the week of Nov. 6.
“By passing this budget today, House Republicans just provided the legislative runway for pro-growth tax reform,” Brady said. “Today is a historic day, and we are ready to deliver tax relief that improves the lives of middle-income Americans and struggling families who have been left behind in our slow-growing economy.”
Adding to the challenge of passing tax cuts in this accelerated timeline are holdouts in the Republican caucus from states with high tax burdens who are concerned about the GOP’s plan to eliminate or at least scale back the state and local tax deduction. Eleven Republicans from New York and New Jersey voted against the budget resolution today because they felt their concerns had not been heard.
Another fissure among Republicans has emerged over rumors that tax-writers will lower the cap for pre-tax contributions to 401(k) savings plans. Earlier this week, President Trump tweeted to reassure Americans that no changes are in store for 401(k) plans, but Brady later said that everything is on the table when it comes to potential offsets to pay for tax reform.
Speaker Paul Ryan (R-WI) said it’s up to the Ways and Means Committee to figure out the right combination of tax changes and pay-fors in the bill.
“I agree with comprehensive tax reform and I agree with giving the Ways and Means Committee the latitude they need to write their legislation,” Ryan said.
Democrats condemned the process Republicans are following to advance a tax bill. “This needs to be digested fully in front of the American people and discussed,” said Ways and Means Ranking Member Richard Neal (D-MA). “They are proposing to address the architectural underpinnings of our finance system in terms of gathering revenue and to do this in four or five days? It doesn’t make sense.”