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Senate Republicans are planning changes to the House budget plan that was meticulously negotiated to earn the support of nearly every GOP lawmaker in the lower chamber, with a key focus on ensuring a permanent extension of President Trump’s first-term tax cuts.
The exact changes are still being discussed but GOP senators said there is no way they’ll accept the House plan as is.
“Will there be changes in the Senate? The short answer is yes. The long answer is hell yes,” said Sen. John Kennedy, Louisiana Republican.
The House late Tuesday adopted a budget resolution that provides instructions to committees to craft a sweeping budget reconciliation package that will cut taxes and spending, raise the debt limit and address critical GOP priorities like border security, immigration enforcement, energy production and the national defense.
Budget reconciliation is the process Republicans are using to pass the majority of the party’s legislative priorities because it allows them to skirt the threat of a filibuster from Senate Democrats.
The House budget instructions give the tax-writing Ways and Means Committee an initial ceiling of $4.5 trillion for the tax cuts, a level that can be adjusted depending on how much spending other committees cut.
Senate Republicans have argued the $4.5 trillion ceiling is not high enough to allow for a permanent extension of the 2017 tax cuts set to expire at the end of the year and accommodate the president’s other tax proposals like exempting tips, overtime pay and Social Security benefits.
The Congressional Budget Office has estimated that a permanent extension of the 2017 tax cuts would cost $4.6 trillion over 10 years.
“I hope the House and Senate are able to agree on making the Tax Cuts PERMANENT!” Mr. Trump posted Wednesday on social media.
Mr. Trump and Treasury Secretary Scott Bessent began tax negotiations Wednesday with top Republicans, including House Speaker Mike Johnson of Louisiana, Senate Majority Leader John Thune of South Dakota, Senate Finance Chairman Mike Crapo of Idaho and House Ways and Means Chairman Jason Smith of Missouri.
It was the first in what is expected to be a weekly White House meeting with top tax writers until Congress passes the tax cut package.
Mr. Johnson told reporters after the meeting that he supports making Mr. Trump’s 2017 tax cuts permanent.
“That’s our goal,” he said. “You need to give certainty to business owners and people who are trying to make plans for the future, and it’s good for the economy overall when you can do that.”
But the speaker said he warned the other leaders that changes to the House budget should be “as little as possible” to preserve the fragile House GOP coalition that voted for the plan.
“We have a very small needle to thread here, and we have sort of an equilibrium point amongst people with competing priorities,” he said. “If we deviate from that too much, we have a problem. The Senate understands that, and I think we’ll have a product that both chambers can agree to.”
The House’s budget squeaked by Tuesday night in a drama-filled vote with only one Republican, Rep. Thomas Massie of Kentucky, voting against it. Mr. Johnson, with an assist from the president, was able to sway other would-be defectors who were concerned about how much the budget blueprint would add to the deficit or whether the spending cuts it called for would lead to reductions in Medicaid.
GOP hardliners in the House Freedom Caucus are already warning they won’t support a bicameral budget agreement that does not set a goal of cutting spending by $2 trillion like in the House plan.
“That’s a nonstarter,” Rep. Chip Roy, Texas Republican, said.
Fellow Freedom Caucus member Ralph Norman, South Carolina Republican, agreed, calling $2 trillion in cuts merely “a teardrop in the ocean” of federal spending.
White House Chief of Staff Susie Wiles attended a Senate Republican lunch on Tuesday to discuss next steps for the budget, among other topics. She backed the push for making the president’s first-term tax cuts permanent, according to Sen. Steve Daines, who has vowed to vote against any tax package that does not do so.
“We’d rather have permanence than temporary,” Mr. Daines, Montana Republican, said, citing strong support among his Senate GOP colleagues.
Mr. Daines, Mr. Crapo and other Senate Republicans want to adjust the budget to require a current policy baseline for the tax legislation, which would make the effective cost of permanently extending Mr. Trump’s tax cuts zero because they’re already in law. If lawmakers take that route, then the only cost they would have to consider would be from new tax policy.
Mr. Johnson seemed on board, even though the House budget did not use that approach.
“I hope that we can employ that, because it makes a big difference in the calculations,” he said. “And I think it also makes good logical sense.”
House Budget Committee Chair Jodey Arrington, Texas Republican and the architect of the House plan, told The Washington Times he did not want to use the current policy baseline because of the impact it would have on the deficit.
He also warned that making the tax cuts permanent would likely be a hard sell for many House Republicans but said he is open to doing so if the Senate adhered to the two main objectives in the House’s budget plan: bending the curve on mandatory spending that’s driving the debt and not adding to the federal deficit.
“Those are two big, hard-fought pillars of our fiscal framework,” he said. “If those are gutted, then, maybe half our conference won’t feel good about it.”
Mr. Smith, who unsuccessfully pushed for the current policy baseline to be part of the House budget, said “we’ll see” whether his Senate counterparts would be successful in achieving that goal.
“I hope that if they do, that’s the vehicle for permanency,” he said, while commending the House for incorporating all of the president’s legislative priorities into their budget plan. “Everything that we have in there is what he’s asked for.”
The good news for House Republicans is their Senate counterparts now appear on board with passing the party’s priorities in one reconciliation bill after initially pursuing a two-bill strategy to pass national security funding priorities quickly and tackle the tax cuts later in the year.
With that decision, Republicans have to decide whether to include a debt limit increase in the party-line reconciliation measure or to address that issue through regular order, which would require cooperation from Democrats.
“The debt limit, if we don’t do it in reconciliation, is going to be the most gnarly issue that we’ll have to deal with,” Mr. Kennedy said, noting Democrats will demand a “bribe” that will likely involve more spending, not less as Republicans want.
Mr. Hoeven agreed that raising the debt limit through reconciliation is preferable but “the challenge is we can’t lose any votes to do it then.”
Some House and Senate Republicans have never voted for a debt limit increase but said they’d be willing to do so alongside steep spending cuts. The required depths of those proposed cuts vary from lawmaker to lawmaker.
Sen. Ron Johnson, Wisconsin Republican, wants to go further than the spending cuts called for in the House budget, saying he prefers a plan that will return federal spending to pre-pandemic levels.
The need to raise the debt limit by summer to prevent the U.S. from defaulting on its borrowing obligations “is the only leverage we have that brings some fiscal discipline to this process here,” he said.
• Lindsey McPherson can be reached at lmcpherson@washingtontimes.com.
• Alex Miller can be reached at amiller@washingtontimes.com.