29 September 2017 Senate FY 2018 budget clears path for $1.5 trillion tax cut The Senate Budget Committee on September 29, 2017, released an FY 2018 budget resolution that provides reconciliation instructions for the Finance Committee to write tax reform legislation that results in a net tax cut of $1.5 trillion over a 10-year period. The resolution, which the Budget Committee will mark up October 4-5, sets a November 13 target date for the Finance Committee to report out a tax reconciliation bill, though there is no penalty for missing a reconciliation deadline. Reconciliation will allow a tax bill to pass the Senate with the votes of as few as 50 senators (with the Vice President breaking the tie) and 20 hours of debate time, but the House and Senate must first agree to the same budget resolution. The House Budget Committee passed an FY 2018 budget resolution in July with reconciliation instructions that provide for deficit-neutral tax reform and a target reporting date of October 6. A House vote is planned for Thursday, October 5, and Majority Leader Kevin McCarthy (R-CA) said yesterday that changes to the resolution could be made at the Rules Committee prior to the vote. The House Freedom Caucus had withheld support for the FY 2018 budget resolution over insufficient information about the tax reform legislation it would facilitate, but now supports it following the September 27 release of the "Unified Framework for Fixing Our Broken Tax Code." Senate Budget Committee Chairman Mike Enzi (R-WY), also a member of the Finance Committee, said the budget resolution is "the first important step in providing Congress with the tools it needs to enact tax reform that will grow America's economy and strengthen hardworking families and small businesses." The $1.5 trillion tax cut figure that was previously agreed to by key Republicans on the Budget Committee is seen as accommodating revenue from dynamic scoring and use of a current policy baseline (which assumes extension of temporary tax provisions like bonus depreciation) that may not be counted in official revenue estimates for purposes of the reconciliation process. The budget resolution directs the Congressional Budget Office and the Joint Committee on Taxation to incorporate the budgetary effects of macroeconomic variables when each produces estimates of major legislation, in order to "guide" the Senate. Like the pending House budget, it follows a current law, rather than current policy, baseline. The budget would balance over the 10-year window, producing surpluses in 2026 and 2027, accomplished by "restraining federal spending, reducing tax burdens, and boosting economic growth." The Budget Committee said that includes $5.1 trillion in unspecified spending cuts, and summary tables also reflect $1.2 trillion in economic growth to result from the plan. With regard to health care, the budget resolution includes deficit-neutral reserve funds related to repeal and replace of the Affordable Care Act (ACA), extension of the Children's Health Insurance Program (CHIP), actions to address the opioid crisis, and extension of other health care provisions. While there is conceivably still room for action on health care reform, the instructions clearly message a shift in priority to tax reform. The FY 2018 Senate Budget Resolution also provides separate reconciliation instructions to the Senate Energy and Natural Resources Committee to "spur economic growth" and produce $1 billion in revenues for deficit reduction. While the instructions are not specific as to what this means, it is widely anticipated that the committee will seek to legislatively permit oil and gas exploration and development in a 1.5 million acre portion of the 19 million acre Arctic National Wildlife Refuge (ANWR) in Alaska, thereby generating an estimated $1.8 billion in federal leasing revenues. Opening ANWR has long been a priority for the State of Alaska and for Alaska's congressional delegation, notably Senator Lisa Murkowski (R-AK) who chairs the committee, but the existing prohibition on leasing was established by the Alaska National Interest Lands Conservation Act of 1980.
Document ID: 2017-1600 | |||||
