mcconnell trump ryan
Mitch McConnell, Donald Trump, and Paul
Ryan

Getty
Images/Pool


  • The Senate passed its budget resolution Thursday night,
    setting up the path to tax reform.
  • Indications from the GOP leaders is that Congress may
    speed up the process to pass tax reform sooner rather than
    later.
  • Challenges still lay ahead, and a tax code overhaul is
    not guaranteed.

Republicans hit high gear on their plan to reform the US tax code
on Thursday night and are aiming to pass their bill “ASAP.”

The Senate
passed its 2018 fiscal year budget resolution
,
clearing a major hurdle on the track to tax reform.
The resolution sets up the GOP’s ability to use what is

known as budget reconciliation
, a legislative procedure that
allows Republicans pass a tax bill in the Senate without the
legislation being subject to a Democratic filibuster.

With the procedural road nearing it completion, Republicans now
face the task of writing and passing the tax bill itself.

A helpful budget deal 

Isaac Boltansky, an analyst at the research firm Compass
Point, said the budget’s passage was a key marker. But he
said Republicans still have a lot of work to do.

To put this development into football terms, the
Congressional GOP converted on a third
 down,
but they are still on their own 30-yard line,” Boltansky wrote in
a note to clients Friday.

But based on Republicans’
statements Thursday, the rest of the tax reform
process could be a fast and furious drive.

The House now has to approve the Senate budget. The
resolution adopted Thursday
included key concessions to House conservatives
that should
avoid a conference committee in which the Senate and House would
have to hash out any differences in the two budgets.

Greg Valliere, chief global strategist at Horizon
Investments, said avoiding a conference would be a
significant step since it would be so time consuming.

“The real eye-opener was the assertion by House Republicans
that a conference committee may NOT be required to finalize a
final budget resolution — and that would save at least two weeks,
allowing debate to begin quickly on a tax bill,” Valliere wrote
in a note to clients Friday.

By simply agreeing to the Senate deal, House Republicans
would fast-track the tax reform process.

Up next: the House

Rep. Kevin Brady, the chair of the House Ways and Means committee
that will oversee the tax reform legislation, said he plans to
debut the bill sometime in early November. That would likely
get the bill to the full floor for a vote shortly afterward.

Brady “hopes to introduce a tax bill within two weeks; his
panel could pass it before Thanksgiving. Full House approval is
likely by early December,” Valliere said.

Some potential snags remain, such as
disagreement over the state and local tax deduction
.
But the likelihood of passage in the House is fairly
high, analysts say. Republicans can afford to lose up to 22
members on the vote for the bill to pass.

Senate slowdown

At the same time, the Senate Finance Committee will likely work
on their own version of a tax bill that will have to
appease all sides of their slim 52-seat majority. Already, a
handful of senators have expressed misgivings about various
aspects of the tax bill.

Chris Krueger, an analyst at Cowen Washington Research
Group, said the Senate is where the real trouble lies ahead.

“We can see a relatively clear path for tax momentum through the
end of next month…then quicksand…just like repeal/replace,”
Kruger said. “The House carries the ball downfield only to see
the bill bleed out in the Senate. The Senate remains the original
cooler.”

Still, the budget vote provided positive developments for
Republican leaders. All Republicans aside from Sen.
Rand Paul voted in favor of the budget resolution, and Paul
tweeted that on Friday that despite his vote,
he supported tax cuts
.

This doesn’t mean there won’t be challenges ahead.
Recalcitrant Republican members
, a slew of industry lobbyists

trying to protect favorable exceptions
for their businesses,
and possible public pushback could all derail or slow the effort.

For now, however, it appears to be full steam ahead for the GOP
plan.

“We’ve been predicting enactment of a bill by spring; now we
think late winter is possible,” Valliere said. “These folks are
serious – they want a victory, and they want it fast. Avoiding a
House-Senate conference committee is a strong signal
that they plan to steamroll a bill through Congress ASAP.”