On October 5, 2017, the House approved 219-206 an FY 2018 budget resolution (H. Con. Res. 71), marking another step toward unlocking reconciliation instructions for tax reform that will be provided if the House and Senate agree to the same resolution. The Senate Budget Committee's consideration of its FY 2018 budget resolution is ongoing.

The reconciliation process will allow a tax bill to pass the Senate by a simple majority, with the votes of as few as 50 senators (with the Vice President breaking the tie). This is seen as essential given that Republicans hold only 52 seats in the Senate. The House Budget Committee approved the resolution in July, but conservative members withheld support until seeing tax reform details in the "Unified Framework for Fixing Our Broken Tax Code" released September 27.

"Today, the House passed one of the most significant budgets many of us will ever vote on — a budget that paves the way for once-in-a-generation, transformational tax reform," House Ways and Means Committee Chairman Kevin Brady (R-TX) said.

Reconciliation instructions under the House resolution provide for deficit-neutral tax reform. The instructions are also written to call on 11 House committees to achieve $203 billion in mandatory savings over 10 years, including $52 billion from Ways and Means.

The Senate FY 2018 budget resolution unveiled last week provides reconciliation instructions for tax reform legislation that results in a net tax cut of $1.5 trillion over a 10-year period. The $1.5 trillion figure is seen as accommodating revenue from dynamic scoring and use of a current policy baseline (which assumes extension of temporary tax provisions) that may not be counted in official revenue estimates for purposes of the reconciliation process.

The Senate instructions do not call for mandatory savings in the same way as the House resolution. The Senate document does envision a balanced budget over the 10-year window, with surpluses in 2026 and 2027, through $5.1 trillion in unspecified spending cuts and $1.2 trillion in additional economic growth.

The House and Senate will need to resolve differences in their budget resolutions after the Senate passes its version, and then each will need to pass the same resolution for reconciliation instructions to take effect. The Senate is out of session next week and may consider the Senate Budget Committee resolution in the full Senate upon returning the week of October 16.

The Senate Budget Committee has begun consideration of amendments to its resolution, and several filed from the Democratic side reflect their concerns about Republican tax reform plans. For example, there are amendments that are intended to: strike the reconciliation instructions; require that no tax cuts be provided for the top 1% of Americans by income; prohibit taxes from being raised on the middle class; prevent reliance on revenue estimates other than those from the Congressional Budget Office and Joint Committee on Taxation; and prevent tax cuts for companies that move US jobs overseas.

Senator Bob Corker (R-TN), who is not running for re-election next year, said he won't back tax legislation that adds to the deficit with dynamic scoring taken into account.

The House resolution is attached.

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ATTACHMENT

House Resolution