(Bloomberg)—President Donald Trump faces many hurdles in delivering his promised tax cut, but none may be more formidable than the congressional calendar.
Republican leaders of the tax-writing House Ways and Means Committee have said the overhaul must be completed in 2017; election-year politics would only complicate the task next year. But the months ahead are full of time-consuming tasks that threaten to divert lawmakers’ attention, including hammering out health-care legislation in the Senate, funding the government again this fall and raising the debt limit.
Tax legislation is “very, very unlikely” to pass in 2017, said Steve Bell, a former staff director for Senate Republicans on the Budget Committee, who is now a senior adviser at the Bipartisan Policy Center. “I don’t think they have enough time.”
The most immediate roadblock is a health-care bill. After the House narrowly passed legislation to replace Obamacare last week, Senate Republicans said they’ll craft their own proposal now, and they signaled they’ll take their time with it. For practical and procedural reasons, congressional Republicans have indicated that they must finish the health-care bill before tax legislation can begin making its way through Congress.
Writing health-care legislation that can pass both chambers of Congress will be a monumental task and won’t happen in a hurry, said Bell, who added: “I’m not sure if they can produce one.”
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There are 39 legislative days on the House calendar before the five-week August recess. Once Congress returns after that, lawmakers will have to agree by Sept. 30 on how to fund the government for the next fiscal year and raise the debt limit this fall -- two jobs that could eat up political capital for Republican leaders who have to make difficult choices.
Congressional Republicans have to figure out spending levels for a fiscal 2018 budget resolution, the vehicle they intend to use for a tax bill so it can pass without Democratic support in the Senate. That will be very hard given internal party disagreements on how much the federal government should spend, according to Bell.
Add it up, and the prognosis looks grim for what President Donald Trump and other White House officials have labeled a top priority this year, Capitol Hill veterans agreed.
“It’s hard to see how tax reform gets done in that environment,” said Stan Collender, a former Senate Democratic budget aide.
Meanwhile, the House and Senate GOP are drifting farther apart on the nuts and bolts of a tax overhaul, despite House Ways and Means Chairman Kevin Brady’s plea on Thursday for fellow Republicans in the Senate and White House to “get on the same page” on taxes. Brady has eased off his commitment to passing a tax bill out of his committee this spring, saying his main concern is getting a bill on Trump’s desk in 2017, regardless of the month.
“There are no consensus-developing activities yet,” Collender said, adding that the prospects only diminish in 2018. “It’s difficult to begin with and it’s going to be more difficult heading into the election.”
House Speaker Paul Ryan and Brady, the chamber’s chief tax writer, remain insistent on a deficit-neutral package that would include revenue-raising provisions like a controversial border-adjusted tax on imports. But Senate GOP leaders are increasingly open to unfunded tax cuts and many oppose the import tax. “I don’t think there is support for it in the Senate,” Senate Majority Whip John Cornyn said Thursday.
Senator Pat Toomey, a Pennsylvania Republican, is pushing to change Senate budget rules to allow a much longer time horizon for tax cuts that would add to the deficit. Current rules require that cuts would have to expire if they add to the deficit beyond 10 years; Toomey has suggested expanding that to 20 or 30 years. “I think we should explore it,” he said in an interview.
The idea, which would be a sea change and diminish hopes of a revenue-neutral rewrite of the tax code, is far from becoming a reality. But it could be considered by some Republicans who have become frustrated by the overall budget process. Senator Lindsey Graham of South Carolina said he’s open to extending the 10-year window, but Senator Bob Corker of Tennessee said he’d be skeptical of any idea that makes it easier to raise the deficit.
Brady declined to comment when asked on Thursday about Toomey’s proposal. Senate Finance Chairman Orrin Hatch kept his powder dry: “I’m open to anything that makes sense,” he said. For now, the plan is still to proceed with a tax overhaul under existing rules, which require a 10-year sunset if cuts adds to the long-term deficit, according to a person familiar with the Senate discussions who asked not be named because the conversations are private.
Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee, said extending the 10-year window would be “a complete about-face” on years of Republican rhetoric about the need to reduce the deficit. “This is so far-fetched,” he said. “I’d be very opposed to it.”
The White House has offered little guidance other than a one-page blueprint released on April 26, which includes cuts for individual and business tax rates. It also calls for eliminating individual deductions other than those for home-mortgage interest and charitable giving. White House spokeswoman Sarah Sanders told reporters on Friday that the White House wasn’t ready to comment on whether the cuts in a tax package should be offset so they don’t add to the deficit.
William Gale, a senior fellow at the nonpartisan Brookings Institution, said the odds of permanent tax reform are diminishing, but he still sees hope for a temporary tax cut this year or next -- as long as it doesn’t directly harm any taxpayers.
“I imagine they will do something on taxes. I don’t think it’ll be reform; I think it’ll be tax cuts,” Gale said. “Tax reform requires increasing taxes on some people, and I don’t see them having the fortitude to impose tax increases on anybody.”
--With assistance from Ari Natter, Toluse Olorunnipa and Erik Wasson.To contact the reporter on this story: Sahil Kapur in Washington at [email protected] To contact the editors responsible for this story: Alexis Leondis at [email protected] John Voskuhl
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