Tax reconciliation package delayed by GOP leaders as challenges lie ahead

WASHINGTON — The House is reportedly scheduled to vote on its massive tax reconciliation package at the end of May, stymieing original plans to have the bill through both chambers of Congress and on President Donald Trump’s desk by Memorial Day.

House GOP leaders are targeting a vote during the week of May 19, according to Punchbowl News — the final week of session before lawmakers break for recess and return in June. The deadline puts lawmakers in a scramble to finalize details of the trillion-dollar package over the next four weeks.

That could be easier said than done. There are still several areas of disagreement for Republican lawmakers, and House leaders have a slim margin to work with.

Republicans currently hold a 220-213 majority. That means if all lawmakers are present, 217 is the magic number to pass any piece of legislation. That gives House Speaker Mike Johnson, R-La., room to lose only three Republicans assuming all Democrats oppose. Any more than that, and the package is dead on arrival.

To put into context, a dozen Republicans voted against the tax reconciliation package passed in President Donald Trump’s first term, which the current tax package will seek to extend, among other things.

It was already a battle to get the budget framework passed earlier this month, which simply began the process to begin drafting the tax reconciliation package. Negotiating and finalizing details of the package is expected to be far more difficult — especially as some lawmakers remain divided on crucial aspects of the bill.

What’s in the budget bill?

The biggest component of the tax reconciliation package is the extension of the tax cuts passed in Trump’s Tax Cuts and Jobs Act of 2017. Under the latest iteration of the budget instructions, the package would make those cuts permanent.

To offset those costs, House and Senate committees are instructed to find trillions of dollars in spending cuts. Both chambers are expected to find at least $1.5 trillion in spending cuts, although some Republicans have expressed support to find deeper cuts.

The bill would also raise the debt ceiling by $5 trillion in order to avoid a default later this year. By raising the debt limit, it allows the government to issue new debt in order to pay off what is outstanding.

The package includes an additional $521 billion to go toward other priorities, including $175 billion for border security and another $150 billion for national defense.

What sticking points remain?

Even with those general outlines made, some obstacles to the tax reconciliation package remain — mainly with where to prune government spending in order to pay for the tax cuts.

Each committee has been given a different target, but some lawmakers are drawing lines in the sand that could put them on a collision course down the road.

Perhaps the biggest fight ahead is over Medicaid and other welfare programs. The House Energy and Commerce Committee, the panel largely responsible for overseeing Medicaid, is instructed to cut $880 billion in spending.

A recent study by the Congressional Budget Office, a nonpartisan agency that provides budget and economic information to Congress, showed that lawmakers would likely need to slash Medicaid funding to cover the lost tax revenue from extending the 2017 tax cuts.

In the CBO’s budget projection, Medicaid accounts for roughly 93% of non-Medicare related mandatory spending in that time period. When one removes Medicare, Medicaid, or the Children’s Health Insurance Program from the equation, funding under the committee’s jurisdiction is only $381 billion.

Of that amount, more than half is already paid for by collection programs or user fees, according to The Washington Post, meaning that even if the committee slashed programs under the remaining $135 billion, it would still fall far below the $880 billion target outlined in the budget.

Still, lawmakers have left the door open to root out waste, fraud, and abuse related to Medicaid, giving GOP leaders some wiggle room when it comes to finding spending cuts. However, some moderate Republicans have made clear they will not sign on to something that threatens access to healthcare for low- and middle-income families.

There’s also lingering disagreements about eliminating tax credits passed in President Joe Biden’s Inflation Reduction Act. While some Republicans are adamant to repeal the full law, some want to preserve the clean energy tax breaks they say helped draw in billions of dollars in manufacturing and other investments.

If abruptly withdrawn, the lawmakers argue, it could cause drastic cost increases in utility bills “the very next day.”