×

Tax reform rush and shutdown threat make for a messy December in Washington

  • Congress faces multiple challenges during a busy December.
  • Republicans want to pass a tax bill before the end of the year, while Republicans and Democrats look to avert a government shutdown by Dec. 8.
  • Lawmakers could also look to pass more natural disaster relief money and reauthorize funding for the Children's Health Insurance Program.
Snow_02_030613.JPG
Chris Maddaloni | CQ Roll Call | Getty Images

Washington is shaping up for a long December.

As Republicans push to get their tax bill to President Donald Trump's desk by Christmas, they will also have to strike a deal with Democrats to keep the government funded. A flurry of activity toward those goals is starting this week.

Senate Republicans aim to pass their tax proposal this week. Meanwhile, Trump was scheduled to meet with bipartisan congressional leadersTuesday to hash out an agreement to avert a government shutdown next month. Democrats, however, pulled out following an inflammatory Trump tweet.

Here are some of the issues Congress will face before the end of the year:

Tax overhaul 

Trump and GOP congressional leaders have repeatedly said they want to approve a bill trimming business and individual tax rates by the end of the year. Congress has made progress. The House passed its version of a tax plan earlier this month, while Senate leaders believe they can approve their bill this week.

If the Senate passes a plan, the two chambers will have to reconcile the differences before sending it to Trump.

Despite Republicans' confidence about passing a tax plan, pitfalls exist.

Two GOP senators oppose the plan as written, while several others have not yet committed to supporting it. Sens. Ron Johnson, R-Wis., and Steve Daines, R-Mont., argue that the plan helps corporations at the expense of pass-through businesses, which get taxed at individual rates.

Others like Sens. Bob Corker, R-Tenn., and James Lankford, R-Okla., want assurances that the plan will have a mechanism to raise more revenue if economic growth does not do enough to make up for the nearly $1.5 trillion in expected tax cuts. They have expressed concerns about the bill ballooning federal deficits.

Senate Republicans can only lose two votes and still pass the plan.

If the bill makes it through the Senate, the chamber will have to compromise with the House on a joint plan. Outstanding differences include the treatment of popular state and local tax deductions.

The Senate plan eliminates them, while the House bill keeps up to $10,000 in property tax deductions. The House GOP passed its bill by 227-205, with some Republican lawmakers from high-tax blue states that benefit from the deductions voting against it.

Shutdown deadline

Congress faces a Dec. 8 deadline to keep the government funded and avert a shutdown. The latest shutdown threat stems from a September move by Congress to pass a short-term continuing resolution to keep the government going.

Ahead of a scheduled meeting with Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., Trump tweeted that "I don't see a deal" to avoid closing the government. He claimed that "they want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes."

The Democratic leaders later pulled out of the planned Tuesday afternoon meeting, saying they would prefer to negotiate only with Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan.

Democrats and some moderate Republicans want to enact protections for hundreds of thousands of young immigrants who came to the U.S. illegally as children before the end of the year. Trump ended the Deferred Action for Childhood Arrivals program in September, with a six-month delay to push for congressional action.

One possibility is approving a stopgap funding measure for only a number of weeks before Dec. 8, then passing a longer-term funding bill before the end of the year.

Lawmakers seem to want to avoid a shutdown. If Congress once again shoots itself in the fiscal foot, the resulting gridlock would be inconvenient and costly for taxpayers. Even if a shutdown lasts only a few days, the pain would be widespread.

The last one, a 16-day stalemate in October 2013, cost the economy more than $1 billion a day, according to most estimates.

Some benefits, like unemployment insurance and veterans' benefits, could be delayed or reduced. Among the headaches: national parks, museums and many passport offices would shut down; the Small Business Administration and FHA would stop guaranteeing new loan applications; farm subsidy checks would stop flowing; and IRS tax processing would slow down.

Natural disaster relief funding

In recent months, hurricanes and wildfires have ravaged several American states and territories. Puerto Rico, Texas, Florida and California all took substantial damage from natural disasters.

While Congress has already authorized billions in aid for those areas, lawmakers will likely have to pass more to deal with the recovery.

The White House has proposed an additional $44 billion in total aid funding. That's not even half the $94 billion requested by Puerto Rico.

CHIP funding

Congress blew past a Sept. 30 deadline to reauthorize funding for the Children's Health Insurance Program. It provides coverage to nearly 9 million low-income children.

While states had money to keep their programs afloat, some could start running out of money as soon as December.