In order to
preclude a Democratic filibuster in the Senate, Republicans must move their
agenda under special rules for “budget reconciliation”. As I explained in more detail last December, reconciliation
is possible when Congress approves a concurrent budget resolution for a fiscal
year that sets revenue and direct spending targets and instructs specific committees to report out legislation that
closes the gap between current law and those targets.
Senate precedent
holds that each budget resolution may authorize only one reconciliation bill
dealing with direct spending and only one reconciliation bill dealing with
revenues; if a reconciliation bill, such as the pending health care proposal,
contains both direct spending and revenue provisions, that is the only
reconciliation bill allowed. Therefore,
as long as the health care bill is in progress, it makes reconciliation
procedures unavailable for either additional tax legislation or further
reductions in direct spending. This
likely explains much of the urgency the Republican leadership has felt to move
the highly unpopular health legislation quickly.
The health care
legislation has been moving under a budget resolution Congress approved for
fiscal year 2017 – the year that is now almost three-quarters over – shortly
after convening in January. Once the
health care bill is out of the way, Congress can pass a new budget resolution
for fiscal year 2018 with reconciliation instructions for other tax and budget
cuts, together or separately. (Budget
resolutions, like reconciliation bills, are immune from filibusters.)
Thus, as long as
Republicans are trying to pass their health care bill, they cannot finalize a
budget resolution to authorize reconciliation procedures to pass their tax and
programmatic cuts. Conversely, once they
give final approval to the 2018 budget resolution, they strip the health care
bill of reconciliation status and essentially write its epitaph. (Republicans apparently believe that, if they
can win initial Senate passage of their health care bill before finalizing a
2018 budget resolution, any resulting conference agreement would retain
reconciliation protection. This far from
clear: once Congress has established new targets under a new budget resolution, the old targets no longer apply and hence do not need current law to be "reconciled" with them.)
Although Majority
Leader McConnell has expressed a strong desire to move the health care bill
through the Senate before the July 4 recess at the end of this week, he really
does not have to do so. Many observers
believe that Republicans will wait to move their tax and programmatic cuts
until after Labor Day – so that Members do not have to defend those proposals
to constituents over the August recess – and hence they likely do not need to
pass a new budget resolution until then.
In addition to
facilitating the enactment of revenue and direct spending legislation, budget
resolutions also are important in guiding the appropriations process. When the process moves as intended, Congress
approves a budget resolution during the Spring before the start of a fiscal
year, setting out the aggregate amount available to be appropriated for
discretionary programs. 2 U.S.C. §
632(a). Shortly afterwards the two
appropriations committees divide up this amount among their twelve
subcommittees (so-called “302(b) allocations”).
Id. § 633(b). These allocations determine, for example, how
available funds will be divided between programs in the Departments of Labor,
HHS and Education, those in the Department of Homeland Security, those in the
Departments of Transportation and HUD, etc.
Although Members not on the appropriations committees lack any direct
role in setting these allocations, at least the allocations give Members some
sense of how the funding levels in the first appropriations bills they consider
will affect what is left for those at the end.
Without a budget
resolution for 2018, and hence without public 302(b) allocations, the leadership
is bringing to the House floor the appropriations bills of the subcommittees
governing topics that Republicans most favor, such as defense, and giving them
generous funding. By the time the final
bills come up for consideration, likely to include Labor-HHS-Education and
Interior, Environment and Related Agencies, most of the money allowed for
discretionary programs will all have been committed elsewhere, forcing deep
cuts in those last subcommittees’ bills to avoid automatic across-the-board
cuts (“sequestration”).
In enacting their
tax cuts, Republicans face a fundamental choice: whether to pay for them. The scope of the revenue losses that both
House Republicans and President Trump propose would be difficult to offset
under any circumstances, and few Republicans have the stomach to justify
raising taxes on one group to pay for cutting taxes on another. The quick and ignominious death of Speaker
Ryan’s border adjustment proposal shows that.
Thus, a “revenue-neutral” tax bill seems off the table.
Some Republicans have
been talking instead about a “deficit-neutral” tax cut bill, one that would be
paid for with cuts in direct spending programs.
With the Medicare plus the Old-Age and Survivors’ portion of Social
Security consuming 64% of direct spending and likely off-the-table, cutting the
remaining direct spending programs enough to pay for tax cuts of this magnitude
would require eviscerating their core functions. As severe as have been the cuts Speaker Ryan
has proposed over the years, those cuts have never reached the level that would
be required to pay for this tax legislation.
Alternatively,
congressional Republicans could enact tax legislation that is not paid for and
adds to the deficit (even after its estimated impact is obscured with the “mandatory
scoring” they have ordered the Congressional Budget Office and the Joint
Committee on Taxation to employ).
Although reconciliation’s protections against filibusters were
established to facilitate deficit reduction,
that assumption was never written into the Congressional Budget Act. As a result, Republicans have repeatedly used
reconciliation for tax cuts that dramatically add to the deficit.
The Congressional
Budget Act does, however, prohibit measures that increase the deficit in any
year beyond those covered by the most recent budget resolution. 2 U.S.C. § 644(b)(1)(E). Thus, when Congress used reconciliation to
enact President Bush’s deficit-increasing tax cuts, it had to put an expiration
date on most of them so that they would not increase the deficit beyond the
ten-year period covered by the applicable budget resolution. Although congressional Republicans strongly
pushed for making those tax cuts permanent when that expiration date arrived – and
Democrats had little appetite for being accused of raising taxes by not
approving an extension – President Obama and congressional Democrats were able
to allow some tax cuts for the very wealthiest people to expire as part of a
budget deal with Republicans.
Seeking to protect
their deficit-expanding tax cuts for as long as possible, some congressional
Republicans have suggested extending the period covered by the budget
resolution from ten years. Budget
resolutions have covered ten-year periods for several decades because both
parties recognized that projections beyond that range are too rough to allow
coherent budgeting. But the assumption
of ten-year budget resolutions, like the assumption that reconciliation was
only for deficit reduction, was not written into the Act. So if Republicans decide to pass a fifteen-,
twenty-, or even twenty-five year budget resolution, they apparently can use
reconciliation to enact tax cuts that increase the deficit by an unlimited
amount during that period. One imagines
that, as soon as such legislation is signed, they will go back to proclaiming
that budget deficits are robbing our children and need to be brought down with
spending cuts right away.
Even if
Republicans do not decide to pay for their entire tax bill with programmatic
cuts, they appear likely to include reconciliation instructions to several
committees, requiring them to report out legislation that would slash programs
within those committees’ jurisdictions.
Committees rarely disregard reconciliation instructions because their
chamber’s budget committee can propose budget cuts to reach the reconciliation
instruction if the committee of jurisdiction does not.
Looming over all
of this is the statutory debt limit, which the federal government appears
likely to reach some time between early September and early October. With many Republicans having won seats after
attacking Democrats for voting to raise the debt limit, they are loathe to vote
to raise it themselves (although not reluctant to vote for tax legislation that
will make further increases in the debt limit necessary). Enough Republicans seem likely to play “chicken”
with the debt limit that it likely will need Democratic votes to pass. To date, the Democratic leadership has
insisted that they will only support a “clean” debt limit bill, one lacking any
other substantive provisions. Many influential
Republicans, however, are insisting that any debt limit bill include
substantial spending cuts. In the end, a
“clean” debt limit bill passing with mainly Democratic votes seems most likely,
but doing this at the same time deficit-raising tax legislation – and painful
budget cuts – are moving could harden positions and increase the risk that the
two sides miscalculate. By effectively
giving Congress permission to put the debt limit off until September, the Trump
Administration has left very little time for any missteps to be corrected.