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Budget and Taxes

The Senate passed its FY 2018 budget by a vote of 51-49 on last night. The passage is a key step to Republican hopes of creating and passing any tax overhaul measure through Congress along party lines in the coming months. Senator Rand Paul (R-KY) was the lone Republican dissenter. Behind the scenes, GOP leaders have already hammered out an agreement to reconcile the differences between the House and Senate budget resolutions, likely negating the need for a formal conference and giving Republicans more time to focus on tax reform before the end of the year.

The Senate adopted a package of House-requested tweaks Thursday night, teeing up the budget resolution for House passage as soon as next week. Both chambers need to pass identical budgets in order to allow Republicans to use the fast-tracking tool for tax reform that permits them to bypass a Democratic filibuster in the Senate. As part of the deal, the House will have to accept the Senate’s plan to add $1.5 trillion to the deficit via tax reform after the lower chamber’s budget initially demanded a deficit-neutral tax plan.

If the Senate resolution can be passed in the House – potentially as soon as next week – it would eliminate the need for a conference agreement or other negotiations to resolve differences between the chambers, and the need for reconsideration of the resolution in the Senate. That would accelerate the process for tax reform given that House leaders have said a tax bill will not be released and processed until the budget is completed. President Trump has urged House members to accept the Senate budget resolution to avoid a conference, and the President will head to the Hill next week to talk to the Senate on a path forward with tax reform.