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Senate GOP budget paves way for $1.5T in tax cuts

by Niv Elis - 09/29/17 12:13 PM ET

The Senate Budget Committee unveiled a budget resolution for 2018 on Friday that would allow the party to shield its tax reform bill from a Democratic filibuster.

The budget would allow the tax reform package to increase the deficit by $1.5 trillion over a decade, though some Republicans argue this would not be the case because of gains from the economy.

{mosads}It also charts a path that would cut spending by $5.1 trillion over a decade and, like proposals in the House and from the White House, portends to balance the budget within the 10-year time frame. Unlike the House budget, the Senate budget’s balancing calculation would not include Social Security, which would continue to run high deficits.

The resolution would leave 2017 spending levels in place, but start slashing non-defense spending by billions of dollars the following year relative to its current baseline.

Defense levels would remain stable relative to the baseline, a far cry from the massive increases sought by the Trump administration and included in the House budget.

“This budget resolution puts our nation on a path to balance by restraining federal spending, reducing tax burdens, and boosting economic growth. It is also the first important step in providing Congress with the tools it needs to enact tax reform that will grow America’s economy and strengthen hardworking families and small businesses,” said Senate Budget Committee Chairman Mike Enzi (R-Wyo.).

The resolution is expected to be marked up in committee next week and then go to the full Senate in mid-October.

But there are key differences with the House’s budget, expected to pass on the House floor next week, that will have to be worked out in conference if tax reform is to proceed.

The Senate’s resolution keeps defense spending at the budget cap levels outlined by the Budget Control Act. It hacks away at non-defense spending staring in 2019, cutting it by as much as $106 billion by 2027. The House, on the other hand, cuts into non-defense spending right away, but includes a $70 billion increase in defense spending in 2018 alone.

In the House, key conservatives have signaled a willingness to accept the Senate’s provision for $1.5 trillion in tax-related deficits in order to move the tax reform process forward.

But the House budget also included instructions for $203 billion in mandatory spending cuts, largely from welfare, anti-poverty and agriculture programs.

“It would be disingenuous to suggest that $200 billion worth of mandatory spending cuts would make it in the Senate budget. So it’ll have to be worked out in conference, and compromises will have to be made,” said Rep. Mark Meadows (R-N.C.), the chairman of the conservative House Freedom Caucus, which delayed passage of the House’s resolution over spending and tax plans.

The Senate’s version includes just $1 billion in cuts to mandatory spending — from the Energy and Natural Resources Committee, which could allow language on allowing drilling in the Arctic National Wildlife Refuge (ANWR) to be passed under reconciliation.

“Republicans have been calling for spending cuts for so long, and they’re putting in just $1 billion. It’s like a doctor evil moment!” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“They have trillions and trillions of dollars of unspecified savings, and because they’re not included in reconciliation, they clearly have no plans of pursuing them,” she added.

The Senate resolution will serve as one springboard for negotiations on spending for the coming year. Though the fiscal year technically begins on Sunday, President Trump struck a deal with Democrats to extend current spending levels until Dec. 8.

If a new spending deal or stopgap measure is not reached by then, the government will shut down.

For many Republicans, the 2018 budget resolution’s main use will be to unlock the reconciliation process that will allow the party to pass tax reform with just 50 votes plus the vice president’s tie-breaker in the Senate. It requires the Senate Finance Committee to report its recommendations for tax reform by November 13th.

“This budget is especially important because it will allow us to get to work on our pro-growth, pro-family, pro-jobs tax reform plan,” said Senate Majority Leader Mitch McConnell (R-Ky.)

But not everyone in the GOP is pleased with the budget.

“The budget is just a tattered document,” said Rep. Mark Sanford, a member of the House Budget Committee, of the House resolution.

“I mean, I don’t know what it means. You’ve already got the appropriations process moving, you have postponement of possible savings until some distant out year, so I think at this point it is what it is, which is it may be a vehicle for tax reform,” he conceded.