Despite a late blitz from the White House, Republicans are preparing for a nail-biting House vote Thursday on a budget bill that will determine whether Congress can pass changes to the tax code later this year.
Republican leaders are struggling with two main camps of opposition: members who believe the budget, passed by the Senate last week, does not include enough mandatory spending reductions, and members who represent a large proportion of households or companies that claim the state and local tax deduction on their annual tax returns.
Despite a phone call from President Trump on Sunday, a Capitol Hill visit Wednesday from his chief economic adviser, Gary Cohn, and two meetings with House Ways and Means Committee Chairman Kevin Brady, several otherwise reliably voting members remain opposed to the resolution because of a GOP tax-reform proposal that would end the state and local tax deduction.
Rep. Leonard Lance said that despite another meeting with Brady planned for Wednesday evening, nothing leaders could say would convince him to vote for the budget because the measure itself includes language calling for the elimination of the deduction, which allows federal taxpayers to write off the cost of state and local taxes they’ve paid.
“I am voting ‘no’ tomorrow on the budget,” Lance said. “The Senate version of the budget contains a provision that eliminates SALT in its entirety.”
The provision is especially a problem for Lance’s GOP delegation colleagues from New Jersey, where upwards of 40 percent of all federal returns claim the deduction. But there are concerns, too, from members representing populous states like New York, California, and Illinois, as well as other states with a large number of high-income earners, like Georgia, Virginia, and New Hampshire. There are about 30 Republicans in high-tax districts who, if they vote in a bloc, could threaten the budget resolution in the House.
Cohn did little to assuage the concerns. In a Wednesday meeting with the Problem Solvers Caucus, a group of moderate Republicans and Democrats, Cohn downplayed the impact of eliminating the deduction and noted the tax bill would not likely shift on that issue.
Ways and Means officials were continuing to meet with affected Republicans, including on Wednesday evening. At a breakfast meeting with reporters Wednesday, Brady said they would figure out a compromise before they unveil the tax bill, hinting that the deduction may remain in a more limited form.
“I expect before the bill is laid out next week that the solution will be announced,” he said.
Still, the problem remains that members want guarantees before any text of the tax bill has even been unveiled, and leaders have been reluctant to tip their hand. Members who are concerned about the SALT deduction may also be tempted to vote against the budget in order to force leaders to work for their vote on the ultimate tax plan.
“The bigger difficulty tends to be people that are conflating the tax bill and the budget vote,” said Rep. Tom Cole, a Republican who sits on the Budget Committee. “A lot of these issues they’re concerned about they’re not going to be able to extract a guarantee on, because people don’t know what exactly is going to be in it.”
That secrecy has been a major issue throughout the process. So closely held have details of the tax bill been that Rep. Matt Gaetz, a freshman Republican, compared it to the Ark of the Covenant from the film Raiders of the Lost Ark: “It must be so magnificent that if we actually laid our eyes on it, it would eviscerate all of us. It would lay waste to nations,” he said.
“It also is frustrating for me … to be asked to vote for a budget that nobody believes in so that we have a chance to vote for a tax bill that nobody’s read,” Gaetz continued.
If the SALT deduction were leaders’ only problem, the vote might be easier. But Gaetz, a member of the House Freedom Caucus, said some conservatives like him are also concerned that the budget strays from blueprints championed in the past by Speaker Paul Ryan when he was chairman of the Budget Committee.
“I reject the premise that the only way to pass tax reform is to wildly deficit-spend and to not have a balanced budget. We could cut spending if we wanted to, but the Senate doesn’t have the guts to cut one nickel of entitlement spending,” he said.
In a bright spot for leaders, however, several other members of the House Freedom Caucus and the Republican Study Committee said they are willing to vote for this budget, if only to move the process along. RSC Chairman Mark Walker stood up in a private meeting of the group this week and said he would support the budget—though a “yes” vote on tax reform is not guaranteed.
“I think we’re going to get it done,” Walker said in an interview. “After that it’s going to get real interesting.”