House GOP leaders cleared an important hurdle Thursday morning after cutting a deal with Freedom Caucus holdouts on a budget resolution amendment that would lock in a mechanism to enact deeper spending cuts in exchange for bigger tax cuts.
The agreement paved the way for Budget Committee approval later in the day Thursday of the fiscal 2025 blueprint needed to unlock their “big, beautiful” reconciliation bill. House Republicans want to use the filibuster-proof process to enact large pieces of their legislative agenda, including extensions of the expiring 2017 tax cuts, domestic energy production incentives, immigration enforcement and defense spending.
During opening statements at the markup, Freedom Caucus Reps. Chip Roy, R-Texas, and Ralph Norman, R-S.C. — who’d been coy about their intentions a day earlier — signaled their backing. “I’m proud of what the chairman has put forward. I believe that it is responsible,” Roy said.
The deal that the Freedom Caucus struck with leadership would change the text of the budget resolution in two ways, Freedom Caucus Chairman Andy Harris, R-Md., said off the floor during House votes Thursday morning.
[House budget blueprint ready for close-up amid GOP ‘angst’]
First, it would require that committees instructed to deliver budget savings must hit a $2 trillion target over the 10-year budget window, or the Ways and Means Committee’s $4.5 trillion in headroom to increase deficits would have to be scaled back by the amount they come in below $2 trillion in cuts.
Previously, that language was in a nonbinding “policy statement” rather than required under the resolution, which set a minimum floor of $1.5 trillion in spending cuts for various committees.
Second, if committees produce more than the required $2 trillion in savings, the Ways and Means instruction could go higher than $4.5 trillion by a commensurate amount. That would move Republicans closer to Roy’s stated goal of $2.5 trillion in spending cuts and $5 trillion in tax cuts — which would also help Ways and Means Chairman Jason Smith, R-Mo., find more room for President Donald Trump’s tax plan.
“We believe the entire Freedom Caucus will vote for this bill, with that amendment that’s going to be offered today,” Harris said. “We understand it’s going to be a manager’s amendment because leadership has agreed to the amendment.”
He said the amendment would ensure the caucus’ goal of offsetting the entire package is met. “We want to make it deficit neutral. We think that with our amendment it ensures deficit neutrality, and that’s all we care about,” Harris said, though he added that additional revenue from economic growth assumed in the package would result in overall deficit reduction.
Clearing the committee does not guarantee success on the floor where tight margins mean GOP leadership needs near-perfect party unity. Pressure is likely to build on rank-and-file members to back the resolution, allowing them to move forward with a reconciliation bill they need to bypass the filibuster in the Senate and enact much of Trump’s agenda.
But Rep. Victoria Spartz, R-Ind., has said she will oppose the measure, citing a need for more spending cuts and opposition to the proposed $4 trillion increase in the $36.1 trillion statutory debt limit. And some moderates are already leery of the initial $1.5 trillion level of cuts required by the resolution, with big chunks expected from Medicaid and the 2010 health care law.
Permanence push
Providing the Ways and Means panel with more fiscal space to write their tax package could help with getting recalcitrant Senate Republicans on board, however.
As the House Budget panel was starting its deliberations, nine GOP members of the tax-writing Senate Finance Committee wrote to Trump that they’d oppose any tax package that didn’t make the 2017 provisions permanent.
“Congressional Republicans have an historic opportunity to enact this lasting tax relief. Failure to act boldly does a disservice to the American people who entrusted us to deliver in November,” the senators led by Steve Daines, R-Mont., wrote. Signatories include Finance Chairman Michael D. Crapo, R-Idaho, Majority Leader John Thune, R-S.D., and Majority Whip John Barrasso, R-Wyo., among others.
Crapo’s view has long been that simple extensions of the 2017 tax cuts shouldn’t count as increasing the deficit, but House Republicans decided to count those extensions as revenue losses in their budget baseline.
The Senate Budget Committee adopted an alternative blueprint Wednesday night that focuses on spending provisions and doesn’t address tax policy, which would be tackled in a second budget resolution and reconciliation bill later this year.
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