Adopting a fiscal year 2018 plan clears the path to get a massive tax deal done
Senate passes $4 trillion budget in crucial step for Trump’s tax overhaul
By David Sherfinski
Senate Republicans powered their budget through Thursday night, adopting a fiscal year 2018 plan that would clear the path to get a massive tax deal done relying only on GOP votes, setting the stage for Republicans’ next big-ticket agenda item.
The budget passed on a 51-49 vote. While the vote is far from a guarantee of success for tax reform, it’s a crucial first step that GOP leaders had to clear.
“Tonight we completed the first step toward replacing our broken tax code by passing a comprehensive, fiscally responsible budget that will help put the federal government on a path to balance,” said Senate Majority Leader Mitch McConnell.
Already months overdue — the fiscal year began Oct. 1 — the budget calls for about $1 trillion in discretionary spending this year, and envisions deficits of $641 billion.
But even Republicans said those numbers were probably irrelevant, and it will take a bipartisan deal later this year to set actual spending levels for 2018.
Instead, the goal of the budget was to set up what’s known as the “reconciliation” process, which allows big financial measures to pass the Senate by majority vote, without having to overcome a filibuster.
Democrats used reconciliation to ease passage of Obamacare in 2010, and Republicans used it to pass tax cuts in 2001 and 2003. The GOP also tried to harness it for the Obamacare repeal effort earlier this year, but were unable to get enough support from within their own ranks.
Throughout the day Thursday Republicans fended off Democratic efforts to derail the budget or hamper the tax reform, shunting aside everything from attempts to force more transparency on the tax debate to putting limits on how deeply the GOP could cut taxes.
Democrats said the votes proved Republicans were more interested in a political win on taxes than on getting a good bill.
“The American people are getting a clearer picture of what the Republican budget and tax plan are about,” said Senate Minority Leader Charles E. Schumer, New York Democrat.
Republicans said Democrats’ complaints rang hollow.
“When they spend money, they think that’s good – they don’t worry about the deficit,” said Sen. Lindsey Graham, South Carolina Republican and a budget committee member. “When we cut taxes, the deficit’s the most important thing.”
Republicans control just 52 votes in the Senate and Democrats have signaled little interest in helping with the direction of the GOP’s tax plans, which involve across-the-board rate reductions and key tax breaks such as immediate expensing for corporations.
Sen. Ron Wyden, the ranking member on the Senate Finance Committee that will be responsible for writing the tax reform, tried to force the GOP toward bipartisanship, offering an amendment Thursday to shut down the fast-track reconciliation process.
“If you start with a partisan markup, where the middle class are deep in the hole as I have pointed out, it’s very hard to fix that with a lot of tinkering,” said Mr. Wyden, Oregon Democrat.
The GOP defeated his attempt on a 47-52 vote, saying it was another way to scuttle tax reform.
“What my friend from Oregon is suggesting is that we give a minority in the Senate the opportunity to defeat tax reform by filibuster,” said Sen. Pat Toomey, Pennsylvania Republican. “There is nothing about reconciliation that in any way discourages or prevents full Democratic participation.”
Democratic Sens. Maria Cantwell of Washington and Chris Van Hollen of Maryland also offered an amendment that would prevent Republicans from reducing or axing the deduction for state and local taxes paid as part of their tax overhaul.
The issue has split the GOP, with opponents arguing that the provision effectively subsidizes high-tax states and Republicans from those bluer states saying their constituents will be hurt if it’s taken away.
But Senate Republicans held together on a first test run of a debate that will continue, defeating the amendment on a party-line, 52-47 vote.
Sen. Rand Paul, Kentucky Republican, was the only GOP senator who voted against the final budget plan.
“The American people are sick and tired of Congress spending recklessly with no end in sight,” Mr Paul said. “We can’t spend our way to prosperity. Today, the Senate considered a budget that simply didn’t measure up and spent too much.”
Nevertheless, Mr. Graham said Republicans are now under pressure to notch a win.
“We’ve got the House, the Senate, and the presidency,” he said. “We’ve got nobody to blame in this exercise but ourselves.”
But even as Republicans were on the verge of getting their broader budget through the Senate, top leaders expressed doubt that they’ll even have enough time now to pass a full-fledged overhaul of the tax code in the next few months.
One top Republican even signaled it could spill over until after the next election.
The GOP should press forward this year, but they’ll be able to take a “second look” at reforming the tax code in 2019 or 2020, said Sen. Roy Blunt of Missouri, the vice chairman of the SenateGOP conference.
“We don’t have to do everything that could possibly be done to improve the tax code this year to take an important step,” Mr. Blunt said Thursday. “Fights that can’t be won in the next few weeks can be won in this presidential term, but only if we take [this] step successfully right now.”
The Senate’s vote isn’t even the last word on the budget. The blueprint would have to be reconciled with the House version, which passed earlier this month.
Among other differences, the Senate budget provides leeway for up to $1.5 trillion in deficit-financed tax cuts, while the House version assumes a tax package that does not add to the deficit.
Sen. John McCain, chairman of the Armed Services Committee, said the spending levels set by the budget aren’t meaningful, and said the real numbers will have to be set in a bipartisan deal later this year.
He said the defense spending level set in the budget is $86 billion shy of what the Senate approved in another bill just last month. He said American troops are dying in training accidents because the Pentagon is short on cash.
“The Republican Party used to be unified in its support for a strong national defense. If our leaders in Congress and the White House do not immediately get to work negotiating a deal to lift the defense caps and fund the military at a level higher than what is in this budget resolution, I’m not sure we’ll be able to claim that mantle any longer,” he said.
