Late changes intended to appeal to House, speed tax reform

The Senate on October 19, 2017, approved 51-49 an FY 2018 budget resolution (H. Con. Res. 71) after adopting an amendment with changes, including facilitating a $90 billion increase in defense spending, intended to make the resolution more appealing to the House and potentially speed the tax reform process.

If the Senate resolution can be passed in the House — potentially as soon as next week — it would eliminate the need for a conference agreement or other negotiations to resolve differences between the chambers, and the need for reconsideration of the resolution in the Senate. That would accelerate the process for tax reform given that House leaders have said a tax bill will not be released and processed until the budget is completed. President Trump has urged House members to accept the Senate budget resolution to avoid a conference, Axios reported yesterday.

The changes were included in an amendment offered by Senate Budget Committee Chairman Mike Enzi (R-WY), and reportedly were negotiated with House Budget Committee Chairman Diane Black (R-TN). Senator Enzi described the amendment as including technical changes to allow for House enforcement of the budget, though Senate Budget Committee Ranking Member Bernie Sanders (I-VT) asserted that the changes in the amendment were more significant. The Enzi amendment was approved 52-48.

Both chambers must approve the same resolution in order to authorize the reconciliation process that will allow a tax reform bill to pass the Senate by a simple majority (with the Vice President available to break a tie), rather than the 60-vote threshold necessary to overcome a filibuster. The Senate resolution's reconciliation instructions provide for a net tax cut of not more than $1.5 trillion over 10 years.

Senator Rand Paul (R-KY) was the only Republican to vote against passage of the resolution.

The Senate adopted by voice vote amendments by:

— Senator Rob Portman (R-OH) to establish a deficit-neutral reserve fund for consideration of "international tax provisions that provide or enhance incentives for businesses to invest in America, generate American jobs, retain American jobs, and return jobs to America"

— Senator Deb Fischer (R-NE) to establish a deficit-neutral reserve fund intended to maintain progressivity of the tax system

— Senator Marco Rubio (R-FL) to establish a deficit-neutral reserve fund for tax cuts for working American families, specifically the child tax credit

— Senator Joe Donnelly (D-IN) to establish a budget point of order against legislation that allows companies that have outsourced jobs to benefit from any tax breaks

Senator Jeff Flake's (R-AZ) amendment intended to make the American tax system simpler and fairer was approved 98-0.

Senate Democrats focused their amendments on the tax bill that would be facilitated through the resolution. Further, the Democrats highlighted that the budget would include mandatory spending cuts on programs like Medicare and Medicaid while providing for a tax cut that would increase the deficit. Democrats also asserted that taxes should be cut for the middle class and not higher-income individuals.

Among the amendments defeated were those by:

— Senate Finance Committee Ranking Member Ron Wyden (D-OR) to strike reconciliation instructions relating to tax reform, defeated 47-52

— Senator Maria Cantwell (D-WA) to establish a budget point of order against repealing the state and local tax deduction, which fell to a point of order (the motion to waive the Budget Act with respect to consideration of the amendment was defeated by a vote of 47-52)

— Senator Heidi Heitkamp (D-ND) to create a point of order against legislation that would increase taxes on taxpayers whose annual income is below $250,000, which fell to a point of order (motion to waive the Budget Act with respect to consideration of the amendment was defeated by a vote of 47-51)

— Senator Sherrod Brown (D-OH) to establish a deficit-neutral reserve fund providing tax benefits to "patriot" employers that invest in American jobs with fair pay and benefits (Patriot Employer Act), defeated 47-51.

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