Tax Cut Talks Elbow Aside Congress’s Spending Work: Appropriators

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By Nancy Ognanovich

House and Senate Republican leaders trying to reach a bipartisan budget deal by Veterans Day appear increasingly unlikely to reach that informal target, as an all-out effort to enact tax cuts begins to overwhelm the process of finalizing this year’s spending bills, key lawmakers said.

House GOP leaders have reserved the next two weeks to mark up and pass tax legislation, while little progress is being reported on negotiating an agreement to raise the Budget Control Act’s spending caps. That would be, the first step needed to wrap up appropriations work by year’s end, top “cardinals” on the House Appropriations Committee said.

“Our leadership has been so preoccupied with the tax reform package, getting it ready and synchronized with the White House, that that has taken a lot of attention away,” said Rep. Hal Rogers (R-Ky.), former committee chairman who now leads the State-Foreign Relations Subcommittee.

House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) started negotiations with Democratic congressional leaders and the White House aimed at raising the BCA’s caps in order to have a better shot at finishing the 12 fiscal year 2018 spending bills in December. A stopgap measure funding the government runs out on Dec. 8, but leaders still haven’t announced any deal that will permit appropriators to revise their bills.

“I think the speaker would like to get it done, but whether it’s a priority as opposed to tax cuts isn’t clear,” said Rep. Mike Simpson (R-Idaho), chairman of the Energy and Water Subcommittee.

K Street strategists said much is at stake, including a more than $70 billion increase in defense spending that Republicans have been working all year to secure. Also at stake, they said, is continued government funding.

“We can’t do tax reform if the government is shut down,” said Jim Dyer, a principal at Podesta Group who previously was Republican staff director of the committee.

$1.2 Trillion In Flux

Minus another bipartisan budget deal, appropriators are working with a BCA framework that actually would cut discretionary spending by $5 billion in the new fiscal year that began Oct. 1. Appropriators in both parties want an agreement that not only would remove the threat of sequestration but raise the caps enough to allow increases in both defense and domestic spending. In total, the omnibus appropriators want to bring to the floor in December would cost more than $1.2 trillion when other funding—including disaster relief funds—is included.

Appropriators said they expect another CR will be needed when the current one runs out Dec. 8. But the question is whether the next stopgap will last another week or two or run into January or longer.

Simpson said a CR lasting into March will just set appropriators up for the same dysfunctional year they had after Ryan and McConnell shelved the almost complete FY 2017 bills last December to give President Donald Trump more say over spending decisions.

“We need to get it done in December because we need to start fresh next year,” Simpson said.

Both Rogers and Simpson said they already are working with their subcommittee counterparts in the Senate on many details of the final versions of the bills. Cardinals on the other panels, such as the Labor, Health and Human Services Subcommittee, are doing the same, they said.

“If we can get a big number, we can get this done on time, and that’s my goal,” said Rogers, who was committee chairman when two previous two-year deals to raise the caps were negotiated. “I think we can make it happen, especially if leadership gives us the big defense number.”

Shutdown Talk Begins

But the delays are reviving fears of an impasse that might lead to a government shutdown. The House now has less than 16 work days scheduled before federal money runs out.

Dyer said negotiating new budget caps—preferably for two years to avoid another showdown on the eve of the midterm elections—is difficult. Then leaders have to resolve “the little extras” like disaster aid, Affordable Care Act payments, the fate of the Dreamers, the border wall, and funding to fight opioid abuse, he said. Still, he said, that exercise is more manageable than trying to muscle through a controversial tax plan in a few weeks.

“We’re talking billions here, while on the tax side they’re talking trillions,” Dyer said.

Stan Collender, executive vice president at Qorvis MSLGROUP, said in a blog post that the fate of the tax and spending bills increasingly are linked.

Collender said he envisions a new CR being passed to year’s end to cover the government while the tax bill is debated. Leaders can use the spending bill’s funds to buy votes for the tax measure, he said.

“But it’s very conceivable that Trump will do the political equivalent of holding his breath until he turns blue by vetoing that funding bill if the tax plan hasn’t yet been enacted,” Collender said. “He could demand that Congress pass the tax bill or he’ll keep the government shut down until it does.”

To contact the reporter on this story: Nancy Ognanovich in Washington at nognanov@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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