https://www.wsj.com/articles/house-republicans-set-out-plan-to-rewrite-tax-code-1500368402?mod=e2tw
WASHINGTON—House Republicans are unveiling an ambitious fiscal plan on Tuesday to rewrite the tax code, revamp medical malpractice laws, change federal employees’ retirement benefits and partially repeal the Dodd-Frank financial regulations—all in one bill that wouldn’t require any votes from Democrats to pass.
The strategy, embedded in the House GOP fiscal 2018 budget, faces political and procedural obstacles, including many of the same ones that derailed the party’s health-care bill in the Senate. For instance, Republicans will have a narrow margin in the Senate and will have to comply with budgetary rules that restrict which policies can be included.
Republicans this year control the House, Senate and White House for the first time since January 2007, and they are trying to take advantage of that moment by pairing a landmark tax bill with at least $203 billion in deficit-reduction measures.
“With a Republican Congress and a Republican administration, now is the time to put forward a governing document with real solutions to address our biggest challenges,” said Rep. Diane Black (R., Tenn.), chairman of the House Budget Committee.
Most bills can be filibustered in the Senate and require a 60-vote threshold. Republicans are seeking to take advantage of an exception to that rule—the so-called reconciliation procedures allowed under budgetary lawmaking.
Under reconciliation, fiscally oriented bills can become law with a simple-majority vote in both chambers and a signature from the president. They can’t increase long-run budget deficits and must hit fiscal targets set out by the budget. To get to that point, Congress must adopt a budget first, which means the House and Senate must agree twice, once on the budget and then again on the ultimate bill.
The House Budget Committee’s release on Tuesday, followed by a committee vote slated for Wednesday, marks the first step in that process. The committee’s fiscal blueprint envisions $6.5 trillion in deficit reduction over the next decade, forecasts 2.6% average annual economic growth, and calls for cutting projected Medicare costs and reducing spending on nondefense programs in an effort to balance the budget by 2027.
Democrats are expected to question those economic assumptions and criticize the GOP’s broad fiscal agenda. But those criticisms are on the parts of the plan that are theoretical and nonbinding, while the tax bill and the $203 billion in potential spending cuts are a core piece of the Republican agenda over the next few months.
The biggest impact of the budget is to set the stage for future reconciliation bills. It will assign deficit-reduction targets to 11 committees under reconciliation.
The potential targets in this round of deficit reduction are unlikely to include changes to Medicare that are included in the 10-year budget outline. But other so-called mandatory spending programs could be affected.
The Judiciary Committee, for example, has a $45 billion target, while the Oversight and Government Reform Committee has a $32 billion number. The committees will decide exactly which policies to pursue, but agenda items could include medical malpractice and Dodd-Frank bills favored by House Republicans, though reconciliation’s special rules could affect and limit them too.
As the House Budget Committee prepares for a Wednesday vote, it isn’t clear whether the budget written by Rep. Black has enough support to pass the House before lawmakers leave for their August recess at the end of next week. Conservatives have been arguing for even larger spending cuts in the reconciliation package.
“I think we have the votes to move it out of committee. We get to the floor, that’s another issue,” said Rep. Tom Cole (R., Okla.), a member of the Budget Committee, noting that the Republican-controlled House was unable to pass a budget resolution last year.
Rep. Dave Brat (R., Va.), a member of the conservative House Freedom Caucus, said the caucus would like to see at least $400 billion in mandatory spending cuts—twice what the current version envisions. He also said some conservatives are reluctant to support the plan without more assurances about the GOP’s tax proposal.
“We did that last time on health care—we opened the gate for a free-market health-care piece. We didn’t get that,” he said. “I don’t want to make that mistake again.”
Rep. John Yarmuth (D., Ky.), the top Democrat on the House Budget Committee, said the GOP budget “embraces the worst extremes of the Trump budget, sacrificing nearly every investment that helps American families get ahead, in order to give huge tax breaks to millionaires and corporations.”
The budget debate will occur even before Congress gets to the tax plan, which negotiators from the House, Senate and White House are working on. They have said they are optimistic that they can release a plan before the end of September and finish the entire process by the end of 2017.
The tax plan itself aims to be deficit-neutral, partly paying for itself with revenue from stronger economic growth. That would seem to rule out, unless the budget framework changes, tax cuts on the scale of what President Donald Trump pledged during his campaign.
“This creates the vehicle for ultimately getting tax reform to the president’s desk this year,” said Rep. Kevin Brady (R., Texas), chairman of the tax-writing Ways and Means Committee.
Adding nontax legislation could make that task harder, because it would create a massive bill with hundreds of moving parts and coalitions.
Rep. Charlie Dent (R., Pa.), a key centrist Republican, said the purpose of the budget should be to provide an “appropriate” top line spending number, which he said they don’t currently have, and reconciliation instructions to advance tax legislation.
“That was the plan,” he said. “Going too much on the mandatory side in this discussion will make tax reform that much harder.”
The reconciliation rules allow each budget to have three bills stem from it: one for revenue, one for spending and one for the debt limit.
The House plan operates under the assumption that the tax bill and spending cuts must be coupled. But a different interpretation of rules or a different structure of the bills could let them decouple the two measures.
Under the reconciliation rules, any bill created through that process can’t add to budget deficits beyond the budget window. Although some lawmakers, including Sen. Pat Toomey (R., Pa.), have called for a longer budget window that would allow long-lasting temporary tax cuts, the House budget has a 10-year window.
Before they can advance the tax bill, the House and Senate must agree on the same version of the budget. The Senate Budget Committee hasn’t yet released a budget or set a date. President Trump doesn’t need to sign the budget resolution; he would need to sign the subsequent bill into law.
The budget could change significantly in the Senate, and it could also be revised to facilitate whatever tax agreement the House, Senate and White House agree on.
“There’s a lot of time, energy and capital expended on the first launch on these bills. I worry more about the landing than I do the takeoff. The landing is what matters,” Mr. Dent said.
WASHINGTON—House Republicans are unveiling an ambitious fiscal plan on Tuesday to rewrite the tax code, revamp medical malpractice laws, change federal employees’ retirement benefits and partially repeal the Dodd-Frank financial regulations—all in one bill that wouldn’t require any votes from Democrats to pass.
The strategy, embedded in the House GOP fiscal 2018 budget, faces political and procedural obstacles, including many of the same ones that derailed the party’s health-care bill in the Senate. For instance, Republicans will have a narrow margin in the Senate and will have to comply with budgetary rules that restrict which policies can be included.
Republicans this year control the House, Senate and White House for the first time since January 2007, and they are trying to take advantage of that moment by pairing a landmark tax bill with at least $203 billion in deficit-reduction measures.
“With a Republican Congress and a Republican administration, now is the time to put forward a governing document with real solutions to address our biggest challenges,” said Rep. Diane Black (R., Tenn.), chairman of the House Budget Committee.
Most bills can be filibustered in the Senate and require a 60-vote threshold. Republicans are seeking to take advantage of an exception to that rule—the so-called reconciliation procedures allowed under budgetary lawmaking.
Under reconciliation, fiscally oriented bills can become law with a simple-majority vote in both chambers and a signature from the president. They can’t increase long-run budget deficits and must hit fiscal targets set out by the budget. To get to that point, Congress must adopt a budget first, which means the House and Senate must agree twice, once on the budget and then again on the ultimate bill.
The House Budget Committee’s release on Tuesday, followed by a committee vote slated for Wednesday, marks the first step in that process. The committee’s fiscal blueprint envisions $6.5 trillion in deficit reduction over the next decade, forecasts 2.6% average annual economic growth, and calls for cutting projected Medicare costs and reducing spending on nondefense programs in an effort to balance the budget by 2027.
Democrats are expected to question those economic assumptions and criticize the GOP’s broad fiscal agenda. But those criticisms are on the parts of the plan that are theoretical and nonbinding, while the tax bill and the $203 billion in potential spending cuts are a core piece of the Republican agenda over the next few months.
The biggest impact of the budget is to set the stage for future reconciliation bills. It will assign deficit-reduction targets to 11 committees under reconciliation.
The potential targets in this round of deficit reduction are unlikely to include changes to Medicare that are included in the 10-year budget outline. But other so-called mandatory spending programs could be affected.
The Judiciary Committee, for example, has a $45 billion target, while the Oversight and Government Reform Committee has a $32 billion number. The committees will decide exactly which policies to pursue, but agenda items could include medical malpractice and Dodd-Frank bills favored by House Republicans, though reconciliation’s special rules could affect and limit them too.
As the House Budget Committee prepares for a Wednesday vote, it isn’t clear whether the budget written by Rep. Black has enough support to pass the House before lawmakers leave for their August recess at the end of next week. Conservatives have been arguing for even larger spending cuts in the reconciliation package.
“I think we have the votes to move it out of committee. We get to the floor, that’s another issue,” said Rep. Tom Cole (R., Okla.), a member of the Budget Committee, noting that the Republican-controlled House was unable to pass a budget resolution last year.
Rep. Dave Brat (R., Va.), a member of the conservative House Freedom Caucus, said the caucus would like to see at least $400 billion in mandatory spending cuts—twice what the current version envisions. He also said some conservatives are reluctant to support the plan without more assurances about the GOP’s tax proposal.
“We did that last time on health care—we opened the gate for a free-market health-care piece. We didn’t get that,” he said. “I don’t want to make that mistake again.”
Rep. John Yarmuth (D., Ky.), the top Democrat on the House Budget Committee, said the GOP budget “embraces the worst extremes of the Trump budget, sacrificing nearly every investment that helps American families get ahead, in order to give huge tax breaks to millionaires and corporations.”
The budget debate will occur even before Congress gets to the tax plan, which negotiators from the House, Senate and White House are working on. They have said they are optimistic that they can release a plan before the end of September and finish the entire process by the end of 2017.
The tax plan itself aims to be deficit-neutral, partly paying for itself with revenue from stronger economic growth. That would seem to rule out, unless the budget framework changes, tax cuts on the scale of what President Donald Trump pledged during his campaign.
“This creates the vehicle for ultimately getting tax reform to the president’s desk this year,” said Rep. Kevin Brady (R., Texas), chairman of the tax-writing Ways and Means Committee.
Adding nontax legislation could make that task harder, because it would create a massive bill with hundreds of moving parts and coalitions.
Rep. Charlie Dent (R., Pa.), a key centrist Republican, said the purpose of the budget should be to provide an “appropriate” top line spending number, which he said they don’t currently have, and reconciliation instructions to advance tax legislation.
“That was the plan,” he said. “Going too much on the mandatory side in this discussion will make tax reform that much harder.”
The reconciliation rules allow each budget to have three bills stem from it: one for revenue, one for spending and one for the debt limit.
The House plan operates under the assumption that the tax bill and spending cuts must be coupled. But a different interpretation of rules or a different structure of the bills could let them decouple the two measures.
Under the reconciliation rules, any bill created through that process can’t add to budget deficits beyond the budget window. Although some lawmakers, including Sen. Pat Toomey (R., Pa.), have called for a longer budget window that would allow long-lasting temporary tax cuts, the House budget has a 10-year window.
Before they can advance the tax bill, the House and Senate must agree on the same version of the budget. The Senate Budget Committee hasn’t yet released a budget or set a date. President Trump doesn’t need to sign the budget resolution; he would need to sign the subsequent bill into law.
The budget could change significantly in the Senate, and it could also be revised to facilitate whatever tax agreement the House, Senate and White House agree on.
“There’s a lot of time, energy and capital expended on the first launch on these bills. I worry more about the landing than I do the takeoff. The landing is what matters,” Mr. Dent said.
