Next Stop: Budget Resolution

[This is part of an ongoing series entitled “The Case for Tax Reform,” which examines the importance of reforming the outdated tax code, and how achieving that goal will advance economic growth, jobs, and prosperity.]

No rest for the weary. Congress has finished, for now, with health care reform, bloodied and battered. Next stop is tax reform.

Tax reform is both urgent and imperative. There is no policy Congress will consider that promises to improve the economic security and prosperity of American businesses, families, and American workers more than tax reform. As U.S. Chamber President Tom Donohue so starkly put it in an open letter, “failure is not an option.”

The good news is much productive groundwork has already been laid, and the “Big Six” involving congressional leadership and the White House leadership issued a statement memorializing their agreement on a great many of the key issues. As these discussions could have dragged on for some time, coming to sufficient agreement to permit the House Ways and Means Committee and the Senate Finance Committee to proceed is a very good sign.

For all its promise and urgency, the tax reform exercise will be no cakewalk, and there is still a mountain of work to do – substantively and procedurally – before the task is complete. The first challenge procedurally is that Congress is rapidly burning through the calendar. At some point in early 2018, passing significant tax reform legislation will much more difficult as the mid-term elections loom large.

Additionally, Congress will face a slew of must-do’s when it returns from its August recess. Congress must pass a FY 2018 Budget Resolution resolving deeply held but starkly competing priorities of deficit reduction and increasing defense spending among other matters, all given the fiscal confines of the Budget Control Act.

As the Chamber noted in a letter to the congressional leadership co-signed by the Business Roundtable, the National Association of Manufacturers, and the National Federation of Independent Business, Congress must also pass a Budget Resolution so tax reform can proceed under special parliamentary procedures called “reconciliation.” The U.S. Senate’s difficulties in accomplishing much of anything are now a matter of long record. Reconciliation instructions help legislation overcome the most impeding of the Senate’s many obstructions.

Budget Resolution in hand, Congress must quickly turn to the annual spending bills, and then right in the middle of these difficult deliberations Congress will have to deal with the debt limit. Whether the decision is to raise, suspend, or repeal the debt limit, congressional Republicans will likely face no more important and no more difficult vote than to raise the debt limit, even though failure to do so would unleash a potentially massive shock on the U.S. and global economies.

Even as Congress is addressing these and other matters, tax reform should move apace in the House and the Senate. Congress can indeed “walk and chew gum at the same time.” Tax legislation must under the Constitution originate in the House of Representatives, so naturally the Ways and Means Committee will get the first shot at writing and moving a bill. But the calendar is unlikely to tolerate the usual dance whereby the Senate waits on the House. The Senate Finance Committee will likely need to begin legislating in light of the Ways and Means Committee action perhaps even before the full House has voted.

This much is clear: the U.S. Congress just concluded an extremely difficult period with results satisfactory to few. When Congress returns from its August recess, the tasks ahead will not be any easier, so all involved had better be ready to buckle in. Next stop: the Budget Resolution.

About the authors

J.D. Foster

Dr. J.D. Foster is the former senior vice president, Economic Policy Division, and former chief economist at the U.S. Chamber of Commerce. He explores and explains developments in the U.S. and global economies.