Senate passes budget plan
Vote is key step in effort to craft legislation that overhauls taxes
The Republican majority in the Senate approved a budget plan for 2018, clearing a key hurdle in their quest to pass a massive tax overhaul.
Approved 51-49 on Thursday night — Kentucky Republican Sen. Rand Paul joined Democrats in opposing it — the budget differs significantly from one passed by the House on Oct. 5, especially in the amount the national debt can be raised by tax cuts.
Each chamber must pass identical measures to have any effect. But even then, the budget’s real impact is not on how much the government will spend or borrow — it’s how much it will tax, because the measure included language that would prevent a tax bill from being filibustered by Democrats later this year or next year.
But many more battles lie ahead. Here’s a look at what comes next.
“Even as we support this resolution as a means to achieve meaningful tax reform, we must acknowledge the fact that the underlying budget contains an insufficient level of funding for national defense.” Sen. John McCain, R-Ariz.
WHAT THE BUDGET DOES
The biggest thing — which senators from both parties emphasized this week — is the passage of “reconciliation instructions” that tell the Senate Finance Committee that a tax bill cannot be filibustered if it adds $1.5 trillion or less to the deficit.
Filibusters require 60 votes to break, which means Democrats could derail the tax bill even though they are in the minority. A bill brought up under reconciliaor tion requires only 51 votes to pass, and Republicans hold 52 seats (plus, they have Vice President Pence to break a 50-50 tie).
The budget also includes reconciliation language that the energy committee could use to ease restrictions on oil drilling in the Arctic, so a bill that is brought up to do that also may not be filibustered.
Over the next 10 years, the budget calls for $473 billion in cuts from Medicare and $1 trillion from Medicaid. They are part of $5 trillion in cuts mentioned overall, but most are not specified.
The budget resolution also sets broad spending levels for federal departments, which the Appropriations committees are supposed to use to write more detailed specific spending bills for the 2018 fiscal year.
WHAT IT DOESN’T DO
It is not a law, so the budget cannot actually cut or raise spending taxes. And this year, it is widely assumed the spending levels for the fiscal year — which actually began Oct. 1 — will not really be used by appropriators.
That point was emphasized by Sen. John McCain, the Arizona Republican who chairs the Armed Services Committee. He was a potential holdout on the budget resolution because he believed spending levels for the Pentagon were set too low, but he agreed to vote for it because of the tax language.
“Even as we support this resolution as a means to achieve meaningful tax reform, we must acknowledge the fact that the underlying budget contains an insufficient level of funding for national defense,” McCain said.
Other than the reconciliation instructions for the Finance Committee, the budget does not include any of the tax proposals spelled out in September.
Nevertheless, Republican senators pointed to tax relief for working families and corporations as a reason to support the bill, while Democrats said tax cuts for the rich and damage to Medicare and Medicaid were reasons to oppose it.
Because the bill was not binding, Republicans argued Democratic attempts to amend the budget to put in restrictions were premature.
Over the course of two days, the Republican majority voted almost en bloc against amendments that included a requirement that no one making $250,000 or less would face a tax increase, to prevent tax cuts from increasing the deficit, to require a “score” on a tax bill’s impact from the Congressional Budget Office before a vote could be taken and to prevent cuts to Medicare or Medicaid.
WHAT HAPPENS NOW
The budget approved by the House on Oct. 5 said tax cuts had to be offset with tax increases or spending cuts and could not add to the deficit; the Senate measure would allow debt to increase by $1.5 trillion.
The House measure also required $200 billion in deficit reduction be found later through reconciliation, while the Senate measure only included a token $1 billion reconciliation cut.
Either the House must pass the Senate’s version, or both chambers must appoint a conference committee to develop a compromise.
Going to conference could add a week or two to the time it would take for a tax bill to actually be introduced. But the Senate tried to accelerate the timeline on Thursday night by adding language sought by House leaders.
Once the budget is finished, work on a tax bill would begin in the House Ways and Means Committee.
Also, both chambers have to agree on spending levels to prevent a shutdown.