Budget outline passes in Senate

GOP aims to set up tax cuts

WASHINGTON — Republicans controlling the Senate muscled their $4 trillion budget plan through the Senate, turning back successive attempts by Democrats to derail GOP plans for a tax cut later this year.

The measure, which passed 51-49, sets the stage for tax legislation later this year that could pass through the Senate without fear of a filibuster by Democrats — and add $1.5 trillion to the deficit over the next 10 years.

President Donald Trump weighed in earlier Thursday, telling reporters, “I think we have the votes for the budget, which will be phase one of our massive tax cuts and reform.”

Only one Republican senator, Rand Paul of Kentucky, had expressed opposition to the budget, which shelves GOP deficit concerns in favor of the party’s tax-cut drive. He was the only Republican to vote against the measure.

The upcoming tax measure has taken on greater

urgency with the failure of the party to carry out its long-standing promise to dismantle former President Barack Obama’s signature health care law. Republicans have said failure on taxes would be politically devastating in next year’s midterm elections, when control of the House and Senate are at stake.

On Thursday afternoon, the Senate began a so-called vote-a-rama, a series of amendment votes.

The process allows senators to offer amendments to the budget resolution on any issue. But Democrats said they planned to focus on four key tax-overhaul topics intended to make Republicans cast politically awkward votes: tax cuts for the wealthy, tax increases for the middle class, reductions to Medicare and Medicaid spending and increases to the budget deficit.

“I would like and I am urging my caucus to limit it to four issues,” Senate Minority Leader Charles Schumer said Wednesday.

Sen. Ron Wyden of Oregon, the top Democrat on the tax-writing Finance Committee, proposed stripping the GOP of its ability to push through subsequent tax legislation without fear of a Democratic filibuster, arguing that a tax overhaul should be bipartisan — as was the tax overhaul effort signed into law by former President Ronald Reagan three decades ago.

“It’s just the opposite of the kind of approach Ronald Reagan and Democrats used in 1986,” Wyden said. “It’s going to polarize us rather than bring us together.”

Wyden’s amendment failed.

The Senate also rejected a Democratic budget amendment aimed at protecting the state and local tax deduction for individuals — preserving a contentious suggestion by Trump and congressional Republicans to repeal or reduce the tax break.

The chamber adopted a measure that would allow for reducing that tax deduction, which tends to benefit high-income taxpayers in high-tax states that tend to vote Democratic. That amendment, offered by Sen. Shelley Moore Capito, R-W. Va., was approved on a 52-47 vote, mostly along party lines.

It’s unclear whether or how any legislation will address the state and local tax deduction, which allows federal taxpayers to write off the cost of the state and local taxes they’ve paid. Roughly two dozen Republican House members in high-tax states have raised concerns that their constituents would be adversely affected by abolishing the state and local tax deduction.

Capito’s budget amendment doesn’t specifically call for eliminating the tax break, but says tax legislation “may include reducing” the deduction. Sen. Joe Manchin, D-W.Va., crossed party lines to vote yes, while Sen. Rand Paul, R-Ky., voted no.

While some Republican House members have complained, the state and local tax deduction issue isn’t as touchy for the GOP in the Senate; Republican senators generally represent lower-tax states. Still, House leaders have said they’re listening to their dissident members’ concerns, and the Trump administration has suggested it’s open to compromise on the issue.

The House passed its version of the budget last week. It calls for tax cuts that don’t add to the deficit and would pair the tax rewrite measure with $200 billion in spending cuts over the coming decade. Both plans seek to crack open a longstanding ban on oil and gas exploration in the Arctic National Wildlife Refuge.

MEDICARE, MEDICAID CUTS

Under Capitol Hill’s byzantine budget rules, the nonbinding budget resolution is supposed to lay out a longterm fiscal framework for the government.

This year’s measure calls for $473 billion in cuts from Medicare over 10 years and

more than $1 trillion from Medicaid. All told, Senate Republicans would cut spending by more than $5 trillion over a decade, though they don’t attempt to spell out where the cuts would come from.

If the measure’s cuts were implemented, the budget deficit would drop to $424 billion after 10 years and average about $540 billion a year over the life of the plan, the Congressional Budget Office estimates.

Republicans use different math, relying on optimistic predictions of economic growth that average 2.6 percent a year — while ignoring growing, chronic deficits run by Social Security — to claim that their budget could actually generate a surplus by 2026.

In reality, Republicans aren’t serious about implementing the measure’s politically toxic proposals to cut Medicare, food and farm programs, housing subsidies, and transportation. In fact, lawmakers on both sides are pressing to break open the measure’s tight spending “caps” on the Pentagon and domestic agency operations and pass tens of billions of dollars more in hurricane relief in coming days and weeks.

“Anything that we do here has to be completed in other committees in order to ever happen,” said Budget Committee Chairman Mike Enzi, R-Wyo. “But this budget does slow Medicare’s projected annual rate of growth by approximately 1 percent.”

Sen. David Perdue, R-Ga., emphasized earlier this month that the purpose of the budget blueprint is to pave the way for overhauling the tax code.

“Everything in here can be ignored, basically,” Perdue, a member of the Budget Committee, said at a meeting of the panel. He described the budget process as “a fraud being perpetrated on the American people.”

Paul was the only Republican to come out against the measure — despite wooing from Trump — while more moderate Republicans who bucked the party on health care earlier this year, such as Susan Collins of Maine, supported the effort.

Paul’s complaint was that the measure permits too much spending and abandons the GOP drive to repeal the Patient Protection and Affordable Care Act. An amendment by Paul to revive the 2010 health care law repeal failed by a 2-to-1 margin.

Details on the upcoming tax bill are still being worked out. It would permit lawmakers to use $1.5 trillion in debt-financed tax cuts to ease passage of a follow-up plan to sharply reduce corporate rates, cut taxes for most individuals, and eliminate taxes on multimillion-dollar estates.

“The fact is, most of the rest of the world has been about the business of improving their tax code while we have not,” said Sen. Pat Toomey, R-Pa. “This is our moment, our opportunity to catch up, and we could do it in a big way as long as we pass this budget.”

Senate Finance Chairman Orrin Hatch of Utah said Thursday that he’s aiming to release a draft of a tax bill early next month.