This week: Congress braces for tax and spending showdown

Congress is set to end this year with a bang as Republicans aim to send their tax overhaul to President Trump and avoid a government shutdown in the span of just five days.

Current government funding runs out after Friday. Yet lawmakers on both sides of the Capitol still haven’t agreed on how to avoid a costly shutdown that would sap the momentum from accomplishing tax reform.

But first, Republicans are intent on clearing the final version of their tax legislation early this week so that Trump can sign it into law before Christmas.

{mosads}

The House is expected to vote first on the tax bill on Tuesday, before sending the legislation over to the Senate.

With a 52-seat majority, Senate Republicans have a narrow path to getting the tax plan through the upper chamber.

But they appeared to clinch the needed 50 votes on Friday, after securing support from Sens. Marco Rubio (R-Fla.) and Bob Corker (R-Tenn.).

Corker voted against the initial Senate version over his concerns about the bill’s expected impact of adding more than $1 trillion to the deficit. But he ultimately reversed course and said that the conference deal represents a “once-in-a-generation opportunity.”

“I know every bill we consider is imperfect and the question becomes is our country better off with or without this piece of legislation. I think we are better off with it,” Corker said in a statement.

Rubio pushed to expand the child tax credit, which would set the maximum refundable amount of the credit at $1,400, up from $1,100 in the Senate version.

GOP Sens. Jeff Flake (Ariz.), Susan Collins (Maine) and Mike Lee (Utah) have yet to say if they will support the tax deal, but they each voted for the Senate version of the bill.

GOP leaders have a little more breathing room in the House. Only 13 Republicans voted against the House version of the tax bill last month, less than the maximum of 22 defections they can afford.

All but one of the House Republicans who voted against the legislation primarily opposed the proposed elimination of the state and local tax deduction that many of their constituents in high-tax blue states rely on. The final version would still allow people to write off state and local taxes, but only up to $10,000.

Another provision that primarily impacts people in urban areas with expensive real estate would cap the home mortgage interest deduction at $750,000, down from the current limit of $1 million. But the final version is still higher than the original proposal in the House bill, which limited the deduction to $500,000.

Among other changes, the final bicameral product would repeal ObamaCare’s individual mandate requiring people to buy insurance or pay a penalty and cut the corporate tax rate to 21 percent, down from the current 35 percent.

The 21 percent corporate rate is slightly higher than the 20 percent established in both the House and Senate bills. But lawmakers raised it by 1 percent to pay for other priorities in the bill when Trump, after initially taking a hard line on 20 percent, expressed openness to a slight change.

 

Shutdown fight

House Republicans are forging ahead with plans to pass a stopgap measure known as a continuing resolution (CR) that would fund defense programs through next September, but other agencies only through Jan. 19.

GOP leaders are, for now, acceding to a demand from conservatives and defense hawks to hold a hard line on defense spending despite objections from Senate Democrats.

The House Rules Committee is slated to meet Tuesday afternoon to prepare the legislation for a floor vote, which could occur as soon as Wednesday.

The bill also includes a five-year extension of funding for the Children’s Health Insurance Program (CHIP), reflecting legislation that the House passed along party lines last month. CHIP’s authorization expired in September, meaning states are starting to run out of money amid the gridlock.

Democrats opposed the House bill last month due to objections over its funding mechanism.

“How dare Republicans give a permanent, unpaid-for $1.5 trillion tax rate cut to corporations, while insisting that a temporary 5-year extension of CHIP for 9 million vulnerable children be paid for by ransacking other vital commitments to children’s health,” said House Minority Leader Nancy Pelosi (D-Calif.)

But GOP leaders may face difficulty clearing the current bill on their own side if lawmakers from states recently affected by hurricanes don’t secure aid for their constituents.

Appropriators are aiming to release supplemental disaster relief funding this week for communities affected by hurricanes and wildfires, which is likely to be higher than the Trump administration’s $44 billion request.

The disaster aid could be added to the CR, or considered as a stand-alone bill.

Lawmakers from states like Florida and Texas are threatening to withhold their votes for the spending bill to avert a shutdown unless they can go home to their constituents with disaster aid.

Rep. Tom Rooney (R-Fla.), who represents citrus growers, told GOP leaders he would vote against the measure because of its current lack of disaster funding. “I very rarely whip no. So that was a, sort of like a new thing for me to do,” he said.

Senate Democrats are warning that the House proposal won’t be able to clear the upper chamber, where 44 of the caucus’s 48 members have told GOP leadership they will not support it.

The move is expected to force Senate GOP leadership to offer a stopgap measure that will fund the government into early next year, though Majority Leader Mitch McConnell (R-Ky.) hasn’t laid out what he will do once the funding bill reaches the Senate.

Collins said the short-term spending bill was the “likely” vehicle for funding for ObamaCare’s cost-sharing reduction payments and “reinsurance” programs.

Meanwhile, Senate Republicans are also considering attaching a clean short-term extension of the National Security Agency’s warrantless surveillance program, known as Section 702, onto the government funding bill.

Sen. John Cornyn (R-Texas) signaled that lawmakers need more time to sort out competing versions of legislation meant to reform and extend the surveillance program.

“If there’s a continuing resolution, which there may be to get us over to January, it’ll be part of that,” he told reporters late last week.

Any changes the Senate makes to the funding bill will force the bill to bounce back to the House to be voted on for a second time.

 

Nominations

The Senate will vote on two Trump nominees this week as they wait for the House to send over the spending and tax bills.

McConnell teed up votes on Owen West to be assistant secretary of Defense and J. Paul Compton to be the general counsel for the Department of Housing and Urban Development.

The Senate will convene for the week at 3 p.m. on Monday, with votes on both nominations expected for 5:30 p.m.