Senate Budget Chairman Michael B. Enzi told Republicans Thursday he intends to mark up a fiscal 2018 budget resolution in September.
In addition, Senate Majority Leader Mitch McConnell, R-Ky., met with Republicans on the Budget Committee late Thursday morning and charged them with producing a budget resolution after the recess.
But it is clear the committee still has difficult issues to resolve before it gets to that point.
Key among them is the path that the budget resolution will lay out for the tax overhaul that the GOP wants to pass through budget reconciliation.
That includes whether the budget will assume a tax overhaul that adds to the deficit, what level of economic growth the budget will envision and how the budget would be scored.
Budget Committee member Ron Johnson, R-Wis., said the key issue that has to be resolved is “how much are we willing to accept in terms of potential deficits caused by whatever we do in terms of tax reform.”
Senate Republicans are debating whether the budget resolution should measure a tax overhaul against what is called a current policy baseline. That baseline would assume that a host of temporary tax cuts that are set to expire are permanent. If Congress made the tax cuts permanent, it would reduce projected federal revenue over the next 10 years by some $460 billion.
The topic came up at GOP luncheons both Tuesday and Wednesday, GOP senators said.
Cory Gardner, R-Colo., also a Budget Committee member, said the committee has to make sure “that people are on the same page whether they’re looking at models and growth projections and making sure that we can find a policy that unifies Republicans and hopefully attracts bipartisan support.”
But McConnell is pressing senators to move ahead. “The leader wants us on the Budget Committee to get together and work, come up with a plan and we’re going to do that,” John Kennedy, R-La., said.
GOP senators said McConnell did not make a pitch for a current policy baseline, instead leaving that issue to the committee.
“There was no real pitching or demanding of anything,” Gardner said. “It was just a conversation about hey, let’s move forward on this and how do we get there.”
Later in the afternoon, Enzi, R-Wyo., told Republicans during a lunch that he intends for the committee to mark up the budget in September.
Though a budget resolution sets enforceable limits on spending and taxes, its main purpose this year is likely to serve as a vehicle for a tax overhaul.
Advocates of using a current policy baseline say it is more realistic, since the tax cuts are likely to be extended again. Opponents say using a current policy baseline is a bad idea because the loss in revenue from assuming the temporary tax cuts are permanent would add to the deficit.
There is another option. “We’ve always used current law,” said Bob Corker, R-Tenn., a member of the Budget Committee. “Certainly establishing the baseline we will be utilizing is important and that’s something that will be negotiated and discussed as we move forward.”
Under a current law baseline, which is different from a current policy baseline, it is assumed that the temporary tax cuts will expire on schedule, providing additional revenue to the government when they expire. The CBO uses a current law baseline, which results in a projection that revenue will be higher over a 10-year period because the temporary tax cuts will expire.
Several GOP senators said they anticipate the committee will use a current policy baseline, or at least they favor that approach.
“I absolutely believe we will take that approach, yes, and that is the correct approach,” Roger Wicker, R-Miss., said about a current policy baseline. “It mirrors reality,” said Wicker, a former member of the Budget Committee.
Susan Collins, R-Maine, appeared open to using a current policy baseline. “My experience has been that we always end up extending so-called temporary tax provisions, so using the current policy baseline may well be a recognition of reality,” said Collins, who is not on the committee.
Johnson, who sits on the committee, favors a current policy baseline. “I think that makes an awful lot of sense because that’s what’s going to happen,” he said.
Some House GOP leaders support using a current policy baseline. But the budget resolution approved by the House Budget Committee (H Con Res 71) does not assume that the temporary tax cuts would be permanent.
Johnson said it’s possible the Senate Budget Committee could devise its own estimates of economic growth and dynamic growth in the budget resolution, similar to what the House Budget Committee did, rather than rely on the CBO, as in the past.
“If it were me I’d try and get a number of scores and take a look at a number of different models and then I would do it based on a number of different projections of growth,” he said.
Johnson also said: “We’re having that serious discussion, whether it’s policy baseline, static vs. dynamic.”
The standard scoring practice, sometimes called “static,” estimates the cost of spending or revenue legislation under the assumption that there is no change in economic growth as a result of the legislation. Dynamic scoring, by contrast, uses a macroeconomic analysis to estimate how legislation will affect the economy — for example by spurring economic growth, which also would increase the amount of taxes paid.