House Budget May Face Opposition Despite Tax Reform Push

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By Laura Davison, Colleen Murphy, and Kaustuv Basu

The House GOP budget resolution is likely to face opposition from both moderate Republicans and conservative House Freedom Caucus members as it moves to the House floor.

The House Budget Committee approved the budget resolution 22-14 along party lines late July 19, but it could face delays before a full House vote as Republicans sort out disagreements among themselves. Moderates oppose mandatory spending cuts in the resolution and Freedom Caucus lawmakers—a group of libertarian and conservative House Republicans—want an outline for tax reform before voting.

Without a budget, Republicans lack a filibuster-proof process to pass a tax bill this year, a stated priority for both the White House and GOP lawmakers. House Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters July 20 that passing the budget is “crucial” to tax reform moving forward and that he’s confident there are 218 House members who will vote for it.

“A vote for this budget is a vote to advance tax reform, clearly,” he told Bloomberg BNA July 19. “At the end of the day, no budget is perfect, but for us to deliver on our promise on bold tax reform, this budget needs to move forward.”

Question of Support

Rep. Mark Meadows (R-N.C.), who chairs the conservative House Freedom Caucus, said he doesn’t think there is support among Republicans to pass the budget. He wants agreement on the framework of a tax plan before voting.

“We’ll have a lot of discussions over the weekend to figure out where the votes are,” Meadows said July 20, adding he thinks it’s unlikely the House will vote on the measure the week of July 24.

Budget Committee Chairman Diane Black (R-Tenn.) said she doesn’t know if the measure will come to the floor next week. Black also said she thinks tax reform is possible this year, even if the Senate isn’t able to pass a health care bill. Republicans had hoped to repeal the Affordable Care Act before passing a tax reform bill in order to have more flexibility when making tax cuts.

“Big ideas deserve time to be vetted in public. So I’m OK taking the time to do it,” Rep. Todd Rokita (R-Ind.), the committee’s vice chairman, said about the budget. “I’m one that’s willing to come back in August to continue doing my work.”

Border Adjustment Issues

Tax reform was the root of an intraparty skirmish during the budget markup. Rep. Mark Sanford (R-S.C.) sought to offer an amendment on a controversial provision—the border adjustment tax—in the House GOP tax plan.

The amendment wouldn’t have allowed the taxes generated by border adjustment to count toward the tabulations determining whether the bill is revenue neutral. The proposal is projected to raise more than $1 trillion over a decade by taxing imports. Excluding those funds would make it difficult to cut tax rates as much as House Republicans have proposed.

Black didn’t allow a vote on the measure because it wasn’t on the list of amendments committee leaders had agreed to consider. Sanford can offer the amendment once the measure goes to the Rules Committee, Black told reporters July 20.

Had the amendment passed, it could have been a blow to one of the most embattled provisions in the House tax reform plan. Senate Republicans and White House officials have expressed doubts about the plan, but Brady continues to push the idea.

“I think we need to let the Ways and Mean Committee come out with their product and not hamstring them by doing that,” Black, a committee member, said. “I think you need to wait until then and you can adjust it accordingly.”

Brady also said there were still discussions about the budget using a current policy baseline, instead of the current law baseline, which would give the Ways and Means Committee more leeway to cut tax rates.

Democratic Opposition

Budget Committee Democrats were unsuccessful in several attempts to alter the budget language to make it difficult for Republicans to make steep tax cuts, such as amendments requiring there be no net tax cut for the wealthiest taxpayers. Budget Committee ranking member Rep. John Yarmuth (D-Ky.) offered an amendment that would strike the reconciliation instructions from the resolution, saying the mandatory spending cuts would harm “the most vulnerable citizens.”“This process is being undertaken for one reason and one reason only, and that’s to facilitate a majority-only vote in the Senate on tax cuts for the wealthiest Americans and corporations,” he said. “This is one of the most cynical processes that I think is imaginable.”The budget outline aims to reach a $9 billion surplus in 2027 through substantial cuts in mandatory and discretionary spending and through faster economic growth than assumed by the nonpartisan Congressional Budget Office. The budget projects $46.333 trillion in spending over the 2018-2027 period and revenue of $41.953 trillion. Republicans on the committee assumed additional deficit reduction from faster economic growth. The committee used its own, more optimistic estimates. The panel estimated economic growth would average 2.6 percent annually in the budget window, above the CBO’s 1.9 percent, because of tax and regulatory changes.

To contact the reporters on this story: Laura Davison in Washington at lDavison@bna.com; Colleen Murphy in Washington at cmurphy@bna.com; Kaustuv Basu in Washington at kbasu@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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