House narrowly passes budget, paving way for $1.5 trillion tax cut

WASHINGTON — The House on Thursday sounded the starting gun on legislative efforts to cut taxes by as much as $1.5 trillion over the coming decade, narrowly clearing a budget blueprint that will allow a tax bill to pass Congress without any Democratic votes.

But the 216-212 vote hinted at how difficult actually legislating a tax overhaul could be. The budget measure cleared Congress over the loud protests of House members from high-tax states like New York, New Jersey and California, who worry that the blueprint will doom the current deduction for state and local taxes — a deduction of great importance to taxpayers in their states.

Twenty Republicans voted against it, 11 of them from New York and New Jersey.

"This is a big issue, and it has to be resolved," Rep. Tom MacArthur, R-N.J., said on the eve of the vote. "Tax reform is good for the country; it's just not good for the country when it's on the back of six states. That's the problem."

Final approval of the budget measure clears the way for House leaders to unveil their tax plan next Wednesday, with a formal bill drafting expected by mid-November. The high-stakes legislative sprint could affect households in every state and businesses in every industry, with enormous political consequences for President Donald Trump and Republicans in Congress.

The budget measure would allow for a tax bill that adds as much as $1.5 trillion to federal deficits over a decade, at a time when the federal government is already piling up more and more debt, which has now topped $20 trillion. The deficit for the 2017 fiscal year, which ended Sept. 30, totaled $666 billion, an increase of $80 billion from the previous year.

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The outline of a tax plan unveiled in September would cut the corporate income tax rate to 20 percent, from 35 percent, collapse individual income tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent, and double the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. But the hardest decisions on how to mitigate the costs of the proposal have yet to be made.

The blueprint, as unveiled, would cost the Treasury more than $2 trillion over a decade, according to estimates by tax-writing experts. Now Congress must now find a way to force those proposals into a $1.5 trillion budget hole.

Disagreements on how to do that have begun spilling into public view. In addition to the dispute over the deduction for state and local taxes, Trump and the House's chief tax writer, Rep. Kevin Brady of Texas, have collided over the issue of retirement savings, another delicate issue.

Republicans hope that by the end of the year, they will be able to deliver to Trump the first significant revamping of the tax code since the Reagan administration, a feat that would show that unified Republican government can take on a big challenge and produce success.

But overhauling the tax code is an exceedingly difficult task, as evidenced by the decades that have passed since it was last achieved. And in the first year of Trump's presidency, Republican lawmakers already failed in their long-promised quest to repeal the Affordable Care Act, an outcome that makes the tax effort even more critical to the party's fortunes.

The budget resolution approved Thursday, for the 2018 fiscal year, ostensibly maps out spending and revenue levels for the federal government. But its passage is meaningful largely because of the special procedures that it unlocks.

The budget measure contains parliamentary language that will shield a tax bill from a Democratic filibuster in the Senate, allowing it to pass with the approval of only 50 senators in a chamber where Republicans hold 52 seats. It also could pave the way for lawmakers to open the Arctic National Wildlife Refuge in Alaska to oil and gas drilling.

In order to allow the tax effort to move along quickly, Republicans in the House agreed to pass the budget plan that the Senate approved last week.
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The House had passed its own budget measure earlier this month, but by agreeing to the Senate plan rather than trying to meld the two documents, the timeline for passing a tax measure can be sped up.

In the end, the eagerness to tackle the tax overhaul ended up trumping other matters — including fiscal concerns that have been a central issue for many conservative Republicans.

For one thing, the House's previous budget blueprint would have called for a more aggressive approach on cutting spending. In addition to laying the groundwork for a tax bill, the House's plan would have instructed committees to come up with legislation that would produce about $200 billion in savings. The House's plan also called for a tax overhaul that would not add to the deficit.

House Republicans were "asked to vote for a budget that nobody believes in so that we have the chance to vote for a tax bill that nobody's read," Rep. Matt Gaetz, R-Fla., complained this week.

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Rep. Diane Black, R-Tenn. and the chairwoman of the House Budget Committee, acknowledged that taking up the Senate plan was not an ideal outcome.

But she talked up the promise of overhauling taxes.

"Put simply, we have the opportunity to make history by reforming our tax system for the first time in nearly three decades," she said. "President Trump is with us on this, and I agree that we must move quickly."

Democrats continued their drumbeat against the tax effort, warning that Republicans were preparing to cut taxes for the rich.

Rep. John Yarmuth of Kentucky, the senior Democrat on the House Budget Committee, said the budget measure was "not a real effort at responsible budgeting."

"It is a means to an end," Yarmuth said, "a single-minded plan to make it easier to enact tax cuts for the wealthy and big corporations regardless of the consequences for everyone else."