A push to permanently extend President Donald Trump’s 2017 tax cuts is emerging as a major flash point in budget negotiations between House and Senate Republicans.
Trump wants his tax cuts extended permanently to boost the economy over the long haul. Senate Republicans say the House’s plan undermines that goal. The dispute centers on how the Congressional Budget Office will be required to calculate the cost of the tax cuts. As both chambers plan to negotiate a bicameral budget framework, the debate over tax-cut permanency is the main sticking point among Republicans.
Sen. Ron Johnson (R-Wis.), a conservative who lauded the House’s focus on spending cuts, said the House’s framework is “just not adequate” when it comes to tax-cut permanency.
“Unless it’s permanent, we’re not going to support it,” Johnson told reporters Wednesday.
Rep. Chip Roy (R-Texas), a House Freedom Caucus member, said House conservatives would oppose any Senate attempt to boost the budget plan’s tax cut numbers at the expense of spending reductions.
“What we know the Senate would want to do is increase the tax cuts and decrease the spending cuts,” Roy told reporters. “That would not go well, at least not with me.”
Senate Republicans want the CBO to analyze the tax bill compared to a “current policy” baseline, which considers extensions of tax cuts to be free. The House plan calls for a score using a “current law” baseline, which would assume a deficit-boosting effect indefinitely into the future.
GOP senators discussed the importance of tax-extension permanence with Trump administration officials including White House Chief of Staff Susie Wiles at a Wednesday lunch, Daines said.
“Permanence for the tax relief is something that the president has expressed support for, and that we have over here, as well,” Sen. Shelley Moore Capito (R-W.Va.) told reporters Wednesday. “And so I think we’ll probably make some changes and debate that.”
That would mean a switch to a current policy baseline, Capito added.
Senate Majority Whip John Barrasso (R-Wyo.) also said tax-cut permanency is important and that lawmakers will debate changes in a final budget resolution.
Trump put additional pressure on Republicans to make his tax cuts permanent, posting on Truth Social Wednesday morning, “I hope the House and Senate are able to agree on making the Tax cuts PERMANENT!”
Changing the House’s budget resolution would be a heavy lift for Johnson (R-La.), who pushed through a budget framework in a 217-215 vote. Johnson said Wednesday morning he wants “as few changes as possible” to the framework.
House Republicans have warned they won’t sign up for a tax-cut free-for-all. While they haven’t ruled out support for a current policy baseline, they’ve said they’ll fight for spending cuts to offset a significant portion of the tax cuts.
“There would need to be certain conditions met if I even would consider doing it,” House Budget Chairman Jodey Arrington (R-Texas) told reporters, when asked about switching to a current policy baseline. “But I’m certainly open.”
Concerns about possible cuts to Medicaid have created other challenges.
Under the House’s resolution, the Energy and Commerce Committee is instructed to reduce the federal deficit by no less than $880 billion over 10 years. Democrats have warned that would nearly guarantee cuts to Medicaid, and some moderate House Republicans expressed concerns about possible effects to their districts. Those cuts to Medicaid are not part of the current Senate budget plan.
Sen. Josh Hawley (R-Mo.) said he would support structural changes to the social safety net such as work requirements, but he is opposed to any direct cuts “to actual working beneficiaries.”
“I will predict to you that that resolution, in that form, will not be voted on, on the Senate floor,” Hawley added. “I’m sure the details will be changed.”
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