Senate Republicans have reached a tentative budget deal that would set the parameters for a tax overhaul being pursued by the party and President Trump, the Wall Street Journal reports.
Reuters notes the deal “could allow U.S. tax revenues to decline by as much as $1.5 trillion over 10 years, but they have not agreed on whether to prevent such losses from expanding the federal budget deficit.”
Senate Republicans are considering writing a budget that would allow for up to $1.5 trillion in tax cuts over the next decade, the Wall Street Journal reports.
Axios: “Writing a budget is the first step in working on tax legislation and adhering to its guidelines would let a tax bill pass the Senate with a simple majority. Details on the GOP tax plan are due next week. Putting a tax cut in the budget would put off decisions on how to pay for the cuts.”
Stan Collender: “There’s just one thing you really need to know about whether tax reform will happen by the end of this year: It’s about to take a very small group of senior policymakers more than six months to agree on the broadest of principles for what a tax reform plan should do…and the broad principles will be the easy part.”
“In spite of the nuanced optimism you hear from The Gang of Six, it’s very likely to take much longer than it did for those six people — only four of which actually have votes — to agree on the generalities.”
“Every one of the 535 members of Congress has individual and corporate taxpayers in his or her district or state and the nitty gritty, deep-in-the-weeds details will be extremely important to each representative and senator. At the very least they will all want to appear to have had an impact on the final product so there will be multiple time-consuming amendments offered both in committee and on the House and Senate floors.”
Washington Post: “The state and local tax deduction, or SALT, has long been a target for tax-policy wonks who see it as an unwise federal subsidy that is mainly claimed by the wealthy. But politics have always intervened: Thanks to the opposition of lawmakers in high-tax states, the deduction has survived every effort to clear out loopholes, including the last federal tax overhaul of similar ambition in 1986.”
“Now, Republican leaders have made clear the SALT deduction is on the table, and it has shaken up a number of blue-state GOP legislators who are warning that it could derail the ambitious tax plan Trump is now pushing.”
“Republicans spooked world markets in their ardor to cut spending when Democrat Barack Obama occupied the White House. Now, with a GOP president pressing for politically popular tax cuts and billions more for the military, few in the GOP are complaining about the nation’s soaring debt,” ABC News reports.
“The tea partyers and other conservatives who seized control of the House in 2010 have morphed into Ronald Reagan-style supply siders while the GOP’s numerous Pentagon pals run roughshod over the few holdouts. Tax cuts in the works could add hundreds of billions of dollars to the debt while bipartisan pressure for more money for defense, infrastructure, and domestic agencies could add almost $100 billion in additional spending next year alone.”
Senate Finance Committee chairman Orrin Hatch (R-UT) told CNBC that tax reform will take a lot of cooperation between the Democrats and Republicans.
He added that once the bill reaches the Senate floor there will be “doubling and tripling of the ideas of people who have been waiting for a long time… to put their own ideas and imprint on it.”
Said Hatch: “It’s much harder than health care.”
Jonathan Swan: “President Trump got a lot of attention for his Tuesday night dinner with three red-state Democratic senators, where he tried to win their support for tax reform. But here’s the thing: This was not the start of a bipartisan tax reform effort. This was the White House’s attempt to give Republicans a cushion in case they lose a few votes.”
“The White House did learn one lesson from the health care failure: It’s a mistake to rely on Republican votes alone. But the administration’s solution for tax reform is to give itself a little breathing room — not open the door to a broader bipartisan effort that would compromise what it wants to do. “
Playbook: “The Big Six — the tax writing chairmen, top GOP leaders and top White House advisers — are releasing a framework at the end of the month. The framework might or might not have rate targets, but our sources tell us it will be a meaty document. Then the committees will hold markups. Republicans are aiming to pass the budget in mid-October. If they get that done — far from a sure thing — they’ll have fewer than 20 legislative days to rally support around and pass tax reform. Oh yeah, they need to keep the government open.”
Jonathan Swan: “Republicans still have one big problem. The House and Senate have to reach an agreement on a budget resolution — which would set the broad outlines for tax reform — before they can work on a detailed tax reform bill. Yet conservatives like House Freedom Caucus chairman Mark Meadows aren’t ready to commit to voting for a budget resolution unless they know the tax reform details first. If Republicans can’t satisfy them, there’s no guarantee they’ll get past Step 1.”
President Trump “plans an aggressive travel schedule, taking him to as many as 13 states over the next seven weeks, to sell the idea of a tax overhaul as the administration tries to avoid repeating the communications failures of its attempt to repeal Obamacare,” Bloomberg reports.
“With a make-or-break legislative battle looming on taxes, the White House is moving to clean up a disorganized communications operation, said four people familiar with the effort.”
Playbook: “Republicans have not yet passed a budget — a prerequisite for tax reform. There’s talk they’ll take it up in the House in the last week of September, but the support is not nearly firm enough yet. There’s a chance there is no final action on the budget until October or November. Without a budget, tax reform talks are just that, talk.”
Politico: “Democratic Sens. Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana have been invited and are expected to attend, aides said. GOP Sens. Pat Toomey of Pennsylvania and John Thune of South Dakota are among the Republican attendees.”
“The three moderate Democrats are all up for reelection next year in states Trump won handily in 2016. They have also been closer to the president than other congressional Democrats. Each declined to join a letter with party leaders outlining conditions on tax reform and all three supported Supreme Court Justice Neil Gorsuch earlier this year.”
Playbook: “Democrats have been shut out of the tax reform process… Do you really think Donnelly, Manchin and Heitkamp’s votes can be bought with some chicken? By the way, we heard this dinner was originally slated to be only Democrats.”
Sen. Mitch McConnell (R-KY) told the New York Times that he thinks Democrats “were a tad premature in exuberantly celebrating the surprise spending deal they struck last week with President Trump.”
Said McConnell: “Let’s put it this way. The deal is not quite as good as my counterpart thought it was.”
“The reason? Mr. McConnell said that he insisted the newly passed legislation preserve Treasury’s ability to apply ‘extraordinary measures’ and shift money within government accounts to pay off debt and extend federal borrowing power. That will delay the need for another increase in the debt limit well beyond the December deadline that Democrats have been trumpeting as their big moment of leverage.”
House Republicans bristled at Treasury Secretary Steven Mnuchin’s pitch for them to vote for a three-month debt and spending extension “for me,” exacerbating divisions between Capitol Hill and the White House, The Hill reports.
Said Rep. Mark Walker (R-NC): “His performance was incredibly poor, and his last words, and I quote, were ‘vote for the debt ceiling for me.’ It was a very arrogant lecture that turned off more of the conference. I’m less sold than when I walked into the meeting.”
Rep. David Brat (R-VA) called the comments “unhelpful” and “intellectually insulting.”
Rep. Ryan Costello (R-PA) said the pitch was “about as well received as his wife’s Instagram post.“
Politico: “With Congress set to lift the debt ceiling into December as part of the deal, Trump floated the idea that the next time Congress votes to raise the debt ceiling, it could be the last. He said conversations should happen over the next three months, according to people in the room.”
“Schumer said such a move could not be accomplished now, but indicated he would talk to his caucus about considering structural changes to the debt limit in December, a conversation Trump supported.”
Jonathan Swan: “The House Freedom Caucus — a group of around 35 ultra-conservative House Republicans who can block their party’s leadership on key legislation — is in the final stages of drafting its own tax plan.”
“Instead of raising new sources of money to ensure their tax cuts don’t add to deficits, the Freedom Caucus is planning to embrace a non-traditional idea to extend the budget window. The idea, pushed by some conservatives, including Sen. Pat Toomey, is to change budget rules so that tax cuts that add to the deficit can last for 20 years or longer, rather than expiring after 10 years.”
“It’s a move designed to unsettle Republican leaders Paul Ryan and Mitch McConnell, who’ve been working behind closed doors to craft a tax plan with the White House.”
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