House GOP, still searching for common ground

Politico

10-02-2025

Presented by NFIB
ON SECOND THOUGHT: So about the House Budget Committee considering a budget this week…
House Republicans remain at loggerheads over core fundamental tax-and-spending issues as they try to build a single, large fiscal package in the coming months that would extend expiring tax cuts and enact other of President Donald Trump's priorities, as our Benjamin Guggenheim and Meredith Lee Hill reported late on Sunday.
Those issues keep pushing back the House GOP's timeline. House Republicans were hopeful they'd be able to roll out the details of a budget resolution late last week, ahead of a committee mark-up this week.
But Speaker Mike Johnson acknowledged on Sunday that his conference's timeline might keep slipping. 'The details really matter,' Johnson said on 'Fox News Sunday.'
Those lost days might end up being costly, too. Senate Republicans are poised to plunge ahead with the consideration of their own budget this week, to start the process for their preferred two-step approach — in which Republicans would presumably score an early victory on issues like border security, in which there is basic agreement within the party, and hold off on the more complicated issue of extending the temporary parts of the 2017 tax cuts and potentially offering further tax relief.
MORE ON THAT IN A BIT, but first thanks for joining this 'well, that was a happy birthday for Saquon' version of Weekly Tax. Also, time to catch up on the lobbying over the penny!
Descending like the confetti at a Super Bowl: Today marks 53 years since David Bowie first rolled out the alien alter ego Ziggy Stardust, at a performance at a now-closed London pub named the Toby Jug.
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DRILLING DOWN FURTHER: So what are these hang-ups plaguing House Republicans?
One big issue is, essentially, how much money to give the Ways and Means Committee to cut taxes. Chair Jason Smith (R-Mo.) has been pushing for around $5.5 trillion over a decade, an acknowledgment of the steep costs of extending the expiring parts of the Tax Cuts and Jobs Act (around $4.6 trillion on its own) and Trump's interest in other ideas, like scrapping taxes on tipped income.
But key deficit hawks in the House, like Budget Chair Jodey Arrington and Rep. Chip Roy, both Texans, have worked to push that number down, with a $4.7 trillion figure making the rounds by the end of last week.
That would be kind of an awkward number, according to several D.C. tax people. It would certainly make it more difficult to permanently extend the temporary TCJA provisions, which Treasury Secretary Scott Bessent has stressed is a top priority for Trump and his administration.
There are a lot of moving parts to consider. The cost of a permanent extension of the expiring tax cuts is why a good number of Republicans are fans of using something called the current policy baseline, which basically assumes that it costs nothing to keep those temporary provisions.
Republicans have other options as well — including, of course, passing at least portions of their tax platform for shorter lengths of time. They also have a variety of revenue-raisers they can look to as a way to finance further tax cuts, like slashing some of the clean energy incentives signed into law by former President Joe Biden.
Still, the tax priorities that Trump's team spelled out last week underscore the challenge for Republicans. The president wants about a half-dozen tax relief measures, also including eliminating taxes on Social Security benefits and overtime pay and offering relief to the current $10,000 cap on state and local taxes, while he's offering a couple ways to raise revenues — ending the preferential treatment for carried interest and hiking taxes on rich owners of pro sports franchises.
The issue there, as the deficit hawks at the Committee for a Responsible Federal Budget noted, is that the tax relief in Trump's wish list far, far outstrips the new revenues — by as little as $5 trillion over a decade, and as much as $11 trillion.
(Worth noting: Trump and his team keep bringing up his desire to eliminate taxes on Social Security benefits. Critics of that idea note that it would both be expensive and largely help better off beneficiaries. But it's also a proposal that would seem exceedingly difficult to pass through the budget reconciliation process, which specifically prohibits changes to Social Security.)
BROADENING THIS OUT A BIT: Congressional Democrats have been pretty open about the fact that they don't expect to play any real policymaking role in the debate over the expiring tax cuts.
Republicans still have well over 10 months to pass an extension of the temporary chunks of the Trump tax cuts. But the longer they have trouble getting on the same page on taxes, the more fears will grow within the GOP that they might need Democrats' assistance in avoiding at least a total expiration of TCJA's tax cuts for individuals.
With that in mind: New polling from a trio of liberal groups — Data for Progress, Groundwork Collaborative and the Student Borrowers Protection Center — makes the case that voters aren't fans of some of the trade-offs that might be necessary to offset the costs of tax cut extensions.
The polling found that majorities of voters support programs to boost energy efficiency and student loan repayment options, while opposing cuts to programs like food stamps, Medicaid and Medicare. Meanwhile, a majority of voters continue to oppose tax cuts for the rich and corporations.
That points to a broader challenge facing Republicans. It's not just that it's difficult for the GOP to find palatable tax increases to help fund their agenda. It's also that lots of government spending programs are quite popular as well.
For instance, Elizabeth Pancotti, Groundwork Collaborative's manging director of policy and advocacy, noted that a majority of Republicans back clean energy programs — underscoring the difficulty the GOP might face in cutting parts of the Inflation Reduction Act signed into law by Biden, which has brought new economic activity to a number of red congressional districts over the last couple years.
More broadly speaking, Pancotti argued the GOP is essentially danged if they do, danged if they don't on tax issues this year. Either Republicans will have to come to Democrats for help, she said, or they'll end up passing what will turn out to be a second unpopular tax package in eight years, after TCJA failed to give the GOP any real electoral boost after it was passed in 2017.
'Voters are clear about what they want: Lower prices, better jobs, vital programs protected and expanded, and for the wealthy to pay their fair share in taxes,' Pancotti said. 'And yet, Republicans in both chambers of Congress are working overtime to achieve the exact opposite.'
Around the World
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Around the Nation
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Did you know?
'The Rise and Fall of Ziggy Stardust and the Spiders from Mars' was Bowie's second highest-selling album, behind 'Let's Dance.'