If congressional Republicans are going to enact their ambitious and complicated tax overhaul, they’re eventually going to have to agree to things many of them don’t particularly like in service of the larger goal. That may involve eliminating some loopholes but not others, making some people pay more so most others can pay less, or increasing a deficit they vowed to shrink.
In other words, they’ll have to make concessions—that necessary evil of deal-making which Republicans often rejected in eight years of opposing Barack Obama and during the trying first year of the Trump administration.
On Thursday, however, the House will take an important practice run at compromise, when GOP lawmakers plan to vote on a Senate budget resolution that few of them enthusiastically support. The budget is a means to an end for tax reform, establishing the parameters for legislation while unlocking the reconciliation process that will allow Republicans to pass it with a filibuster-proof 51 votes in the Senate. House Republicans narrowly passed their own budget resolution earlier this month, but rather than spend the next few weeks bridging the gap with the proposal Senate Republicans approved last week, House leaders decided just to swallow hard and accept their version in the interest of time.
“This speeds up tax reform by more than two weeks, so it starts the process faster so we can get this done this year,” House Majority Leader Kevin McCarthy said Wednesday morning on Fox News. That’s the argument President Trump made privately to Republicans in a conference call on Sunday, urging them to put off a fight over the budget so they can skip to the bigger and more important one over taxes.
The biggest difference between the House and Senate proposals is in fiscal philosophy. House Republicans called for deficit-neutral tax reform and an extra $200 billion in cuts to mandatory spending programs, while the Senate version ignores the extra spending cuts and allows the tax bill to add $1.5 trillion to the deficit over 10 years. “The key piece here is urgency,” Representative Dave Brat of Virginia, a member of the conservative House Freedom Caucus, told me on Wednesday.
The Freedom Caucus held up passage of a House budget earlier this year because they wanted to see at least some of the details of the tax plan the leadership was drafting in secret. Frustrated with the delays on tax reform, the group reluctantly agreed to back the Senate budget this week in exchange for a commitment from party leaders to unveil the long-awaited tax legislation in the next two weeks. But the bigger concession conservatives have made is an acknowledgment that most Republicans in the Senate—not to mention Democrats—have no interest in the cuts to entitlement programs that many in the party have been pushing for years. “The spending up here is the swamp,” Brat told me. “It doesn’t look like we have any way of fixing that.”
Conservatives, for once, are going to take what they can get. “We’ve asked for tax reform and we’ve asked for spending reform. The Senate has said you can only have one,” Representative Scott Perry of Pennsylvania said Tuesday at an event hosted by the conservative Heritage Foundation.* “We’re not thrilled with it, but we understand the situation.”
GOP leaders expressed confidence the Senate budget will pass, but it’s no sure thing. Democrats are uniformly opposed to it, and Republicans lost 18 of their own members when the House voted on its own proposal in early October, 219-206. They only have a few more votes to spare to keep a majority, and GOP leaders were reportedly scrambling on Wednesday evening to nail down support.
Several members from New York and New Jersey who backed the earlier version are threatening to vote no on Thursday unless the leadership agrees to a deal on the state-and-local-tax deduction in the upcoming tax bill in advance. The provision has emerged as a stumbling block in the tax reform debate; senior Republicans want to scrap the deduction to pay for steeper rate cuts, but lawmakers from higher-tax states are worried it will result in a net tax increase for many of their middle-class constituents.
Nor are all conservatives on board with the Senate budget. “I find it a little condescending to be asked to vote for a budget that nobody believes in when we don’t even get to see the tax bill that’s supposed to be the great savior of the American economy,” said Representative Matt Gaetz of Florida, a first-term member who voted for the House budget but warned he is “not there” on the Senate version. Representative Justin Amash of Michigan denounced the proposal as “a big-government budget” that conservative leaders would have criticized under President Obama. “What happened to fiscal conservatism?” he asked on Twitter.
Chances are that Republican leaders will find the votes for the budget, if only because rank-and-file members know they’ll have another chance to fight over the details of tax reform later on.
Ryan has taken to comparing the situation to a white-water rafting trip. “We’ve been going through Class 3 rapids, which is nice. It’s a pleasant ride. Everybody pretty much stays in the boat,” he said Wednesday during an interview with Reuters. “But we’re about to go through Class 5 rapids, which is the biggest rapid you can go through. And we’ve got to make sure everybody stays in the boat and we get the boat down the river.”
Republicans have yet to reach the tax-reform gantlet, but Thursday’s budget vote is their first test of the choppier waters to come.