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Mitt Romney has not filled in details of what the tax code would look like if he wins the presidential election, but conservatives in Washington, D.C., are formulating ambitious plans for how to get an overhaul through Congress.
Despite the Republican nominee’s promise to work Democrats on a tax package, senior GOP strategists have been discussing ways to enact major tax changes next year with little or no Democratic support if Republicans control the White House and have a Senate majority.
Although Senate rules make it difficult to pass legislation with fewer than 60 votes, both parties have sought routes around that obstacle. Republicans, if they do better than projected in next week’s elections, would be following a recent tradition by exploring such options.
Current and former congressional aides say at least some Republican leaders are interested in using the budget reconciliation process to rewrite the tax system to lower tax rates and pull back benefits for individuals and businesses. But some Republicans are wary of such a strategy, fearing it could open a Pandora’s box of unwelcome political and policy outcomes.
Republicans have been looking for several months at how reconciliation could be applied to “tax policy issues, as well as the mandatory spending side of the equation,” said one former GOP aide familiar with the discussions.
Passing a tax overhaul through reconciliation is possible but far from ideal, said Rep. Patrick Tiberi (R-Ohio), a senior member of the House Ways and Means Committee. “I just like the odds of a Romney presidency getting tax reform and getting particularly Senate Democrats from red states and working with them.”
A Republican Congress used reconciliation to pass President George W. Bush’s sweeping 2001 and 2003 tax cuts, and Democrats used it to pass President Barack Obama’s health care overhaul in 2010.
The procedural tactic allows the Senate to pass legislation changing revenue or spending levels with minimal debate and without a threat of a filibuster. Restrictions apply, however, among them that reconciliation bills are not supposed to add to the deficit beyond the period covered by a joint budget resolution.
As a result of the Byrd rule — named for the late West Virginia Democratic Sen. Robert C. Byrd — the Bush tax cuts were written to sunset at the end of 2010, creating a temporary tax code that continues to frustrate lawmakers.
Given the headaches created by the last tax reconciliation measure, there has been little suggestion publicly that Republicans might take that course. But GOP strategists are not ruling out any scenario. Those who have studied the budget process closely have said it might be possible to overcome the Byrd rule and pass permanent legislation that adds to the deficit relative to the Congressional Budget Office baseline.
That the Byrd rule was codified in law in 1990 makes it difficult to get around the hurdle, but Republicans who say it can be done point to apparent contradictions in the law, as well as the broad principle that 51 senators can simply vote to pass legislation if there is sufficient will.
“One should not assume that the parliamentary terrain cannot be changed, because we did it dramatically and changed the entire way the Senate approaches legislation 31 years ago,” said Steve Bell, a former Republican staff director of the Senate Budget Committee who helped write the first major reconciliation bill in 1981 and is now a senior economic adviser at the Bipartisan Policy Center.
According to some experts, Republicans would have a legal basis to turn off the Byrd rule in a joint budget resolution, based on the “elastic clause” of the Budget Act of 1974 that gives lawmakers leeway to establish new procedures in a budget resolution. Should the Senate parliamentarian object, Republicans could proceed anyway because the parliamentarian technically serves only in an advisory role.
Although Republicans previously have worked within the constraints of the Byrd rule, their appetite for pushing the limits of majority rule appears to have grown since Democrats managed to reshape the health care system without a single Republican vote.
Still, not everyone is interested in escalating the procedural arms race. Concern about using reconciliation to pass a tax overhaul appears to be particularly strong among Republicans who sit on tax-writing panels. They fear that Republicans could commit to reconciliation and end up passing another temporary bill that does nothing to alleviate the uncertainty created by the present system.
Another concern is that a measure advanced only by Republicans would be less popular and perhaps even less substantive than one with support from Democrats.
Among Republicans on the House Ways and Means Committee and Democrats on the Senate Finance Committee, “there has been a lot of interest in creating clear lines of communication, mutual understanding of each chamber’s priorities and an appreciation of the general outline of what could look like the best way to proceed,” said Eric Ueland, a former Senate Republican leadership aide who now works as a lobbyist. “And not all of that can be easily reflected in a reconciliation process, which drives you to starker decision-making.”