WASHINGTON ― House Republicans approved the Senate-passed budget on Thursday, yet another important step toward the GOP’s ultimate goal of cutting taxes. But the narrow margin by which Republicans agreed to the budget resolution was another reminder that there are many potential tax reform pitfalls ahead.
Republicans adopted the budget resolution 216-212, with 20 Republicans and all Democrats voting against the document, which is needed so the GOP can pass its yet-to-be-released tax bill with a simple majority through reconciliation.
Democrats on Thursday criticized Republicans for taking another step toward tax reform while members don’t have a full picture of what GOP leaders intend to propose, and they called out Republicans for their hypocrisy on debt.
“I know my Republican colleagues desperately want to believe that the tax cuts in their budget will pay for themselves and usher in a new era of economic growth,” ranking Democrat on the Budget Committee, John Yarmuth of Kentucky, said Thursday. “Or at least they want the American people to believe that. But the record is clear, this approach has failed time and time again.”
For years, Republicans have put forward budgets that balance in a decade and aim to reduce debt and deficits. When it came time for Republicans to put forward a budget where the numbers would actually affect their agenda, however, leaders laid the groundwork for a tax bill that would add $1.5 trillion to the debt over 10 years, allowing the national debt to grow to nearly $26 trillion by fiscal year 2027.
But ultimately, arguments about fiscal responsibility were muted from Democrats, and of the 20 Republicans who voted against the budget, about a dozen voted no because the tax bill looks likely to reduce ― if not outright eliminate ― the state and local tax deduction, or SALT. That write-off, the elimination of which would raise $1.3 trillion over 10 years, mostly benefits highly taxed states and areas where Democrats dominate.
Republicans from some of these states, like New York and New Jersey, tried to stymie the budget to force a better deal from leadership on SALT.
Leaders have been working to accommodate some of their concerns, potentially softening the elimination of the deduction by allowing individuals to deduct a portion of their state and local taxes. But leadership ultimately never made an official offer, finding the votes by splitting New York Republicans and winning over every Republican in California, another state that would bear a financial burden by not allowing individuals to deduct their state and local taxes. (Seven of nine New York Republicans voted against the budget, as did four of five New Jersey Republicans.)
With the budget adopted, Republicans now move to the more difficult parts of tax reform. Ways and Means Chairman Kevin Brady (R-Texas) has said he plans to release a draft bill next week. Without a bill, GOP leaders have been able to tell members to hold off on their issues and wait to see what Republicans propose. But once there is legislative language, the theoretical concerns of Republicans who have individual interests in the tax overhaul will become real.