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House GOP Budget Would Tie Tax Reform to Spending Cuts
August 20 2017, 02:09 | Irvin Gilbert
Victoria Sarno Jordan
The House budget ultimately plans for trillions of dollars in mandatory spending cuts, but in the near term, it calls upon 11 committees to cut $203 billion altogether over a decade. Conservatives want deeper spending cuts - Rep. Warren Davidson called $203 billion "pretty soft" - but some moderates don't support using reconciliation under this budget to cut mandatory spending at all.
To view the full article, register now. "We really do need to know what's in the budget and what the effect of the health care bill, whatever it looks like, will have on revenue before we can do a thorough job".
The proposal would raise defense spending from $583 billion to $621.5 billion - $18 billion more than Trump had asked for - which includes funding for a border wall. All Republicans, including those in the Freedom Caucus, voted yes on it. While less optimistic than the White House's assumed 3 percent growth rate, both estimates far exceed the Congressional Budget Office's more conservative 1.6 percent estimate.
"I don't think there are $2 trillion of politically saleable offsets on the corporate side of the ledger", said Rohit Kumar, a former aide to Senate Republican leader Mitch McConnell who now serves as a principal in the tax policy group at the consulting and accounting firm PwC LLP. Once the current fiscal bill expires, Republicans lose that reconciliation directive and will resubmit for a new directive to pass tax reform through reconciliation. Changing that would require the support of Democrats.
But like the GOP's health care repeal-and-replace efforts and its moribund hopes to boost infrastructure, the GOP budget outline faces opposition from both wings of the party. A Politico-Harvard T.H. Chan School of Public Health survey found that 62 percent of respondents said they are against the plan, while 24 percent back it. (Republicans were split, with 40 percent supporting the proposal and 41 percent opposed.) Most respondents said the tax plan would not help the economy.
The House Budget Committee voted 22-14 along party lines to send the measure to the floor of the House for consideration by the full chamber, a day after the $4 trillion spending blueprint was unveiled.
The budget doesn't specify what those cuts should be, instead leaving it up to the House committees that authorize funding as well as the House Appropriations Committee - which draws up the legislation to actually set aside the money for federal programs - to decide. This budget will reverse that bad leadership with a combination of pro-growth policies, including comprehensive tax reform, welfare reform, healthcare and regulatory reform.
With that strategy in mind, they chose to move both overhauls through the budget reconciliation process - health care in fiscal 2017 and taxes in fiscal 2018 - to allow for a simple-majority vote in the Senate.
This resolution for fiscal year 2018 would cut mandatory spending by more than $200 billion, while also aiming to balance the budget in a decade.
Reeling from the collapse of their plan to repeal the Affordable Care Act, Republican lawmakers are now moving on quickly to the next big thing: tax legislation.
As proposed by House leaders, tax reform would essentially be deficit neutral, which means cuts to tax rates would be mostly "paid for" by closing various tax breaks such as the deduction for state and local taxes. "That's the only reason you do a budget. It does at least offer us a Plan A for getting to tax reform", said Rep. Tom Reed, a Republican from Corning who sits on the tax-writing Ways and Means Committee.
While defense spending would soar, domestic discretionary spending vital to federal programs and assistance operating federal agencies would be reduced by roughly 24 percent, from $554 billion this year to $424 billion in fiscal 2018.