On Wednesday, House and Senate Republicans met at the Treasury Department to continue the long, drawn-out negotiations on what is going into the "one, big, beautiful bill," as Donald Trump calls it.
It's not all up to the politicians. The Senate Parliamentarian, Elizabeth MacDonough, has the final say in whether the GOP proposals follow the rules on spending. That's one of the main concerns of Republican committee chairmen as they make slow progress toward bringing a bill to the floor sometime before the Easter recess in two weeks.
Most Republicans are looking at a two-step process of passing an extension of the 2017 tax cuts as well as energy and immigration enforcement proposals using the reconciliation process and then, later in the year, using reconciliation again to pass a debt limit increase among other Trump agenda items.
There are several senators who want to gum up the process and hold up passage of the debt ceiling for more spending reductions. Kentucky Sen. Rand Paul has indicated he wants more than the $2 trillion in cuts passed by the House.
That's not going to happen, given that the bulk of the cuts are going to come from Medicaid. The House Energy and Commerce Committee has been tasked with cutting $800 billion, most of it from Medicaid, to reach the $1 trillion in cuts needed to make the budget numbers add up.
While the obstacles to finalizing a bill are many, Republicans in the Senate seem confident they can pass a bill before April 12 when both House and Senate will leave for Easter recess.
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The congressional aphorism "herding cats" applies in this case.
“I’m supporting not just a two-step but a three-step process,” Finance Committee member Ron Johnson (R-Wis.) said Tuesday. Johnson wants the extension of tax cuts to be split off from any new reform proposals, including eliminating taxes on tips.
“I would just extend current law. I would prevent a massive automatic tax increase and then sit down and do the hard work, returning to a reasonable pre-pandemic baseline of spending,” he told The Hill.
Senate Finance Committee member Chuck Grassley (R-Iowa) doubted Wednesday whether Trump’s proposed additional tax cuts — measures that include cancelling taxes on tips, overtime and Social Security as well as breaks for family caregivers and people paying auto loans — will get enough consideration to be acceptable to the president.
“I’m not saying that it’s going to get enough consideration to satisfy the president, but some of it’s going to be adopted,” Grassley said.
Republicans are trying to pass their tax cut, border enforcement and energy production bill through a procedure called budget reconciliation. The process has become the norm in recent decades for advancing mainline agendas, including GOP tax cuts going back to former President Reagan, the Affordable Care Act and the 2022 Inflation Reduction Act.
Republicans are worried that their preferred accounting method for calculating the impact on the budget — "currently policy baseline" — won't satisfy Parliamentarian MacDonough and, as she did in 2021, she will rule against them and tank the entire bill. House Budget Committee Chair Jodey Arrington (R-Texas) said it's a "great question" how MacDonough will rule on the accounting method.
Arrington said that even if the parliamentarian approves the policy baseline, he’s concerned that it would still violate reconciliation rules, notably a provision called the Byrd Rule that requires legislation to have a budgetary impact and not to add to the deficit after a 10-year period.
“My concern with their rendering a positive position on it is that according to the Byrd Rule, whatever policy you legislate has to have a material impact to the budget. ‘Current policy’ wouldn’t show an impact to the budget. One of the other main tenants is [that] you can’t increase the deficit outside the 10-year window. Well, even though there’s no impact to the budget, there is an increase to the deficit outside the 10-year window,” he said.
The Republicans in the Senate are a long way from seeing the finish line for the first reconciliation bill. But they're not standing still or moving backward.
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