Budget and Taxes

Posted on October 20, 2017October 20, 2017

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.

Senate Begins Debate on Budget Resolution

Posted on October 17, 2017

The Senate has begun its floor debate on the FY2018 budget resolution. As mentioned previously, although usually used to determine parameters of federal spending, this year’s package contains a set of procedures that would enable the chamber to adopt a tax package by a simple majority.

With all Democrats expected to oppose it, one Republican Senator currently back home for health reasons, and a number of other members of the party expressing reservations about certain parts of the legislation, it is not yet certain that the Republicans have the votes for its passage. A long list of votes on amendments is expected between now and the final vote on passage, which could take place on Thursday.

Senate Expected to Take Up FY2018 Budget Resolution

Posted on October 16, 2017

The full Senate is expected to take up this week its FY2018 budget resolution. The House cleared its version earlier this month.

While the budget resolution usually lays out the budget parameters for a given year, the primary goal of the FY2018 budget resolution is to set up for procedures that would allow Republicans to pass a tax reform package with the minimum number of votes. The House adopted resolution would also allow for a similar process.

While Republicans are united in their push for a big tax package, there is disagreement on several issues associated with such a measure, including whether a tax-cut bill should increase the debt. Read more here and here.

More Disaster Relief; Tax Reform Slowly, Slowly

Posted on October 10, 2017

It’s getting expensive to deal with disaster relief.

Going first, the House is scheduled to vote this week on the second installment of hurricane relief aid. While the Trump administration requested $29.3 billion, lawmakers have been busy trying to add to the total.

Texas lawmakers want an extra $18.7 billion for victims of Hurricane Harvey, which devastated coastal Houston. The Governor of Puerto Rico asked for another $4.6 billion to help the territory deal with the aftermath of Hurricane Maria. Florida lawmakers have asked for an additional $26.9 billion for victims of Hurricane Irma.

If all those requests were honored, the total aid package would balloon to $79.5 billion. Also, House Armed Services Chairman Mac Thornberry (R-TX) has lobbied the White House for extra money for missile defense to combat the threats from North Korea.

Disaster aid is considered emergency funding that is exempt from discretionary spending limits imposed by the Sequester. However, with the ultimate damage assessment from three recent hurricanes projected to reach a few hundred billion dollars, some conservatives are beginning push to pay for long-term rebuilding costs by cutting other programs, which is a nonstarter with Democrats.

This second installment does not even consider how the US is approaching federal disaster preparedness and recover. For example, the Administration’s request includes $16 billion to cancel debt owed by the National Flood Insurance Program, which has faced mountains of red ink since Hurricane Katrina in 2005. The FEMA-run program literally can not pay claims.

…and Congress and the Administration haven’t started talking about wildfires yet…

Meanwhile, House and Senate leadership are slowly trying to fill in the Administration’s framework for tax overhaul. Generally, lawmakers have said the cost of tax rate cuts would be offset by eliminating most of deductions and credits in the tax code. However, the few ideas floated publicly have run into stiff resistance.

The idea to include a border-adjustment tax, that would have raised $1.2 trillion over 10 years, has been dropped after business lobbies complained that it would raise prices for consumers. Also, the idea to eliminate the state and local tax deduction has unleashed a huge volume of complaints to tax writers. Plans to completely eliminate the “death tax” have also been sidelined as it becomes more clear that reducing of changing existing taxes will be more politically manageable than outright repealing them.

House Passes Budget

Posted on October 5, 2017

House Republicans passed budget legislation today that sets the stage for an ambitious tax bill that they plan to pass. The House measure includes language that would allow the Senator to pass a tax measure without invoking cloture. The Senate is proceeding on a separate track toward passing its own budget, which will have to be reconciled with the House version in the coming weeks.

The Senate Budget Committee was poised to finish work Thursday on a resolution that is more focused on the tax legislation than the House version.