Republicans and President Trump are really excited that the Senate passed a blueprint of a budget late Thursday. This is the first step to getting tax reform done, they say.
That’s technically true. But paradoxically, Republicans’ excitement at getting past step 1A underscores just how difficult a task they have to pass tax reform. They don’t even have a bill yet.
We’ve also been here before. Procedurally, Republicans are following same path they used to try to repeal Obamacare without Democratic votes. That fell short by one vote in the Senate this summer.
It’s possible the same fate could befall tax reform, which arguably has more special interests than health care.
Republicans do have a lot more pressure on them to do something. They are almost a year into governing and have no major legislative win. Failure to pass tax reform “will be the end of us as a party,” warned Sen. Lindsey O. Graham (R-S.C.) to the New York Times. Behind the scenes, other Republicans agree.
Here are all the other steps Republicans have to navigate to get tax reform done, and where they could fall short.
1b. Pass a budget resolution through the House of Representatives: Because it’s only a blueprint, Trump doesn’t have to sign a budget resolution into law. But to avoid a Democratic filibuster, this budget resolution does need to be the exact same as the Senate version. That could be difficult, because the Senate’s version allows Congress to increase the deficit by $1.5 trillion in the name of tax cuts. House Republicans had wanted a budget that increases the deficit by zero dollars.
The Post’s Elise Viebeck reports that, in the name of getting tax reform done, House Republicans may simply agree to the Senate’s budget resolution.
Important side note: Republicans are moving forward with legislation that significantly adds to the deficit, which is a remarkable departure from party orthodoxy. Republicans pride themselves on being the party of fiscal conservatism.
The Post’s Tony Newmeyer, author of the daily Finance 202 newsletter, calculates the $1.5 trillion deficit will blow “a gaping hole in the deficit, roughly twice the size of the 2009 stimulus package that 38 then-Senate Republicans opposed.”
So why have Republicans given up on getting something revenue neutral? To answer that, let’s jump to No. 2, which is one of the biggest — and most difficult — steps in this whole process.
2. Write a tax bill: In September, the White House and congressional Republicans released a tax blueprint. It was loaded with all of the good stuff that politicians like to sell — tax cuts for everybody: for the wealthy, for small businesses, for the middle class.
But this blueprint did not touch on how they were going to pay for all of these tax cuts. Some budget experts estimated this plan would cut $5 trillion in tax revenue over the next decade. Republicans decided this week that they will try to keep this tax bill in the $1.5 trillion price tag range.
So now Republicans have to find a way to raise taxes on some people and businesses.
GOP operatives trying to help Republicans keep their majorities in Congress say a tax reform bill that cuts middle class taxes without blowing a hole in the deficit would be much easier for them to sell.
“Politically this is, always has been, and always will be the most important issue,” said Corry Bliss, head of a House GOP super PAC. “There’s nothing more important than having a good-paying job and being able to provide for your family.”
3. Vote on it in the House: House Speaker Paul D. Ryan (R-Wis.) says this could happen by early November. But, again, Republicans don’t even have a bill yet.
The Wall Street Journal’s Richard Rubin reports House Republicans on the tax-writing committee plan to release a bill shortly after Congress agrees on a budget resolution. This bill would detail where Americans fall on simplified income brackets and whether Republicans will cut state and local tax deductions, child tax credits or the popular mortgage interest rate deduction to pay for the tax cuts.
From there, we’ll get a better sense of the GOP factions on tax reform. Will conservatives oppose the bill because it’s too expensive? Will moderate Republicans oppose the bill because it cuts things their constituents like? Does anyone know what Trump thinks of it?
Since they’re not relying on Democratic votes, House Republicans can afford about 23 defections.
4. Vote on it in the Senate: The same intractable problems face the Senate, only they are exacerbated there. Republicans can only afford two defections. This is where an Obamacare repeal effort died.
5. Make sure it’s the same bill: A bill that can pass the House is very rarely the same as a bill that can pass the Senate. Lawmakers will have to find a way to conference the two bills in a way that can pass both chambers again.
6. Get Trump to sign it: Trump changed his position on a bipartisan health-care bill half a dozen times in ONE day. Republicans are not relying on Trump to be consistent about what he wants to see in a tax bill, either.
But at the end of the day, the pressure to get a major legislative victory could bring everyone in line.
“All this revolves around two things,” said former GOP Senate budget aide Steve Bell. “GOP desire to have done ‘something’ before the 2018 elections; and Trump’s desperation to sign a tax cut in a Rose Garden ceremony.”