As Republicans inch closer to their ultimate goal of passing a reconciliation bill, the Senate GOP is charging ahead with a revised version of the House’s budget that calculates the fiscal impact of their legislation using a “current policy baseline.”
And while that may sound like an inconsequential detail only interesting to congressional budget nerds, there are trillions of reasons why that decision will have a massive impact. Literally.
Republicans are planning to claim that extending President Donald Trump’s 2017 tax cuts, which are set to expire at the end of the year and would cost about $400 billion a year for the next decade, would have zero budgetary impact.
Essentially, Republicans are saying a $4 trillion tax cut is free. And because the Senate is moving ahead with a budget that intends to make the tax rates permanent, the true cost of the tax cut is trillions more. It’s a $400 billion tax cut every year, in perpetuity, with the amount of revenue that would have been collected going up every year that GDP increases.
Never before has Congress used a “current policy baseline” in a reconciliation bill, with lawmakers previously opting to calculate the cost of legislation by comparing it to a “current law baseline,” which assumes Congress does nothing.
But Senate Republicans are convinced this accounting method is a good one, and even though it may solve some of their public relations problems with ultimately passing a reconciliation bill that adds trillions to the debt — Republicans can claim the bill hardly has any budgetary impact through this tactic — it does introduce some issues in the House.
Last month, Rep. Chip Roy called the proposal to use a current policy baseline “fairy dust.”
“They’re full of crap,” Roy said of senators looking to adjust the baseline, “and I’m gonna call them out on it.”
Whether Roy makes the current policy baseline issue an actual issue remains to be seen. But in response to the Senate releasing its revised budget Wednesday, some House Republicans were quick to criticize the blueprint.
“Since it’s baseball season, I’ll just say, ‘Swing and a miss,’” House Freedom Caucus member Rep. Ben Cline said of the Senate’s new budget.
Another House Freedom Caucus member, who asked to remain anonymous, told NOTUS they don’t “trust the Senate to do anything.”
“Much less fund anything close to spending reductions necessary for deficit neutrality,” this member continued.
And yet another Freedom Caucus member told NOTUS the Senate’s budget was “very disappointing.”
Of course, Democrats were also harsh on the Senate budget and the GOP’s baseline change.
Senate Minority Leader Chuck Schumer said Tuesday that adopting a current policy baseline would be tantamount to Republicans “going nuclear” to break Senate rules.
“It shows that Republicans are so hellbent on giving these tax breaks to the billionaires that they’re willing to break any rules,” Schumer said.
Sen. Elizabeth Warren said Republicans were adding “magic rules to their magic math.”
“At the end of the day,” she said, “none of this will work. A $4.7 trillion tax giveaway to billionaires will cost $4.7 trillion, and cuts to Medicare, Social Security and Medicaid will be real and cost millions of people around this country.”
Still, Republican leaders don’t seem to have an issue with using a new baseline.
“If we could have made what we did in 2017 permanent at the time, we would’ve,” Sen. Ron Johnson said after meeting with Trump. “We may have a couple people that might need convincing, but by and large, we’re fully supportive of what Chairman Crapo and Chairman Graham are going to do here.”
In a brief interview on Wednesday, Speaker Mike Johnson told NOTUS that, after the Senate adopts the budget, lawmakers will work on “merging the two products together and moving it forward” in the House. (GOP leaders know it will take some work to get everyone on board. They’re bracing for some tough days next week.)
And while Speaker Johnson may have some people in the House to convince, GOP senators were onboard with the baseline decision.
“We no longer need a ruling from the parliamentarian, that we can do it through the authority of the budget chairman,” Sen. John Kennedy said after a meeting between Trump and Senate Budget Committee Republicans on Wednesday. “We told him that, undoubtedly, the Democrats will challenge it. We will win.”
Sen. Rick Scott said using the current policy baseline was “the right thing to do,” while Sen. Ron Johnson said, “that’s just a done deal.”
It’s a risky gambit — made even riskier by other gambles in the Senate’s latest version of their budget resolution. The new legislation lists the House and Senate as having separate ceilings for debt limit increases. There are also still discrepancies in each chamber’s totals for spending cuts. And lawmakers from either chamber — and within each chamber — have continued disagreements on cuts to benefits like Medicaid.
As Kennedy noted, Democrats are also likely to challenge the current policy approach. The Senate parliamentarian, Elizabeth MacDonough, could object to the use of the current policy baseline in the actual reconciliation bill and doing so would wreak havoc on negotiations.
Senate Majority Leader John Thune has said he wouldn’t want to overrule MacDonough. Senators originally planned to get the parlimentarian’s ruling on the current policy baseline before an actual reconciliation bill. But Thune this week decided to move forward without it. Republicans insist Sen. Lindsey Graham, as budget chair, is empowered to make the decision on his own.
The urgency to speed ahead, despite clear issues with the plan, is emblematic of the pressures Senate Republicans are facing.
For weeks, the House has been pushing senators to move on a renewed budget resolution, after Speaker Johnson rejected the Senate’s first attempt. But there has been some trepidation — on both sides of the Capitol — over the cost of the overall reconciliation bill.
Wednesday’s meeting, according to multiple senators, helped alleviate concerns among the chamber’s fiscal hawks that a reconciliation bill would blow a hole in the deficit.
“I heard the President say, ‘I recognize this is a rare and wonderful opportunity to right-size the budget, and I support your efforts to achieve that end,’” Kennedy told reporters. “And I’ll say it publicly and repeatedly: I believe he will do that.”
Kennedy added that he asked Trump to send the Senate a rescission package to codify DOGE spending cuts. White House Chief of Staff Susie Wiles and Office of Budget and Management Director Russell Vought told Kennedy they were working on it.
Although Trump seems to have mollified some concerns, the Senate was always expected to eventually find the 51 votes needed to pass whatever iteration of the reconciliation bill reaches the chamber floor. First, the Senate has to adopt this revised budget. Without a budget, there can be no budget reconciliation. But the House also has to get on the same page with the Senate’s budget.
And while fiscal hawks in the House have their issues, more vulnerable House Republicans also have problems with their chamber’s budget.
“We’ve all been receiving messages from the House basically saying, ‘We do not agree with the bill that was sent over,’” Sen. Mike Rounds said, adding that House lawmakers have suggested the Senate “fix the bill and send it back to us.’”
Ultimately, lawmakers are planning to rely heavily on Trump to push the reconciliation bill through, believing hardly any Republicans will stand in the way of the president’s legislative agenda.
Kennedy said he’d “predict” that, eventually, “what will have to happen in order for us to pass something is for the president to step in.”
Departing the meeting with the president on Wednesday, Thune said it was a good discussion and “a good opportunity to get a lot of members’ questions answered.”
But asked if Republicans were all on the same page on the budget, Thune wasn’t exactly definitive.
“You never know for sure until it comes time to count,” he said.
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Ursula Perano is a reporter at NOTUS. Ben T.N. Mause is a NOTUS reporter and an Allbritton Journalism Institute fellow. Reese Gorman is a reporter at NOTUS.