Senate passes a budget, moving the GOP closer to tax reform

Key Points
  • The Senate passes a budget resolution, a key step on the way to tax reform.
  • It still needs to reconcile its budget proposal with a different one passed by the House.
  • Once Congress approves a budget, it will start writing a tax bill that Republicans hope to pass this year.
Senate passes a budget, moving the GOP closer to tax reform

Senate Republicans approved a $4 trillion budget measure Thursday, taking a crucial step toward their goal of passing a tax plan this year.

The chamber approved the budget resolution by a 51-49 vote. Sen. Rand Paul, R-Ky., was the only GOP senator to vote against it.

Senators will now have to reconcile their budget resolution with a separate one passed by the House. The other chamber could simply choose to pass the Senate budget blueprint.

Passing a budget unlocks reconciliation, which enables the GOP to pass a tax bill with a simple 51-vote majority in the Senate. Using the tool removes the need for winning Democratic support, which would likely sink a GOP tax measure.

Republicans have described overhauling the American tax system as crucial to achieving campaign promises and avoiding an electoral setback next year. Disagreements within the party already derailed one key campaign plank, repealing the Affordable Care Act.

Senate budget bill paves the path to tax reform

President Donald Trump, Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Paul Ryan, R-Wis., contend tax cuts will unlock economic growth.

Lawmakers have differences to hash out before they can approve a joint budget and move toward passing a tax bill. If lawmakers choose to go to a conference committee, it could take Congress until late October or early November to clear a budget.

Among the variations, the Senate version would allow for tax cuts to add $1.5 trillion to the deficit over a decade. In contrast, the House called for a revenue-neutral proposal.

Republicans hope to pass a bill that broadly chops individual and corporate tax rates. A framework GOP officials released late last month said the proposal would double the standard deduction and scrap provisions like the estate tax and alternative minimum tax.

But other than a proposal to get rid of state and local tax deductions, it largely lacks tools to fund those tax cuts. That could put a hole in the budget deficit, even after economic growth is taken into account.

Republicans have not yet introduced a concrete tax bill. The process of crafting the full plan will start once the House and Senate can pass a budget resolution.

Even amid challenges, Trump and McConnell this week said they still want to pass a tax plan this year.

Democrats, even those up for re-election next year in states Trump won in 2016, appear unlikely to support the tax bill.

WATCH:  GOP eyes tax reform after budget win

GOP eyes tax reform after budget win