This week, MMG was watching to see how the Republican party will approach the budget process, as its majority tightened following the Alabama special election. Meanwhile, trade talks are heating up as the Trump administration threatens to leave NAFTA, and state and local taxes are back in the conversation as midterm elections creep closer.
GOP Considers Skipping Budget Process
With embattled Republican Roy Moore’s loss to Doug Jones in the Alabama special election last year, Republicans now have a very slim (51-vote) majority in the Senate—a margin that will make passing a budget this year more difficult, Politico reports. With such a narrow margin, competing factions within the party will be sure to clash. The more conservative House is likely to push a budget with major cuts to entitlement spending, something the Senate isn’t keen on.
If the GOP skips the budget process, its legislative agenda will be severely handicapped. The budget process is the vehicle for enabling the reconciliation process, which allows budget-related bills to be passed by a simple majority vote. Without reconciliation, the Senate will be required to have some of its Democratic caucus sign on to legislation, which is highly unlikely for big-ticket items such as Obamacare modifications and welfare reform.
The more conservative House is likely to push a budget with major cuts to entitlement spending, something the Senate isn’t keen on.
NAFTA Talks Continue
As the Trump administration continues its NAFTA talks, Senate Republicans are lobbying intensely to remain in the agreement, Axios reports. If the administration pulls out of NAFTA, congressional officials say the economic impact is highly unpredictable, as the agreement is deeply ingrained in the economies of many states. In addition, top GOP officials are unsure of what that process would even look like. Senate officials maintain that NAFTA can be updated and that Trump simply wants the “best deal possible.” That suggests it’s highly likely that the United States will remain in the agreement.
Congressional officials who are facing tough reelection prospects due to the tax bill are pushing for changes to the state and local tax, or SALT, limitation, The Hill reports. Republican Rep. Leonard Lance of New Jersey is currently working on legislation that would allow those who prepaid their state property taxes for 2018 to benefit from the full deduction. State legislatures also are trying to sidestep the limitation with measures such as converting property taxes to income tax, or allowing individuals to “donate” to a charity founded by the government (for the purposes of governmental revenue) and to deduct the donation as charitable giving. Courts would likely strike down many of these types of measures.
Ben Marsico is ACG Global’s manager of legislative and regulatory affairs.