House passes budget, paving way for tax reform

The House passed its 2018 budget resolution Thursday in a party-line vote that represents a step toward its goal of sending tax-reform legislation to President Trump.

In a 219-206 vote, lawmakers approved a budget resolution for 2018 that sets up a process for shielding the GOP tax bill from a filibuster in the Senate.

A total of 18 Republicans voted against the resolution, along with all the Democrats who were present.

GOP lawmakers hailed the vote as meaningful because of the tax measure.

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“We haven’t reformed this tax system since 1986. We need to pass this budget so we can help bring more jobs, fairer taxes and bigger paychecks for people across this country,” Speaker Paul Ryan (R-Wis.) said during House floor debate.

Democrats lambasted it for the same reason.

“This budget isn’t about conservative policy or reducing the size of our debt and deficits. It’s not even about American families. This budget is about one thing — using budget reconciliation to ram through giant tax giveaways to the wealthy and big corporations — and to do it without bipartisan support,” said Rep. John Yarmuth (D-Ky.), the ranking member of the House Budget Committee.

The budget reconciliation rules would allow Republicans in the Senate to pass tax reform without any Democratic votes, though Senate Majority Leader Mitch McConnell (R-Ky.) can only afford two defections.

Republicans used the same strategy for ObamaCare repeal but failed, and are hoping for a better outcome on taxes.

Yet there are already signs of trouble, with some Republicans questioning whether the tax proposal would add too much to the deficit, and others balking at plans to eliminate a deduction for state and local taxes. The tax plan is now estimated to add $1.5 trillion to the deficit over a decade, but that figure would grow if the state and local tax deduction is not eliminated.

Republicans have yet to secure a major legislative win despite having unified control of government. They hope to secure a tax win by the end of the year, which is an ambitious timeline.

The GOP tax reform framework unveiled last week would cut the top tax rate for the wealthy and lower taxes for businesses.

The proposal would consolidate the current seven individual tax brackets into three, with rates of 12 percent, 25 percent and 35 percent. Committees may choose to establish a fourth rate above 35 percent for the wealthiest Americans. The current top individual rate is 39.6 percent. 

House Republicans are far behind schedule in passing the budget, which is normally approved in the spring.

Thursday’s vote comes five days into the new fiscal year, and a month after the House passed all 12 of its spending bills for 2018. 

The government is operating under a temporary spending measure that runs out on December 8. Congress and Trump must strike a new deal to prevent a shutdown after that deadline.

The House budget is in many ways an opening bid in that battle.

Like the already-passed spending bills, it would increase defense spending by $72 billion, and cut nondefense spending by $5 billion. The Senate’s plan keeps overall funding levels steady.

It also includes plans for trillions of dollars in spending cuts over a decade, including from programs such as Medicare and Medicaid, but does include enforcement mechanisms to enact those plans. The budget outline, for example, assumes the adoption of a House-passed ObamaCare repeal bill that has not advanced.

The House budget leaves no room for tax reform to add to the deficit. Instead, it provides instructions for $203 billion in spending cuts from welfare programs in areas such as nutritional assistance and education. 

To unlock the reconciliation rules for tax reform, lawmakers will likely have to go to conference to sort out differences with the Senate’s budget resolution. The upper chamber’s version is being marked up in committee Thursday and is expected to move to the Senate floor in two weeks. 

The Senate budget carves out $1.5 trillion in possible tax cuts for the reform effort, a figure the House is expected to agree to. The Senate is not expected to accept the $203 billion in mandatory cuts from the House budget, but House Budget Committee Chairman Diane Black (R-Tenn.) said she will fight to keep them in.