House Republicans passed budget legislation Thursday morning, narrowly overcoming internal dissension and Democratic opposition to clear a major obstacle in the GOP’s quest to pass large-scale tax cuts.
The budget legislation authorizes special procedures that will allow Republicans to reduce federal revenues over the coming decade by as much as $1.5 trillion without Democratic help.
The bill passed by a vote count of 216-212. No Democrats voted for the budget Thursday, nor did 20 Republicans.
A key holdout bloc consisted of Republican lawmakers from states with high local tax burdens, who have resisted to the GOP’s plan to eliminate or at least scale back the income tax deduction for state and local taxes. Several members of that group threatened to hold up the budget unless their concerns were addressed.
No deal on the deduction emerged in the hours before the budget vote, but House leaders were able this week to convince enough of the balking lawmakers to advance the process. A highly anticipated meeting scheduled for Wednesday night between the holdouts and House leaders was cancelled shortly before it was set to begin, after party whips appeared to secure enough votes.
“We’re still working with them. There’s been no agreement, but there’s a lot of discussion about how to fix their problem,” said House Majority Whip Steve Scalise, R-La. “Not all the members from those states are going to support [the budget]. But they’re also working to help us solve the problem.”
Rep. Tom Reed, R-N.Y., a member of the tax-writing Ways and Means Committee who has been negotiating a deal on the deduction, said Wednesday he expected an agreement to be reached in the coming week. The committee’s chairman, Rep. Kevin Brady, R-Texas, said this week that he expects to release a draft bill by Nov. 1.
“Before the rollout of the whole tax legislation and bringing it to the floor, all those i’s and t’s will be dotted and crossed,” Reed said.
The budget’s passage came after months of wrangling between various factions of the Republican party, with adherents of supply-side economics facing off with deficit hawks, as well was with members with more parochial concerns.
The House Budget Committee crafted a spending blueprint that included a pathway to cutting $200 billion in federal spending over the coming decade, while envisioning a tax overhaul that did not add to the federal deficit. But the Senate version of the budget included did not provide a path for spending cuts and authorized a tax bill that would add up to $1.5 trillion to the deficit.
The House Republican leaders argue that cutting taxes will spark economic growth that will drive up federal revenues, ultimately offsetting the revenue loss. But Democrats, some rank-and-file Republicans and most economists dispute that claim.
“I know my Republican colleagues desperately want to believe that the tax cuts in their budget will pay for themselves and usher in a new era of economic growth, or at least they want the American people to believe that,” said Rep. John Yarmuth, D-Ky., the top Democrat on the House Budget Committee. “But the record is clear: This approach has failed time and time again.”
While congressional tax writers have been quietly crafting the legislation behind closed doors for months, Thursday’s vote formally kicks off the bill-writing process. House Speaker Paul Ryan, R-Wis., has called for the bill to clear the House by Thanksgiving. The Senate is expected to engage in a parallel process that will, if both chambers pass legislation, culminate in a conference to resolve the differences between the chambers.
Ryan warned in a Wednesday interview at a Reuters-hosted event that hundreds of lobbyists would soon swarm Capitol Hill, hoping to preserve the tax provisions treasured by their clients. He compared the legislative effort ahead to a whitewater rafting voyage.
“We’re about to go through Class 5 rapids, which is the biggest rapid you can go through,” he said. “We’ve got to make sure everybody stays in the boat, and we get the boat down the river.”
