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Coming off a week-long recess and without any significant legislative victories this year, the pressure is on the Senate this week to pass the FY 2018 budget resolution, S.Con.Res. 25, which provides reconciliation instructions for fundamental tax reform. The House passed its own version of the FY 2018 budget, H.Con.Res. 71, on October 5 by a vote of 219 to 206.
The Senate Budget Committee, chaired by Sen. Mike Enzi (R-Wyo.), marked up S.Con.Res. 25, on October 5 on a party-line vote. The week-long recess that followed after the committee mark up puzzled many conservatives, who are anxious for action on tax reform.
While the spending levels in the budget are frustrating, the ultimate purpose of the budget resolution is the reconciliation instructions for tax reform. Section 2002 states:
The Committee on Ways and Means of the House of Representatives shall submit changes in laws within its jurisdiction that increase the deficit by not more than $1,500,000,000,000 for the period of fiscal years 2018 through 2027.
For those wondering why the House Ways and Means Committee is so important in this process, Article I, Section 7 of the Constitution requires that legislation dealing with revenue begin in the House. Ways and Means is the chief tax-writing committee in that chamber. The Senate Finance Committee handles tax-writing on the Senate side.
The Senate's budget resolution differs from the one passed by the House in several ways, including spending levels, policy priorities, and even on the bill produced for tax reform. Although the Senate's budget allows for tax reform bill that creates a $1.5 trillion budget deficit, not accounting for increased economic activity to make up for the static reduction in revenue, the House-passed budget calls for a tax reform bill that does not increase the budget deficit. House and Senate negotiators will have to work out these differences in a conference committee.
Before House and Senate negotiators can work out their difference, though, the Senate has to pass its budget. It's unclear whether Majority Leader Mitch McConnell (R-Ky.) has the votes. With a 52-seat majority, McConnell can afford only two Republicans to defect, allowing Vice President Mike Pence to cast the tie-breaking vote.
Whether Sen. Rand Paul (R-Ky.) will vote for the budget is an open question. He has been critical of the tax reform framework, relying on a "study" produced by a leftist think tank. Unsurprisingly, the leftist think tank came to questionable conclusions about the framework's impact on the middle class. Sen. Paul also has understandable concerns about spending. Sens. Susan Collins (R-Maine) and John McCain (R-Ariz.) have been more than willing to light a match and set the party's agenda on fire. Additionally, Sen. Thad Cochran (R-Miss.) is in poor health, leading to speculation whether he'll return to Senate this week to vote on the budget resolution.
The House has gotten the job done to get the process started. It's time for Senate Republicans to do theirs so negotiators can reach a final agreement on the budget resolution, which, by the way, still has to be approved by both chambers before the House Ways and Means Committee can get to work on an actual piece of tax reform legislation.