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Republicans’ extended, circular debate over how to execute Donald Trump’s agenda in Congress is obscuring a much larger problem: They’re nowhere near agreement on what would go in a tax bill.
The House and Senate GOP are still haggling over the size and the scope of their plan, with a long list of details to work out and decisions still to settle. And the more the two chambers tangle over how fast to move, the less time they spend on those even tougher policymaking choices.
House Speaker Mike Johnson has suggested the party’s entire tax plan could pass by April. But many other Republicans estimate it will take months to get a final bill to Trump’s desk — possibly running up against the year-end deadline to prevent the expiration of his first-term tax cuts.
Plenty of those Republicans are comfortable taking their time on taxes, too, arguing that they have a unique opportunity to reorient US economic policy and that rushing it makes no sense.
“The process of negotiating the details will take many months. It’s just incredibly complicated, and there are trade-offs. And obviously, you’ve got differing views in the Senate and the House,” Sen. Ted Cruz, R-Texas, told Semafor. “It will be a long, extended process.”
The unresolved tax fights are all politically sensitive: How much of Trump’s campaign promises to slash taxes on tips and Social Security benefits can be included? How much of the new tax cuts should be paid for with spending cuts? Should Republicans tinker with the corporate tax rate? Will red-state Republicans accommodate a bigger state and local deduction for blue-state Republicans?
It’s a workload huge enough to make unity between House and Senate Republicans especially critical. For now, however, they have chosen an imperfect solution: Working separately on two different plans and seeing which proves more viable in the coming weeks.
The idea seems to be a battle over which chamber of Congress can get its act together more quickly.
“I suggested the horse race idea … I thought that might appeal to President Trump. He likes competition,” said Sen. John Hoeven, R-N.D. “Have we come together on tax? No, there’s a lot of work to do.”
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The rift over tactics between the House and Senate GOP will determine how quickly the party can deliver results to Trump. Yet with basically no margin for error in the House and the likelihood that no Democrat gets seriously involved at all in the discussions, internecine fights are all but guaranteed among the different wings of the party.
Republicans have not yet decided on a target for the size of their tax bill, how much of it will be paid for or whether to include tariffs to help finance it. Some of those questions will be answered in the budget resolutions that must pass before any tax bills can advance in either chamber.
Many Republicans think extending the expiring Trump tax cuts don’t need to be paid for, chief among them Senate Finance Committee Chair Mike Crapo, R-Idaho. That means trillions of dollars in tax cuts could be made permanent without corresponding new revenue or spending cuts.
But even if that idea can pass muster with the party’s vocal fiscal conservatives, any new plans like slashing taxes on tips and Social Security are likely to spark a fight over how to offset them.
“You have to pay for them,” said Sen. Rick Scott, R-Fla.
Republicans recalled in interviews that the 2017 tax law improved the longer they worked at it, adding tax incentives for education and killing Obamacare’s individual health insurance mandate. They executed that tax bill fairly quickly, taking about four months from September to December to figure out the scope of the bill and then push it to Trump’s desk.
Importantly, Republicans were also under pressure to succeed on taxes in 2017 after flubbing their attempts to repeal Obamacare. A similar dynamic could emerge this year if Republicans end up spinning their wheels into the spring and summer without implementing a border security plan or another cornerstone of Trump’s agenda.
“The more we waste time, for something that’s gonna be really complicated? It’s gonna be really tough,” said Sen. Shelley Moore Capito, R-W.Va., the No. 4 GOP leader. “The fact that a lot of this is the president’s tax programs, I think that that’s gonna really up the ante for the president to really play a big role here.”
The View From Sen. Rand Paul, R-Ky.
Beyond extending most expiring tax cuts and trying to make individual and small business rates permanent, Republicans have another huge call to make: Should they try to raise the US debt ceiling without Democratic votes in their tax bill?
For some conservatives who generally don’t vote to raise the debt limit, that adds a new bargaining chip to their push for as many fiscal offsets as possible. For other conservatives, piling the debt ceiling onto the tax bill is simply too much.
“The proof is going to be in whether we have real spending cuts and whether we get them attached,” said Sen. Rand Paul, R-Ky. “Conservatives like myself, we don’t want the debt ceiling in there either, so we’re going to quite stand firm on that.”
Burgess’s view
I’d definitely bet on a tax bill passing Congress before 2026; the political and policy stakes for Republicans are too high. But it’s very unclear how much new policy the narrowly divided chambers can enact, as opposed to a straight extension of tax cuts that would otherwise expire.
A big x-factor is Trump’s patience: Is he willing to wait months to see his key priorities pass? History says no. That explains why Senate Republicans aren’t abandoning their plans to pursue border and energy legislation separately from taxes.
“I know that that time can fly by,” said Sen. Jim Banks, R-Ind. “That’s why Senator Graham and others are focused on getting as much done as quickly as we can. I agree with that.”
Notable
- The debt limit and SALT deductions are potential red lines on the right in the House, CNN reports.
- Trump told blue state Republicans he wants to lift the SALT cap, Politico reports.