Tax Overhaul Won’t Derail Wrapping Up Spending Bills in Fall: GOP

Daily Report for Executives provides in-depth coverage of unfolding legislative, regulatory, and judicial news from the nation’s capital, the states, and around the world. This daily news service...

By Nancy Ognanovich

An all-out effort to overhaul the tax code this fall won’t derail Republican efforts to negotiate new spending caps and finish off all 12 appropriations bills by December, GOP leaders said.

While gearing up for a rollout of their tax plans, Republicans said they are also negotiating a new deal with the White House and Democrats that should enable them to also finalize a 12-bill omnibus by year’s end.

“We are in a four-corner bipartisan negotiation over how to fund the government, including talks with the administration,” said Senate Majority Leader Mitch McConnell (R-Ky.). “That will have to be done by December the 8th, and I think we’re on a path to do that.”

McConnell and House Speaker Paul Ryan (R-Wis.) are said to be still trying to work out another bipartisan budget deal to raise the Budget Control Act’s discretionary spending totals and remove the threat of deep cuts caused by sequestration. Their goal is to get that deal done soon so appropriators can rewrite the 12 unfinished bills and get them passed before a stopgap bill funding the government runs out.

Senate Minority Leader Chuck Schumer (D-N.Y.) said he also is satisfied with progress on the talks, which include House Minority Leader Nancy Pelosi (D-Calif.) and representatives of President Donald Trump. But he said many items—including the relative increases for defense and non-defense spending—still have to be worked out.

“We’re not there yet. We have a number of outstanding issues. But it’s going pretty well and I am hopeful there can be an amiable omnibus agreement,” Schumer told reporters.

$70B Defense Increase at Stake

The leaders didn’t discuss specifics, but the House backed an increase for the Pentagon earlier this year in the range of $70 billion. Senators also support a large defense increase but haven’t moved a defense appropriations bill because the BCA’s cap for fiscal year 2018 actually calls for a $5 billion cut in discretionary spending. The big increase approved in the House would face a budgetary challenge if taken to the Senate floor—unless the BCA is again amended.

Minus a deal, the 12 House-passed bills and eight measures approved by the Senate Appropriations Committee are on hold and the government is being funded by a continuing resolution for a few more weeks. Also delayed at the Senate Appropriations Committee are markups for the four other bills. Chairman Thad Cochran (R-Miss.), who has been sidelined part of the fall with an infection, has repeatedly postponed the sessions.

Republican leaders are said to be weighing whether to ready another continuing resolution to cover the government when the current stopgap runs outs next month. But appropriators are resisting any suggestions that leaders should look at another CR running into next winter.

Sen. Roy Blunt (R-Mo.), chairman of the Senate Appropriations Labor, Health, and Human Services Subcommittee, said an omnibus can be negotiated and made ready for action in December.

When asked whether a tax overhaul is a threat to appropriators’ plans, Blunt said, “I don’t think so. I think everybody has worked hard on these bills, Democrats and Republicans, to the point they would rather see the spending reflect the priorities of this Congress as opposed to the last Congress.”

Blunt is among the Republicans who are also looking for increases in non-defense spending to cover Labor-HHS programs. In particular, he and others in his party want a $2 billion funding increase for the National Institutes of Health.

Still, Sen. Richard Shelby (R-Ala.) said he doesn’t envision any quick action on the bills—even if a deal is reached soon. Shelby, chairman of the Commerce-Justice-Science Subcommittee, laid out a scenario in which the omnibus is tackled after a tax revision.

"[I]f history’s a guide, we’re going to be preoccupied with tax for the next several weeks. It’s going to be hard to focus on appropriations at the same time,” Shelby told reporters.

Massive Supplemental Bill in Works

Another reason why the appropriations package might remain on hold is that it is expected to become the vehicle for Trump’s next emergency disaster aid package, others said.

The package coming in November is expected to cost more than $50 billion—perhaps as much as $100 billion—to address hurricane damage in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands, and wildfires in western states, they said. In addition, Trump himself may ask for billions in aid to pay for more troops in Afghanistan and to address the opioid crisis, they said.

Texas sent a formal $61 billion request for federal aid to Congress and the White House late Oct. 31. Earlier that day, Gov. Greg Abbott (R) met with both Ryan and McConnell to discuss the state’s requests for more money.

The request, made by Abbott’s Commission to Rebuild Texas, said the total damage is “as high as $180 billion with tens of thousands of homes, businesses and other property lost.” Its $61 billion request includes $36.6 billion for the U.S. Army Corps of Engineers and $6.3 billion for FEMA’s Disaster Relief Fund.

Large figures could be expected for other places affected by recent hurricanes as well, Sen. Bill Nelson (D-Fla.) said.

“It may be $80 or $90 billion just in Puerto Rico,” Nelson said. “It may be—I’ll just pick a figure—$50 billion in Florida. So we’re talking about huge amounts here.”

—With assistance from Jack Fitzpatrick

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Daily Report for Executives