Budget Reconciliation Update!

Just before recessing, Congress passed a continuing resolution to fund the federal government through the end of fiscal year 2025. Republican leaders will spend the next three weeks trying to negotiate a compromise budget resolution and pass it in one or both chambers. Leadership faces several foundational disputes to resolve, including how deeply to cut social spending programs and how to score the bill.

Senate Budget Committee Republicans plan to meet with the Parliamentarian over the next few weeks to determine her position on using a current policy baseline as a scoring method. Senate Finance Committee Chairman Crapo (R-ID) stated last week that using a current policy baseline to score extensions of the 2017 tax law’s expiring provisions would reduce the cost by about $3.8 trillion. If the Parliamentarian does not approve that scoring method, Republicans would have to consider alternatives, such as overruling her interpretation during debate of the reconciliation bill, ignoring any scores produced by the Joint Committee on Taxation or the Congressional Budget Office (CBO), relying on an obscure federal statute to expand the House Budget Committee’s ability to set budgetary estimates, or replacing the current Parliamentarian.

Last Friday, CBO released an analysis requested by Joint Economic Committee Chair Schweikert (R-AZ), estimating that permanently extending the expiring provisions of the 2017 tax law would increase the national debt to more than double gross domestic product over the next three decades, absent other changes to fiscal policy or interest rates. Rep. Schweikert referred to the report to argue against efforts to score the reconciliation bill based on current policy, highlighting ongoing intra-party discussions regarding the proposal. Members of the Senate Finance Committee are meeting regularly to discuss their plans. House Ways and Means members plan a series of meetings over the next three weeks, building on two held before the recent recess, to discuss implementing the President’s tax priorities. Ways and Means will not start drafting language until both chambers pass an identical budget resolution.