By Phil Mattingly
Quietly, in the final hours of the Senate budget debate last week, a dam of sorts broke, with House GOP leaders agreeing to small-ish technical changes to the Senate budget that would allow them to pass it as is.
Minor as it seemed (the substitute amendment that contained these changes was approved with little fanfare), this was one of the more important moments of the tax reform debate so far.
It showed the House, most notably the chamber’s conservative block, willing to back off a centrally held tenet of their ideological beliefs in order to clear the path for tax reform. In other words, the political imperative that this must move at all costs, actually showed itself, for now, to be true.
For GOP leaders, it’s a huge signal. And it’s also a big logistical boost.
The House and Senate negotiations to reconcile the budget would’ve taken a week or two. Now the House is slated to pass the budget this week. And that means tax reform will start in earnest next week.
Timeline
* Expect the budget vote by Wednesday, if GOP leaders feel like they have the votes (and * they feel confident right now they’ll get there.)
* House Ways and Means Republicans will huddle again twice this week on the details of the bill
* Expect the Ways and Means Republicans to release their tax reform bill as early as next week, aides say. This, obviously, is a huge, huge deal.
And yet …
Don’t believe this was an easy thing. There’s a reason the President had to get onto the House GOP conference call Sunday afternoon. Conservatives, who have staked so much principle-wise on these budget documents, are still very uncomfortable voting for the Senate budget.
The President’s message was crystal clear, per people on the call: Gotta move now. This is everything for us and our party and anyone running for re-election in 2018 (which is, you know, everyone in the House who isn’t retiring).
Trump kills 401(k) talk (we think)
This was floating around, and it wasn’t clear how much juice it had, but the backlash over the course of the last 72 hours has been an intense. And as such, the President put a stake in its heart Monday morning. At least that’s what it appears, via his tweet:
“There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”
Why was this floating around? Lawmakers need money to pay for this effort. Period. Every time someone gets angry about a change (see: state and local deduction repeal), that means GOPers are losing the money to pay for the bill. Again, tax reform is about brutally difficult trade offs.
Despite the optimism created by the above, things like this are always a great reminder that the hard work is still to come.
The fourth bracket
House Speaker Paul Ryan made pretty clear Republican were going to opt for the optional fourth bracket in their final plan. That doesn’t mean a tax increase — in fact, the idea that has been kicked around has been to leave the rate at the current highest level, 39.6%.
The big question has been the threshold — a natural cut off is those earning $1 million.
From a messaging perspective, it’s very helpful, aides acknowledge. From a revenue perspective, it’s helpful as well. The big problem, of course, is falling away from the “everyone gets a tax cut mantra.” Axios has a good rundown from Grover Norquist on this front. But aides say this has long been considered an option on the table. It makes sense from a revenue perspective. It makes sense from a messaging perspective. And there has been zero pushback from the White House on the idea, they add. It is not finalized yet, aides caution. But it is very much in play.
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