Instead, Senate Republicans will have to make significantly different choices to make the bill comply with the upper chamber’s more stringent rules. Then, the two chambers will smooth over differences in reconciliation.
“The goal is to reconcile this at the end,” House Ways and Means Chairman Rep. Kevin Brady, R-Texas, said Friday, speaking at a public Politico interview.
“I actually believe having slightly different — or maybe even substantially different — designs to hit that target, that’s part of the process,” Brady said of passing tax reform.
The process won’t be perfectly harmonized, even though the House, Senate, and White House talked for months to arrive at a common framework to allow the entire party to be united in writing the bill.
One major procedural problem is that the House bill, as written, could not pass the Senate with only Republican votes.
The budget reconciliation process that allows Republicans to bypass the Democratic filibuster requires, via what is commonly known as the “Byrd Rule," that legislation not add to deficits beyond the 10th year. That rule is separate from the requirement that the bill add at most $1.5 trillion to deficits in the first 10 years, which Republicans imposed on themselves.
Yet the House bill would appear to fall afoul of the Byrd Rule. The official score of the bill, from Congress’ Joint Committee on Taxation, showed the bill running major deficits in the 10th year, an indication that the red ink would continue in the out-years. The Tax Foundation, an outside think tank, also found Friday that the bill would add to deficits in the second decade.
House Republicans said that they were aware of the difficulties the bill would face in the Senate, but that they decided not to reshape their own bill to meet the Senate’s rules, sacrificing some of their priorities to make the numbers add up.
“Obviously, we were sensitive to the issues of the Senate, but at the end of the day we wanted to put our bill out and do the best we could to honor the commitment we had to growth and tax reduction for middle-class, hard-working Americans,” said Rep. Tom Reed of New York, a Republican member of the Ways and Means Committee. “I think we found that sweet spot.”
In the Senate, lawmakers are more likely to strategize about meeting the Byrd Rule as they draft legislation. Senators are apt to weigh a number of different legislative workarounds for ensuring that the tax bill doesn’t add more than $1.5 trillion to deficits in the first 10 years and adds nothing to the deficits in out-years. The Finance Committee likely will go through the reform provision by provision, deciding which ones have to be made permanent and thus have offsets and which ones can be allowed to expire after a certain number of years.
One priority is making the 20 percent corporate tax rate permanent.
Those considerations, rather than the House’s precedent, will shape the Senate’s first draft.
“We’re not taking up the House bill and then saying, item by item, ‘What do we have to change in order to comply with the Byrd Rule?’” said Pennsylvania Sen. Pat Toomey, a Republican member of the Senate Finance Committee. “Instead, what we're saying is: ‘We've got the same macro goals, we’ve got the same big-picture objectives — how do we achieve it in a way that is compliant with the Byrd Rule in the Senate?’”