Now It’s Time for Tax Cuts — and Republicans Are More Divided Than Ever

When presidents fail, it creates a snowball effect. George W. Bush couldn’t privatize Social Security and his legislative agenda never recovered. Bill Clinton’s abandonment of health care reform led it to tackle small-ball measures. Both were punished by voters for their failures in the next midterm, losing control of Congress and the ability to get anything else done. Voters don’t like losers.

That’s bad news for House Republicans. Fresh off the (probable) failure to repeal the Affordable Care Act, they are pivoting to tax cuts. But along the way, for procedural reasons, they need to pass a budget.

The budget resolution is critical to the entire agenda for next year, because it sets up what’s called a budget reconciliation bill, which allows the Senate to get around the 60-vote threshold needed to overcome a filibuster. Without a budget resolution, there likely will be no tax cut package, the next big item for Trump.

Here’s how that’s going. Freedom Caucus members went public about their fears of being cut out of the deal. Nevertheless, GOP leaders persisted, releasing a budget resolution this week with $203 billion in mandatory spending cuts and trillions more in other reductions. That infuriated the more moderate members of bunch. It also included a “deficit-neutral” tax reform that includes an unpopular tax increase conservatives can’t stand. Sound familiar?

[Clarification: The budget resolution instructs the Ways and Means Committee to devise a deficit-neutral tax reform, but does not specify any specific tax cuts or increases to accomplish that. While Rep. Mark Sanford, R-S.C., did suggest amending the resolution to exclude a border adjustment tax from any future bill, the resolution did not require the border adjustment tax, although that is the main revenue-raiser being discussed by the House GOP. We regret any impression that the budget resolution required that tax to be instituted.]

Freedom Caucus conservatives want more cuts and no offsetting tax increases, and moderates want fewer cuts. With only 22 votes needed to kill the budget, both sides could have the votes to do the deed.

The head of the Freedom Caucus confidently predicted the resolution doesn’t have the votes to pass the House. By Tuesday night, House leaders were already scaling back their ambitions, vowing to pass only a handful of the necessary appropriations bills. One Freedom Caucus member threatened a poison-pill amendment in the Budget Committee that would kill the biggest revenue-raiser in the bill, the unpopular “border adjustment tax.” On Wednesday night, House Budget Committee chair Diane Black disposed of that amendment, and the budget resolution squeaked through committee, but it’s viability on the floor is anything but certain.

“I have serious concerns about the budget in its current form,” said Rep. Charlie Dent, R-Pa., head of the moderate caucus. “The focus of this budget should be on reconciliation instructions for tax reform. … Trying to use mandatory savings in the same reconciliation instructions is going to make tax reform much harder, not easier. Anybody with a pair of eyes can see this.”

The budget resolution is really a fight over tax cuts, and even more so a fight about deficits. The House GOP blueprint insists on revenue neutrality, making it difficult to pass, because you have to find acceptable tax increases from a Republican caucus that hates them all.

If all that fails, Republicans have said they’ll pursue a “shell” budget — which has close to nothing in it, but still allows the filibuster to be busted. But conservative Republicans in the Senate — enough to kill it — have said they won’t support a shell.

It would be a lot easier to square this circle in a winning environment. But with only gridlock to show for six months of work, lawmakers are frustrated and paranoid, worried as much about being cut out of negotiations as they are the next election cycle. I’m calling it — the budget resolution won’t pass. Which means most of Trump’s agenda won’t pass, at least not legislatively.

Top photo: House Budget Chair Diane Black, R-Tenn., and Ways and Means Chair Kevin Brady, R-Texas, key stewards of the Republican health care overhaul legislation, board an elevator off the House chamber after GOP leadership decided to pull the troubled bill off the House floor.