House Republican leaders face powerful headwinds as they return to Washington to push for a second major tax and spending bill this year designed to meet fiscal conservatives’ demands for deeper federal budget cuts.
The new GOP legislative drive, still in the early stages, lacks the urgency that the year-end expiration of 2017 tax cuts provided to speed President Donald Trump’s signature tax and spending law, and party leaders already stretched the limit of available sweeteners in that struggle to win over wavering swing-district lawmakers.
“A big part of how they ultimately got to yes on the first bill was the sense that they had built something that was too big to fail,” said Molly Reynolds, interim vice president of government studies at the Brookings Institution.
House Speaker Mike Johnson pledged to lead an effort to pass a follow-up tax and spending bill by late fall, which could revive provisions left out of the $3.4 trillion package Trump signed in July.
That bill is likely fiscal conservatives’ last, best hope before next year’s midterm congressional elections to cut federal benefit programs such as Medicaid and food stamps even deeper than the first bill did.
But it’s unclear what could induce moderates from competitive districts to support more cuts to safety-net programs. And Republicans so far lack a unified vision for the package.
Johnson’s counterparts in the Senate also haven’t been enthusiastic. Senate Republican leader John Thune told Bloomberg Government in July that the effort would be “a big undertaking.”
Still, House Republicans are determined to push forward. The Republican Study Committee, the biggest GOP House caucus, held several staff-level meetings in August to brainstorm provisions to include.
Among the ideas on the table are cutting federal Medicaid funding to the 40 states that expanded eligibility under the Obama administration’s health-care overhaul law, ending student-loan forgiveness for public-sector workers, extending a one-year moratorium on Planned Parenthood funding, further limiting eligibility for the Supplemental Nutrition Assistance Program, known as food stamps, and banning Medicaid funding for gender-affirming care, a person familiar with discussions said.
House Republican leaders don’t plan to turn to the package until October, after Congress resolves how to keep the federal government open beyond the Sept. 30 expiration of current funding, said a person familiar with their thinking. But behind-the-scenes preparations are already underway, the person said.
No ‘forcing mechanism’
In some ways, Republican leaders are a victim of their own legislative success. The first tax bill incorporated breaks with broad appeal that the president campaigned on such as exempting tips and overtime pay from income taxes.
Even so, GOP lawmakers from competitive districts are struggling against national polling data showing the overall law is unpopular.
“There was the forcing mechanism of expiring tax cuts and President Trump’s campaign promises,” said Adam Michel, director of tax policy studies at the libertarian Cato Institute. “There’s less of an imperative here.”
The first package had hard deadlines baked into it, including an increase in the federal borrowing limit essential to averting an impending U.S. debt default. Without action before Dec. 31, Americans also would have faced a tax increase as the 2017 tax cuts expired.
Republican leaders also dipped into a grab bag of inducements to hold together the party’s disparate factions. Steep cuts to Medicaid and other social safety net programs convinced conservative deficit hawks to back the package. While the promise of tax relief, particularly a higher cap for state and local tax deductions, kept on board the moderates who were leery of social safety net cuts.
It’s unclear what incentive swing-district Republicans have to back additional safety net cuts without SALT relief or something similar.
“You don’t have the same cudgel to go to them and say to them, you’ve got to eat some spending cuts here because we’re gonna do something for you on SALT,” Brookings’ Reynolds said.
Second try
Jonathan Burks, chief of staff to then-House Speaker Paul Ryan, is among the skeptics. Party leaders’ cupboard of incentives is nearly bare, he said.
“If it were popular spending cuts or popular tax increases it would’ve been included” in the Trump tax bill, said Burks, now executive vice president of economic and health policy at the Bipartisan Policy Center.
But Brittany Madni, executive vice president of the Economic Policy Innovation Center, a conservative think tank, said concerted efforts could sway swing-district Republicans to come around to policy ideas they previously wouldn’t accept.
“Some of the policies didn’t have broad support just because they didn’t have enough time to be socialized,” Madni said.
