Update on Senate/House Reconciliation and Tax Reform

The US Senate and House are currently driving the budget reconciliation process needed to pass a tax bill to extend the 2017 Tax Cuts and Jobs Act. On February 25th the House adopted its budget resolution, which prioritized climate, immigration initiatives and tax in one bill package that narrowly passed. Just last week the Senate passed a revised resolution that amended what the House passed previously, but with a few substantial differences. For example, the House Ways and Means instruction for a deficit increase is capped at $4.5 trillion, while the Senate Finance instruction for the deficit is capped at $1.5 trillion. Additionally, the Senate resolution allows for hundreds of billions of dollars less in spending cuts than House "budget hawks” are demanding, which is proving to be a huge point of contention.  

For the reconciliation process to continue, the House must approve the Senate resolution exactly as it is written, or it will have to go back to the Senate for further deliberation and changes. It is important to remember that the current resolutions are just a shell with lots of spending targets, but no policy specifics yet for Republican lawmakers to reveal.