The twin battles over government funding and tax reform both took steps forward yesterday as House Republicans released the text of their preferred version of a continuing resolution (CR) and tax conferees reached an “agreement in principle” on the final form of a legislative package. On the former issue, the House Republican CR (text) would fund defense spending for a year and domestic spending for five weeks – an approach endorsed by conservatives in the House, but viewed as a non-starter in the Senate, where Democrats have demanded “parity” in increases to defense and domestic spending. House Republican leaders are reportedly facing pressure from the conservative side of their caucus to pass the bill and leave town in an attempt to force the Senate to accept their version. However, with 8 Democrat votes needed in the Senate for any funding measure, that approach is likely unpassable in the upper chamber and the brinksmanship approach would amount to a serious escalation of the threat of a government shutdown. Bipartisan and bicameral negotiations will continue behind the scenes ahead of next Friday’s deadline.
On tax reform, a deal has reportedly been struck by Republicans to bring the House and Senate versions of their bill together, with only a few technical issues left to work out. The agreement would set the top individual tax rate at 37 percent, the corporate rate at 21 percent, and include the $10,000 deduction on property tax that is seen as a compromise on the repeal of the state and local tax (SALT) deduction. A full release of the reconciled tax proposal is expected to be released tomorrow, ahead of floor consideration next week. So far, it appears that Republicans will have near-perfect party unity on the measure and be able to pass it on the strength of their majority in both chambers. Republican leaders are still finalizing the plans for floor time, but the expectation is for both chambers to pass the bill before Wednesday in order to provide enough time to pass a government funding measure before the current CR’s expiration on Dec. 22.
Today, the Senate will take its last vote of the week with a final up-or-down vote on the nomination of James Ho to join the U.S. Fifth Circuit. The House is also expected to wrap up its floor work for the week today. Lawmakers in the lower chamber will vote on a measure (H.R. 2396) that would make technical clarifications on privacy notices and exempt some financial services firms from disclosure requirements. The bill received some bipartisan support in the House Financial Services Committee, being advanced on a 40-20 vote in a markup in October.