Congressional Republicans have spent a good portion of the week hammering out a final budget agreement that would allow them to fast-track a tax reform bill.
The House adopted their fiscal 2018 budget resolution earlier today, while at the same time the Senate Budget Committee started marking up its own version. House leaders have tried to prepare their rank-and-file that the final concurrent resolution is not likely to be as conservative as the House proposal, which projects to balance within a decade and includes $203 billion in mandatory spending cuts.
The Senate plan does not call for any mandatory spending cuts and, in fact, allows for $1.5 trillion in new spending. House conservatives are mostly suppressing their deficit-reducing demands, however, because adopting a budget is the only way Congress can employ the powerful tool of reconciliation for comprehensive tax reform, rendering it immune to a Senate filibuster.
There are signs of discord among GOP lawmakers, however. Sen. Bob Corker (R-TN) said he is supporting the budget resolution because it moves tax reform forward, but has been adamant that he won’t vote for a bill that ultimately adds to the deficit.
“Unless it reduces deficits and does not add to deficits with reasonable and responsible growth models, and unless we can make it permanent, I don’t have any interest in it,” Corker said.
Democrats have been calling out Republicans’ willingness to overlook additional spending in the Senate plan if it allows them to advance tax cuts.
“So much for being a fiscal hawk,” Senate Minority Leader Chuck Schumer (D-NY) told reporters this week. “When it comes to tax cuts for the rich, fiscal responsibility doesn’t seem to matter.”
Speaker Paul Ryan (R-WI) said that the House Ways and Means Committee will produce a detailed tax bill within three weeks. Tax-writing Republicans have shared only a framework for tax reform so far, which calls for cutting the corporate tax rate to 20 percent from 35 percent, creating a new 25 percent tax rate for “pass through” businesses and doubling the standard deduction.
To pay for tax cuts, Republicans are reportedly considering how to rework the state and local tax deduction, including possibly allowing taxpayers to choose between deducting their mortgage interest or state and local taxes, putting a limit on the deduction, or giving a special tax break to middle-class families that live in areas with high property taxes. Republicans are also considering setting a fourth top tax rate for wealthy individuals to counter claims that their tax plan benefits the wealthy over the middle-class.