House Republicans adopted their budget resolution for fiscal 2018 Thursday. The vote was 219-206. The passage of the budget resolution begins the long-sought tax reform.
Bloomberg reports the House budget resolution includes major spending cuts demanded by Conservatives, even as the House focuses on passing a tax bill that could add as much as $1.5 trillion to the budget deficit. The special reconciliation procedures in the legislation allow Republicans to pass the bill over a potential Democratic filibuster in the Senate.
It’s not going to be easy.
Republicans are arguing among themselves over the size of proposed tax cuts, how much to add to the federal deficit, and which tax breaks to eliminate — in particular the deduction for state and local taxes, which would amount to a trillion-dollar tax increase mostly affecting blue states including New York, California and Massachusetts. Ending those deductions will offset lower individual rates and a higher standard deduction. Republican House members from high-tax states are seeking to lessen the tax increase on their constituents.
The Conservative House Freedom Caucus agreed to allow a vote only after the White House and GOP leaders revealed tax plan details last week, including a proposed corporate tax-rate cut to 20 percent from 35 percent. Members of the Republican Study Committee of House conservatives further complicated the process Tuesday by seeking more generous cuts in capital gains and dividend taxes and expanding businesses’ ability to fully expense investments.
The Senate Budget Committee plans to vote later in the day on its version of the 2018 budget. The full Senate vote is expected in two weeks. Republicans hope to produce a joint budget later this month. In order to agree upon a joint budget the House and Senate must resolve conflicts over spending caps. The House budget would allow $73 billion more in regular defense spending and $10 billion more in war funding than the Senate plan. The House would cut non-defense agencies by $5 billion, while the Senate budget doesn’t make cuts.
Hopefully this goes better than repealing ObamaCare.