[W]ASHINGTON — On a slim four-vote majority, the U.S. House adopted a budget resolution Thursday, clearing the way for Congress to buckle down on tax reform.
House leadership opted to bring the Senate-approved budget blueprint directly to the floor for a vote, instead of going through a conference committee where lawmakers from each chamber would hammer out the differences between their versions.
The process will make it easier for Republicans to get tax reform through Congress, which they are eager to do. However, specifics are still unclear.
The proposals for spending levels and tax changes could have big impacts for Vermont, particularly on health care funding. But many who watch the state’s finances say the lack of details makes it hard to adjust yet.
Rep. Peter Welch, D-Vt., spoke on the House floor against the budget resolution shortly before the vote Thursday morning.
Welch criticized the fiscal blueprint for authorizing the national deficit to increase by $1.5 trillion, which will accommodate the tax cut package the White House and congressional Republicans have backed.
“Deficits matter,” Welch said. “This budget explicitly raises the deficit.”
He also critiqued the process, arguing the House was proceeding toward a major change of the federal tax system even though there is, as of now, no bill.
Rep. Diane Black, R-Tenn., who chairs the House Budget Committee, responded by asserting that Democrats have proposed to increase the deficit.
“All of a sudden they seem to be very concerned about deficits,” Black said.
The vote was a close one. Representatives chatted with each other on the floor, looking up to where a roll of members was projected onto the wall, noting each vote as it was cast.
As the majority leadership team huddled around a table throughout the vote, House Speaker Paul Ryan mingled among Republicans, his arms firmly crossed.
The measure passed 216-212. Twenty Republicans voted against it. No Democrats voted for it.
When the final tally was announced, a cheer went up from the Republican side of the chamber. Some Democrats responded with a low, rumbled “boo.”
In an interview later in the day, Welch slammed the resolution.
“It’s really a sham,” he said. “It’s not about a budget. It is about procedural maneuver to ram through a tax cut package before the bill is written and with no Democratic input.”
The adoption of the budget resolution is a key step for Republicans hoping to pass legislation in the coming weeks to lower taxes. Procedurally, it will allow the tax package to pass the Senate with 51 votes, rather than the 60-vote threshold that would otherwise be necessary.
The immediate impacts of the budget resolution and the forthcoming tax legislation for Vermont aren’t clear.
Vermont Commissioner of Finance and Management Adam Greshin said in an interview Tuesday that the administration is monitoring proposals in Washington to reform federal taxes. However, he said, it is challenging to predict what policies might actually be enacted.
He is more concerned with how changes in Congress could affect federal funding to Vermont, he said.
“We’ve been more focused on the expenditure implications of the tax package,” Greshin said.
The administration of Gov. Phil Scott is putting together a budget proposal for fiscal year 2019, to be released in January.
“We are developing a budget assuming the status quo, because as of today, we don’t know any better,” Greshin said. “If and when the status quo changes, we will make adjustments.”
Though the federal budget resolution does not commit the federal government to long-term spending priorities, the version adopted Thursday sketches out a major shift away from spending on federal benefits programs over the next decade, particularly on health care.
According to the Center on Budget and Policy Priorities, the resolution would result in cuts of about $1.3 trillion to Medicaid and Affordable Care Act programs over the next decade. An additional $473 billion would be cut from Medicare.
If such a reduction in spending were to occur over the next 10 years, it could have big implications for Vermont, where about 200,000 people receive health care services through Medicaid.
Meanwhile, the specifics of changes to federal tax policy are still developing, too.
Congressional Republicans and the White House released a blueprint for their tax proposal in September, but no legislation has been released.
House Ways and Means Chair Kevin Brady, R-Texas, announced Thursday that he plans to introduce a bill Nov. 1 and to take it up in the committee the following week.
Welch said the budget framework does open the door for some proposals that could have a significant impact on Vermonters, such as eliminating a deduction for state and local taxes.
“Any Vermonter who itemizes is going to lose under this Trump tax plan,” Welch said.
Democrats have argued that the tax package will disproportionately benefit the wealthiest people in the country.
The Institute on Taxation and Economic Policy analyzed the proposal and estimated the wealthiest 1 percent of Vermont’s population would get 45.1 percent of the federal tax cuts.
Meanwhile, Republicans argue that lowering taxes will help people across economic strata.
At a meeting last week, Trump’s chief economist, Kevin Hassett, chair of the Council of Economic Advisers, outlined his case for lowering the federal corporate income tax rate.
Hassett helped write a report that estimates American households will see their incomes increase $4,000 if the corporate tax rate is lowered from 35 percent to 20 percent.
The current rate, he and others say, has encouraged multinational businesses to set up shop in other countries, instead of the United States.
“We’ve got a system where basically we’re moving jobs overseas, we’re moving the demand for labor overseas, driving up overseas wages, and holding down domestic wages,” Hassett said.
He lauded Trump for the proposal, which he said will “stop chasing the jobs overseas.”
