Budget committees need to move fast!

As you know, the Trump tax cut law of 2017 is going to expire at the end of the year unless Congress and the White House work together to extend it.  

Here’s the truth: Without an extension, taxes for the average American family would go up $1,500 a year. No one wants that.

Renewing the tax cuts is a top priority of both the White House and Congress, so it should be a piece of cake, right?

We wish. But the situation is more fraught than you might think.

Why this isn’t a slam dunk: Even using the reconciliation process that severely limits what Democrats can do to stop it, slim Republican majorities in the House and Senate give small factions in both chambers significant leverage. Any united group of a half-dozen members can slow down the process by holding out over their priorities.  

So I wanted to use this newsletter to walk through the reconciliation process, highlight its pitfalls, and explain why both chambers will need to work together collaboratively and quickly to get tax cuts across the finish line.

Let’s do a quick recap on budget reconciliation: In a nutshell, reconciliation is a special legislative process that allows Congress to pass bills related to spending, revenues (taxes, fees, etc.), and the federal debt limit with only a simple majority vote in both chambers.

This means only 51 votes are needed in the Senate instead of the usual 60-vote threshold required to overcome a filibuster.

Here is a breakdown of the process:

• The process begins with the work of the budget committees, which draft a budget resolution that acts as the foundation for everything that follows. Without this critical resolution being passed by both the House and Senate, the entire process comes to a halt.
• The budget resolution issues specific instructions to the other congressional committees to change spending, revenues, deficits, or the debt limit by specific amounts. This provides the contours for what the final resulting reconciliation legislation will contain. For example, the tax writing committees need to be instructed to lower revenue up to a certain amount if you want to enact tax cuts.
• Each committee writes a bill to meet its target, and the budget committee then puts all these separate bills together into one big (and hopefully “beautiful”) bill.

As you can see, what goes in the budget resolution is paramount – it’s the blueprint for all that comes after. If it’s not in the budget, it isn’t happening.

Just yesterday, after an all-night session that ended this morning, the Senate passed their budget resolution that does not include any tax provisions. The House is expected to soon pass their budget resolution that does include extending the tax cuts. The Senate version does not (the Senate wants to do that in a different bill). Americans for Prosperity was heavily engaged in passing the House resolution out of committee, even getting a shout-out during the committee consideration of the bill.

While there is intense debate ahead, what isn’t debatable is that time is the enemy of reconciliation. The historical record is clear. As the Congressional Research Service put it:

“Timely adoption of the budget resolution can facilitate timely enactment of reconciliation legislation, just as tardy adoption of the budget resolution can delay completion of the reconciliation process.”

With the tax cuts set to expire at year’s end, this issue cannot be deferred to next year.

Here’s why:

• Delay risks empowering small factions to exert undue influence, rewriting portions of the bill to cater to narrow, localized interests.

• Rushing to meet a year-end deadline would inevitably result in a flawed bill, lacking the care and consideration needed to produce meaningful, balanced solutions.

• Dragging out the process would create uncertainty and be bad for the economy.

It can get complicated: The reconciliation process is quite complex and involves multiple players working together toward a common goal. And in this case, budget committees are at the heart of it all. Their decisions, and the speed at which they make them, will have significant impacts on the outcome of the tax bill and much else.

We will be monitoring the work of these committees to ensure they act in a timely manner.

In the meantime, take a moment to urge your lawmakers to extend the 2017 tax cuts. It’s your money — not Washington’s — and time is running out.