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Analysis: Chances for Budget Through Regular Order Shaky

Shell budget may be needed to set up reconciliation process for tax overhaul

Speaker Paul D. Ryan, R-Wis., said Wednesday that a regulatory fix may be the best approach on a potential bump stock ban. (Bill Clark/CQ Roll Call File Photo)
Speaker Paul D. Ryan, R-Wis., said Wednesday that a regulatory fix may be the best approach on a potential bump stock ban. (Bill Clark/CQ Roll Call File Photo)

House Republicans are readying for a possible floor vote on a fiscal 2018 budget resolution as soon as next week, but with support for the plan currently shy of the 218 votes needed, action could be delayed weeks or even months.

After more than a month of negotiations, the House Budget Committee will mark up the fiscal blueprint on Wednesday. Floor action before the August recess appears to be the goal, and with several conservatives and moderates withholding support, that’s a target leaders will likely miss.

This puts House Republicans in a familiar situation: Last year, the Budget Committee reported out a budget resolution that never had enough support to make it to the floor.

But this year, Republicans need the budget resolution to set up the reconciliation process they want to use to advance a tax overhaul.

There are a few ways the GOP can finish a budget and set up the reconciliation process, but only one appears to be truly viable. Here’s a look at the possible paths and the likelihood of them occurring:

Regular order budgeting

The path House Republicans have been pursuing is regular order, albeit on a delayed timetable. The budget process typically involves the House and Senate Budget committees drafting separate budget resolutions with topline spending levels, aspirational messaging about spending and tax policies they would like to pursue, and sometimes, reconciliation instructions for the committees of jurisdiction to write legislation detailing those policy proposals.

The House Budget Committee will finally unveil its fiscal 2018 budget resolution on Tuesday and mark it up on Wednesday, all part of the regular order process.

But proceeding with regular order will likely prove difficult. For one, the budget resolution is not expected to get the 218 needed votes on the House floor without changes.

Many conservatives in the House Freedom Caucus, as well as a few who are not part of the group, oppose the plan because they feel the reconciliation instructions expected to ask House committees to cut a total of roughly $200 billion in mandatory spending over 10 years do not go far enough. They believe Republicans should be doing more to reduce the deficit, especially when it comes to welfare program spending.

Some conservatives also wanted to hammer out some of their differences with leadership on a tax overhaul before voting on a budget. The budget resolution is expected to instruct the Ways and Means Committee to write a tax bill that raises a nominal amount of money, effectively signing off on leadership’s plan to make the tax overhaul revenue neutral.

The conservatives who oppose such an approach believe it is effectively an endorsement of the controversial border adjustment tax on imports that is estimated to raise roughly $1 trillion and serve as a major offset for cutting tax rates.

Instead, some Freedom Caucus members want the reconciliation instructions for a tax overhaul to provide more flexibility, either by lengthening the budget window in which the plan needs to reach the revenue target or by allowing the mandatory spending cuts to count toward the overall deficit reduction goal.  

Even if House GOP leaders were able to accommodate enough of the conservatives’ concerns to win enough support to move the budget resolution through the House, there is another major obstacle to finishing the budget through regular order: the Senate.

The Senate Budget Committee has yet to announce plans to release or mark up a fiscal 2018 budget resolution, and it’s unclear if and when it will. If the Senate does draft a budget, it’s unlikely to mirror the House plan.

Topline spending numbers in the Senate will need to reflect a bipartisan agreement to avoid Democrats raising a point of order against a defense spending level set above the sequester caps. And the Senate, which is currently struggling to pass a health care bill in part because of moderate senators’ concerns about cutting Medicaid spending, is unlikely to pursue hundreds of billions of dollars in cuts to mandatory spending programs.

That means if the House and Senate were able to both adopt separate budget resolutions, they would still need to go to conference and reconcile their differences and agree to a single plan to get the reconciliation process started. The probability that all those steps will occur by fall, when GOP leaders want to start moving a tax overhaul, is low.

Bipartisan budget deal first  

One reason the House plan lacks the support of the full GOP conference is over objections from moderates who believe a bipartisan, bicameral deal on topline spending numbers should be negotiated before a budget resolution is advanced.

Without such an agreement and subsequent legislation enacting new topline spending levels into law, appropriations must adhere to the spending limits set by the Budget Control Act. The sequester caps fiscal 2018 spending at $549 billion for defense and $516 billion for nondefense discretionary.

Moderate Republicans such as Pennsylvania Rep. Charlie Dent, co-chairman of the Tuesday Group, have characterized the House budget resolution toplines of $621.5 billion for defense and $511 for nondefense discretionary as “fake numbers” that amount to a “fake process.”

Dent and 19 other Tuesday Group members wrote a letter to Speaker Paul D. Ryan on June 30, saying they would be “reticent to support any budget resolution on the House floor” absent a bipartisan, bicameral budget agreement.

Negotiating such an agreement before proceeding with a budget resolution is one path available to GOP leaders. It would not only help win the support of House moderates but would also make it easier for the Senate to draft its own budget resolution.

However, this path does nothing to address conservatives’ concerns. It would likely create additional conservative opposition because a bipartisan budget deal would most likely have to increase domestic spending to get Democrats to agree to the defense spending increase Republicans are seeking.

Shell budget

The challenges of the other two paths could leave Republicans with one option if they want to use reconciliation to rewrite the tax code: a shell budget.

The barebones plan would simply outline topline spending limits and include the reconciliation instructions for the tax-writing committees, forgoing the hundreds of pages of aspirational policy ideas that usually go into the budget.

This is the process Republicans used in January to set up the reconciliation vehicle for their health care overhaul.

House GOP leaders promised, at the time, that the shell budget would be a one-time tool, so pursuing this path again would require them to break their word. This path would likely involve the Senate again taking the lead on drafting and advancing the shell budget.

Senate Republicans will have an easy excuse for taking this approach: They spent so much time working on a health care overhaul they didn’t have time to move a budget through regular order.

House GOP leaders could then blame the need to use a shell on the Senate and try to build support for it among their members by arguing for the importance of overhauling the tax code.

The desire to rewrite the tax code, a top GOP priority, becomes even greater if Republicans fail to pass a health care overhaul.

The shell approach appears to have more viability than the other two paths but it’s not a slam dunk. The possibility that Republicans will fail to pass any form of a budget to set up the reconciliation process for a tax overhaul is real.

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