House conservatives took flak this week for demanding assurances on tax reform before approving a budget resolution.
In their eyes, it's a bid to prevent the same outcome that befell the Obamacare replacement effort. Then, they approved a budget that was little more than a vehicle for repealing Obamacare with only 51 votes in the Senate. They went along with the "shell" budget to pass an Obamacare replacement in the House, only to see the Senate fail to do the same — and then use the legislative vehicle to consider "skinny repeal" and other legislation they hadn't originally contemplated.
"We passed a shell budget, and then we got a bill that was meaningless," said Rep. Mark Meadows, the North Carolina Republican who heads the House Freedom Caucus. "And we don't want to do the same thing on tax reform."
Now, House Freedom Caucus members say that they would need to see the basics of the tax reform idea before they could go along with a budget resolution. Budgets, in theory, are supposed to outline Congress' plans for spending and taxing. In reality, though, the critical aspect of passing a fiscal 2018 budget is to unlock budget reconciliation, a process that allows fiscal measures to pass with only 51 votes in the Senate, disarming the filibuster.
Once reconciliation is available, however, it could be used for different purposes. The conservative members sought assurances about the basic form of the tax reform under consideration.
For insisting on tax reform details, the conservatives caught flak from some elements of the Republican Party.
In a Wall Street Journal op-ed Thursday, former George W. Bush adviser Karl Rove wrote that the Freedom Caucus was the "biggest obstacle" to tax reform because it was holding up the budget process.
"The Freedom Caucus is itching to vote for a tax cut bill," responded Rep. Dave Brat, a Virginia member of the Freedom Caucus. "So, this is a total falsehood, intentional, for political reasons, as usual."
The problem, according to Freedom Caucus members, is not with them. After all, they voted for, and passed, an Obamacare replacement. It was the Senate that failed to live up to its end of the bargain.
And the administration and leadership have not yet spelled out a tax plan that would satisfy their fears that the legislative process could take a turn away from a conservative, supply-side vision of tax policy.
Instead, the administration's talks with Congress have dragged on for months without producing results. In the meantime, pressure has grown for them to act swiftly on taxes.
Republicans would likely lose in 2018 and 2020 "if we don't do a dramatic pro-growth tax cut that is also tax reform in the next couple of months and have it take effect so that we see economic growth," said Americans for Tax Reform President Grover Norquist.
Meadows outlined six items he wanted details on: The corporate tax rate, the tax rate on S-corporations and other businesses that file through the individual side of the tax code, the capital gains rate, the tax rates on individual incomes, whether businesses would be allowed to immediately write off investments, and whether corporate taxes would no longer be levied on foreign profits.
Those questions usually would be answered in the broad outlines of a tax plan. Both President Trump's campaign plans and the House Republican "Better Way" answered each of them.
On Thursday, Treasury Secretary Steven Mnuchin indicated that some of the questions about tax rates and other major considerations would be addressed in the document that congressional leaders and the Trump administration plan to announce the week of Sept. 25.
Nevertheless, Sen. Orrin Hatch, chairman of the Senate Finance Committee and one of the members of the leadership-White House negotiations, also suggested at a hearing that the document wouldn't necessarily bind the tax-writing committees on every point. Instead, he said, the document would include "guidance or potential signposts" for legislation.
The top taxwriter in the House, Ways and Means Committee Chairman Kevin Brady, opposed the idea of waiting to have the tax plan in hand before proceeding with the budget resolution in the House.
Budget reconciliation would be the path forward for the bill, he said at an event hosted by Politico. "We're not going to take off until we know that runway's in place," he said.
The issue is that if Congress doesn't pass a budget and unlock reconciliation, tax reform would require 60 Senate votes. To reach that threshold, Republicans would need to secure at least eight Democratic votes. To do so, they would have to calibrate the tax plan to be more enticing to Democrats, rather than the bold supply-side version they've hinted at.
"That tax package is going to look drastically different," said Rep. Tom Reed, R-N.Y., a centrist member of the Ways and Means Committee.
"Let's get this done; move the ball forward," he said of the budget vote. "Fifty-one votes is the more practical and reasonable expectation of being successful in the Senate, in my opinion."