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Senate Begins Debate on Budget Resolution Allowing for Tax Reform

Posted on October 18, 2017 by Asha Glover, Stephen K. Cooper

The Senate took a major step on the road toward tax reform October 17, voting to begin debate on a fiscal 2018 budget resolution that would set the stage for lawmakers to release tax reform legislation and fast-track its passage by year-end.

Debate kicked off after the Senate voted 50 to 47 on a motion to proceed on the resolution, which includes reconciliation instructions providing for $1.5 trillion in tax cuts as part of tax reform. If the resolution passes the upper chamber, a conference committee with the House is expected. The House resolution also includes reconciliation instructions for tax reform, but calls for $200 billion in deficit reduction.

“I think everybody realizes that passing a budget equals tax reform. If there’s no budget, there’s no tax reform,” Senate Finance Committee member John Thune, R-S.D., told reporters following his party’s weekly policy luncheon. “In the end, we have to get the budget across the finish line or we don’t get a chance to write a tax reform bill that will be good for the economy.”

Finance Committee member John Cornyn, R-Texas, said the Senate’s vote to begin debate on the budget increased his confidence that the measure will pass later in the week. “I’m optimistic that that bodes well for our chances of passing it,” he said, acknowledging that Republicans feel pressure to succeed.  

Debate on the resolution will continue for 50 hours, culminating in a “vote-a-rama” expected late October 19, when Democrats plan to offer dozens of amendments to highlight GOP tax policy proposals they find objectionable.  

Democrats will criticize Republican plans to lower taxes on the wealthy and increase them on middle-income Americans, Senate Minority Leader Charles E. Schumer, D-N.Y, told reporters. They also object to Republican policies they say would increase the nation’s debt and cut funding for Medicare and Medicaid.

More Talk of 2018

Office of Management and Budget Director Mick Mulvaney said during a Bloomberg TV interview that he thinks the Senate is “on schedule” to pass the budget. “If it doesn’t get done this week, there’s still a chance [tax reform] gets done this year, but more likely it goes over into the beginning of next year,” he said. “The longer we wait to get tax reform, the longer the benefits take to kick in.”

Mulvaney's remarks come a day after President Trump and Senate Majority Leader Mitch McConnell, R-Ky., suggested tax reform could slip to 2018.

Mulvaney also said he wants to maintain a provision to eliminate the state and local tax deduction, which has been a point of contention among congressional lawmakers of both parties. Mulvaney argued that people with higher incomes take the deduction and that doubling the standard deduction — as proposed in the GOP tax reform framework — would reduce the number of people who claim it.

Senate Finance Committee Chair Orrin G. Hatch, R-Utah, has said he would prefer to keep the deduction in place, but House Ways and Means Committee Chair Kevin Brady, R-Texas, has maintained that it will be repealed even as he is working with lawmakers who oppose its elimination.

Envisioning Bipartisanship

In a Senate floor speech, Hatch said tax reform will eliminate credits, exemptions, and deductions that were designed to benefit special interests, and he argued that Democrats agree with Republicans on areas such as middle-income tax relief, lower corporate tax rates, and making U.S. companies globally competitive. “Historically speaking, tax bills that pass through the budget reconciliation process tend to have support from both parties,” Hatch said, adding that the Republican tax reform framework “envisions a tax reform approach that both parties can and should support.”

Even though Republicans have reached out to red-state Democrats for support, one senator said their efforts have not yielded results.

Following an October 16 dinner with a bipartisan group of senators at the home of presidential adviser Jared Kushner and Ivanka Trump, Finance Committee member Claire McCaskill, D-Mo., said use of the reconciliation process is hindering the possibility of bipartisanship.

“There’s kind of a disconnect between some of the rhetoric and the reality,” McCaskill said. “In a perfect world, I think they’d love to have a bipartisan bill, but it feels like a crime to get this done without us.”

McCaskill added that there are “two major problems” with working in a bipartisan manner on tax reform. “One is that there’s a lack of trust at this point because so much of this has been done behind closed doors with just Republicans,” she said. “And secondly, they have no firm proposal that we can even talk about.”  

Dylan F. Moroses contributed to this article.

Follow Asha Glover (@AshaSGlover) and Stephen K. Cooper (@ScoopOnTaxes) on Twitter for real-time updates.