Congress returns from its mid-summer break Monday for a crucial three-week stretch that will help determine whether President Donald Trump can deliver on his promise of a historic tax cut.
Several obstacles await lawmakers, including an ongoing health care fight, divisions among Republicans on the basic parameters of a tax bill, and a maelstrom of upcoming deadlines to keep the government running and avert a catastrophic default on U.S. debt.
Republican leaders had hoped to spend July working on what House Speaker Paul Ryan has called a once-in-a-generation bid to overhaul the U.S. tax code. But the Senate remains bogged down with the president’s call for changing the Affordable Care Act. With no clear endgame for that effort, observers question the prospects for tax legislation, which can’t move procedurally until health care is off the agenda.
“The longer the health care debate drags out, the harder it’ll be to get to the finish line on tax reform,” said William Galston, a senior fellow at the Brookings Institution. “Health care and tax reform are linked in very concrete ways,” he said, in part because the Senate health bill, the Better Care Reconciliation Act bill, would establish a lower tax base by repealing a number of taxes imposed by the Affordable Care Act of 2010.
Meanwhile, House Republicans have been delaying consideration of a fiscal 2018 budget resolution, the vehicle they plan to use for tax legislation. Factions within the party disagree on whether tax rate cuts for individuals and businesses should be offset with new revenue or spending cuts, or just be allowed to add to the deficit. Debate among conservative and moderate Republicans has focused on how deeply they should cut “mandatory” safety-net spending.
“There’s a train wreck coming,” said G. William Hoagland, a senior vice president at the Bipartisan Policy Center in Washington and a former Republican staff director for the Senate Budget Committee. “I don’t see a tax bill in 2017 at all. Not at all,” Hoagland said. “Not comprehensive tax reform. No way.”
The Republican divisions are “too stark, too great” to pass a budget resolution before the new fiscal year starts in October, he said. Hoagland predicted lawmakers will have to settle for stopgap measures to keep the government open. “From my perspective and from past experience, we’re very late on everything right now.”
Treasury Secretary Steven Mnuchin (Photo: Treasury)
His pessimism stands in contrast to House Speaker Paul Ryan, whose office sent emails to reporters last week proclaiming that “Tax reform is happening. Not next year or next Congress. It is happening now, in 2017.” The legislation will be “transformational,” Ryan’s email said, not “some rinky-dink, watered-down version of reform.”
Lack of Clarity