“Clearly, no budget, no tax reform.”
That comment made by House Ways and Means Chairman Kevin Brady on Thursday, and then again for good measure on Monday, is the primary selling point on which House Republican leaders are hoping to whip up enough support to pass their fiscal 2018 budget resolution. Yet that pitch has done little to appease the naysayers.
With the budget still lacking the needed votes, some GOP tax writers are concerned about the future of the yearslong goal to rewrite the tax code. But most of that concern remains shrouded in a cloud of optimism.
“I’m confident there are 218 Republicans in the House who came here to do bold, pro-growth tax reform,” Brady said. “And they know we can’t do it together until we have budget and reconciliation.”
The Texas Republican is just one of many members who have said in recent weeks that they believe the desire to overhaul the tax code will push enough GOP lawmakers to ultimately vote for the budget resolution. However, even if sufficient support was to materialize, a vote before the House departs at the end of the week for its monthlong summer recess appears unlikely.
The House GOP budget includes reconciliation instructions for a deficit-neutral tax overhaul, as well as $203 billion in cuts to mandatory spending. If the House and Senate both pass and reconcile their budgets with a set of reconciliation instructions, they can use the resulting process to fast-track a tax overhaul without the threat of a filibuster in the Senate and rely solely on GOP votes.
“The budget is the gateway to tax reform,” House Budget Committee member Todd Rokita of Indiana said.
Without the budget reconciliation process that allows for a simple-majority vote in the Senate, Republicans would need bipartisan cooperation on a tax plan to ensure its passage. GOP leaders have effectively ruled out that option, citing partisan divisions.
However, intraparty tension is already threatening to derail a tax code rewrite before Republicans even release a bill.
Conservatives, mostly from the hardline conservative House Freedom Caucus, have remained opposed to the budget resolution because they feel the reconciliation instructions do not provide a high enough target for mandatory spending cuts and because they want more details on what the tax bill would look like. Specifically, they want to ensure the tax plan would not be contingent on a border adjustment tax on imports that they are not on board with.
Moderates, meanwhile, are concerned that attaching mandatory spending cuts to a reconciliation measure for overhauling the tax code will make the latter more difficult to achieve. They would also like to see a bipartisan, bicameral budget deal to change the top-line spending numbers dictated by the Budget Control Act before voting on a budget.
“Budgets are always some of the toughest votes,” House Ways and Means member Devin Nunes said.
The California Republican said he is hopeful the prospect of a tax overhaul and the ability to use the budget process to put GOP policy ideas into law will provide for a different outcome than last year, when House Republicans never got enough members on board to pass their budget blueprint.
While Republicans did not pass a full budget last year, they did so early this year using a so-called shell budget — one empty of policy details — to set up the reconciliation process so they could address health care.
So far, members have said they’ve heard no talk of doing another shell budget or any other Plan B for what will happen if they can’t pass the budget resolution that the House Budget Committee reported out unanimously last Wednesday.
“I just believe we got to work as hard as we can to get to tax reform. That’s why I was a little concerned with the budget last night as well,” Ohio Rep. James B. Renacci, who serves on the Budget and Ways and Means committees, said Thursday. “I was willing to pass it and vote for it to move it to the floor. But in the end I hope there’s an amendment process.”
Renacci said he is concerned the current instructions for a deficit-neutral tax overhaul are not flexible enough because the Senate would have to measure that under a static scoring model, unlike the House, which would rely on dynamic scoring.
“That’s concerning because it’s almost impossible to get revenue-neutral, static-based tax reform,” he said.
Calling himself “pathologically optimistic,” Ways and Means member David Schweikert said he can see a path to getting the votes on the budget but that it will require leadership to have a lot of one-on-one sessions with members to walk through their concerns.
“It is sort of the dance we go through every budget,” the Arizona Republican said. “It’s a lot of math. There’s a lot of discomfort. … For some of us, the fact that it’s finally cracking the door open to finally touch mandatory spending, it is a big deal.”
Still, there is a realization among some members that failure to pass a budget may imperil the chances of Republicans rewriting the tax code this year.
Pennsylvania Rep. Mike Kelly, also a Ways and Means member, said the budget is just one of many roadblocks to getting a tax overhaul.
“I don’t know because I’m not included in those talks,” he said when asked if there was a Plan B. “I would sure as hell hope that if you’re in charge, you have a Plan A, a Plan B, a Plan C and a Plan D, that you actually are knowing that, ‘OK, if this one doesn’t work, what do we plug in.’ And if you tell me, ‘No, this is the only way we’re going to go. If we can’t do it that way, we’re not going to do it’ — that’s not responsible.”