The Senate Republicans have a big decision to make this week. Are they going to approve a budget?
Despite the slimmest of margins, made narrower by the absence of an ailing Sen. Thad Cochran (R-Miss.), Senate Republicans will try this week to adopt a budget that allows the party to cut taxes by $1.5 trillion. Their success isn’t assured, since Sens. Rand Paul (R-Ky.) and John McCain (R-Ariz.) have yet to commit to the plan. Securing the votes — assuming House Republicans then follow suit and accept the Senate version — makes it more likely that Republicans won’t be heading home empty-handed from the tax project. The budget will give them enough leash at least to slash individual rates temporarily, as they did in with the 2001 and 2003 Bush tax cuts.
Senator Corker of Tennessee is a clear skeptic of the framework that has been discussed for tax reform, but he’s indicated that he considers the vote on the budget a procedural move rather than an otherwise important document that sets out the spending priorities for his governing party. It sounds like he will not stand in the way of passing a budget, even though he’s definitely not yet on board with voting for any final tax product.
I’ve discussed this over and over again: the budget is needed to create a process known as “budget reconciliation.” Using this process, the Senate Republicans can pass a tax bill with only fifty votes and the vice-president breaking the tie. If they can’t pass a budget, they can’t use this process to avoid a filibuster and they will have to actually negotiate a tax bill with the Democrats. This isn’t the only procedural hurdle standing in the way of a successful tax effort, but it’s the first and most important one.
With Sen. Cochran unavailable, the GOP can only afford to lose one additional vote. Yet they still stand a better than even chance of prevailing on the budget because it’s seen not so much as a substantive bill over which you might haggle than as a permission slip to begin the process.
I don’t usually have any interest in offering the Republicans advice, but I am going to make an exception in this case. It would be a major mistake to vote for the budget.
Once they approve a budget, it will start a process much like the one they went down with the effort to repeal Obamacare. Only in this case, the likelihood of success depends much more on how you want to define success. If the idea is to enact a major tax reform reminiscent of the 1986 overhaul, the odds against that are 100 percent. If the idea is to pass a permanent tax cut that won’t sunset, the rules of budget reconciliation make this almost completely impossible because they won’t be able to create something that is budget neutral past a ten-year window. If, on the other hand, they’re willing to do something that expires after ten years and that isn’t all that ambitious, they have a decent chance of accomplishing their goal.
The first consideration for the Republican senators who will be voting on the budget this week is whether they want to roll the dice on some watered down tax cuts based on nothing better than a decent chance of success. Perhaps the consequences of failure are too great to contemplate and not even making the effort would be too catastrophic to countenance. Maybe a decent chance looks better than no chance.
But even assuming that they want to give it a shot, they should look at the kind of mess they’re headed into. Take the following as an example:
Tax-writers originally envisioned a full repeal generating some $1.5 trillion in revenue to help fund lower rates and immediate expensing of capital investments. But the proposed rollback of the tax code’s preference for debt financing has already sprung a number of leaks — with lawmakers talking up the possibility of carve-outs for farmers and ranchers, electric utilities, land purchases and others.
Likewise, the push by Republican leaders to scrap the deduction for state and local taxes is taking on water. Republicans in high-tax states, including New York, New Jersey, Pennsylvania and Illinois, have called the proposal a nonstarter. So, the GOP brass is hoping to limit the break for top earners, although how to define that group isn’t obvious.
They’re going to find themselves in a situation where they’re creating an unholy mess of a tax code with all kinds of carve outs and exceptions introduced solely to try to get every last vote that they’ll need, not because they make any sense or have any merit.
The resulting bill will be predictably awful. Consider for a moment the distorting incentives that would be created by something like this:
National Economic Council Director Gary Cohn channeled the sentiment on Monday, telling the annual meeting of American Bankers Association in Chicago that tax-writers are considering limiting a repeal of the interest deduction to corporations. That would mean businesses organized on the individual side of the code, including real estate partnerships such as the Trump Organization, could still claim the break.
The more you look at the ways that the tax code will be slapped together in a haphazard manner to secure votes, the easier it is to see both how difficult it will be to succeed and the high probability that the legislation is a disgrace that will burden anyone who supported it.
All of this can be avoided by simply slamming on the brakes now and refusing to authorize the budget that is needed to get this process started.
The person most likely to take this position is Senator John McCain, who has already said repeatedly that he doesn’t want to continue to try to push through Trump’s agenda using the budget reconciliation process. He wants “regular order,” which means a typical process with committee hearings and markups and an extensive amendment process. But it also means that the process will require the ultimate support of sixty senators.
Mitch McConnell can’t tell the party’s donors that he cannot pass a worthwhile tax cut. Donald Trump isn’t going to tell them that. The only way to avoid this mess is for a couple of Republican senators to kill the effort in the crib by refusing to vote for the budget.
It might seem like a giant betrayal, but if it saves the party from wasting months of effort on a process that can never achieve their main goals and has no better than a decent chance of resulting in (what will be) a terrible tax bill, then preventing the budget from passing will be an act of principled sacrifice that is in the medium-term interests of the party.
Of course, if McCain goes this route and Cochran can’t vote, there still needs to be one more Republican senator who is willing to stand up and introduce some sanity into the conversation. I wouldn’t place any bets on this happening, but it’s within the realm of possibility. For example, Sen. Rand Paul just announced that he will oppose the budget unless the leadership agrees “to cut billions in spending from the plan.” On the other hand, he also just voted for a motion to proceed to the bill.
If the budget fails, the Senate will regroup and the Finance Committee will begin looking at ideas that the Democrats could support. The donors will be furious, obviously, but also interested in seeing what they could get out of a bipartisan process.
Before long, it will be clear that both Trump and McConnell have been saved from a repeat performance of the Affordable Care Act fiasco. They’ll probably both see an uptick in their approval numbers once the Republican base gets over their initial disappointment.
And a bill that would have some support from the Democrats actually could be produced in time for the midterms, taking steam out of the narrative that the Republicans are too ideological to govern.
If the budget passes, it will ensure a disaster for the Republicans. It’s hard to convince them of this. They believe the exact opposite to be the case. But they’re wrong, and it won’t do them any good to find this out the hard way.
If those assholes of the GOP spent as much time actually working on useful plans for new legislation in regards to taxes and health care as they spent on reviving archaic laws to stop immigration and gay rights, they might have actually accomplished something.
If they had souls or hearts, they would review what their terrible plans to eviscerate our health care and upend our tax codes and rethink what the results will be.
But that’s an impossibility. They will screw over their own voters, and have done so already, just to reward their rich donors and corporate lobbyists. They will act on the advice of Nazi nationalists and billionaires because no one can stop them and they do not care as long as they get their money.
So, let the disaster happen and let them own it. We’ll have to keep fighing them as best we can.
Their admitted goal is to destroy the government of the United States. “Government is not the solution to our problem; government is the problem.” “I want to drown it in a bathtub.” The government (with the exception of the ‘justice’ system and the military) is simply a competing power center. There is no environmental or health care crisis in their world.
I can’t tell if the best way to achieve that destruction is via the methodical dismantling of the state as per Traditional Republicanism, or via the toxic flailing of a sociopath in the White House. That is, I’m not sure if they do more damage to the government by passing an evil tax plan that makes hundreds of millions of American suffer, or if they do more damage by failing to pass that plan, and using that failure to whip up the anti-American frenzy to an even more fevered pitch.
Gosh what do you call someone who wants to destroy the government of the United States? Where I grew up you called them traitors. I wonder what the founding fathers would have called them.
Has the Senate taken up the budget passed in the house? Is that what they are trying to get votes on? I’m unclear on that. Seems like what you’re saying is their ‘budget’ is a completely separate document than the House passed. The House has to accept the Senate version. What happens to the House version? It goes away?
The House Budget can’t possibly be good for this country. That it squeaked by seems to indicate it wasn’t perverse enough for the Freedom Caucus.
I want to keep needing CRs indefinitely. Is that even possible?
right now, the Senate budget is a completely different bill from what the House passed.
So two ships passing in the night then. Thanks.
Democratic capitulation on rates just because the GOPropaganda network starts chanting “tax and spend Democrats” will make the real situation much worse and conflate their policy with that of the GOP.
The must be some loud, public, simple, and needed tax code reforms that remove substantial parts of the arcane sections of the tax code.
Democrats must be seen as being for something demonstrably better in acting as solid opposition. Something more generally beneficial instead of the special carve-out for those that shelter their personal income in corporate forms.
What I’d do if I were Schumer is have Wyden come up with a framework to create a truly budget neutral tax reform that could bring down the nominal corporate rate a bit and fulfill some other Trump goals, like hitting hedge fund managers. I’d take that to the White House and say that if Wyden is allowed to drive the process, the votes can be there in the end. They key is to write a good bill that works on the merits, and challenge Trump to take it or face another epic failure.
I know there is not much incentive to help Trump in any way, but I really don’t think it’s in the national interest to let things continue along this reconciliation route. Blowing it up will be a victory in itself, on a whole lot of levels. Even for the GOP.
As an aside, wrong tactic with this kind of narc.
If you want to try manipulating him, it has to be thru praise or adulation somehow. He’s constantly looking for more of this supply. But no challenge – there’s no bottom. Unless the strategy is to provoke.
On the other hand, he reneges just as regularly as he lies – it’s just an advanced version of lying – so involving him in your solution is almost a sure dead end.
Don’t interrupt your enemy when he is in the process of making a mistake.
Your correct. The dems need to stand back and watch. They can come up with a plan b for the budget but they need to leave the donald out of the loop. Why would anyone at this point trust him? The GOP has had years to come up with their dream budget/tax cut and to date they have produced nothing they can agree on. Also, the dems cannot produce a save for nothing in return.
I believe the GOP/the donald have too many hostages. There are so many and every day they keep adding a new one. The hostages are going to start dying.
Helping Trump capitulate by allowing him to crow that he’s making America great again seems a good tactic just so long as the voters want more of what the Democrats proposed and less of what the Republicans proposed.
The point is having the Republicans in Congress have the pressure on them from their constituents because of the merits of the bill. And having the Democratic challengers of the Republicans being portrayed as the straight talkers. …and cutting through the RushBo and the ShockJocks doo-wop.
McCain is now considering his legacy. He will be dead in 1-2 years. What will be left?
If he has anything to say, it might be “regular order”. The Senate working by consensus from both sides. Amendments offered and voted on. Most bills with bipartisan support.
That is why he voted against the Obamacare health care bill. I would not be surprised to see the same stuff with the budget, and with taxes.
“Regular order” is a better epitaph than “Sarah Palin”, that’s for sure.
“But they’re wrong, and it won’t do them any good to find this out the hard way”
So why do you tell them, Martin?
ups, I see you answered the question already.
Nice Try, Booman, but I don’t think the GOP will take your advice. They have to be seen to be doing something, and that can’t include working with Democrats they have so successfully demonised. Their snake oil will be to blame all sorts of “moderates” like McCain for sabotaging their agenda. Trump needs bogeymen he can blame. Then he will campaign against them in 2018.
Actually achieving stuff is for wonks. You got to hate on people to get your base riled. If you actually solve a perceived problem that takes away another opportunity for hate. Trump’s schpiel will be that he tried but was frustrated by all the establishment and moderate Republicans. The answer is to elect radicals…
Why would the GOP care if the tax bill is terrible and creates an unholy mess? I would imagine that the donors are pleased as long as their after tax consultant taxes are lower than today and they make a healthy return on their donations.
And if they sunset in ten years, that is a) ten years of lower taxes and b) a reason to keep funding the GOP. Win-win as they say.
“Mitch McConnell can’t tell the party’s donors that he cannot pass a worthwhile tax cut.”
Well he could, but that would require getting off his knees, growing a spine and putting country over party. Not going to happen.
They’re committed to moving forward on a tax cut. They may not succeed but if they don’t there will be hell to pay. Look at how Wall Street thinks happy days are here again based on nothing more than anticipation of a big tax cut. Were it not to happen and the market crashed 10% or more, Trump’s claim to be faithfully stewarding the economy would be revealed as smoke and mirrors.
I’m more impressed with how he’s reversed himself on Health Care, now appearing to support a bipartisan bill that restores his cuts. He’s twisting like a pretzel.