Tax reform advocates hope GOP can avoid September catastrophes

Stakeholders hoping that the Republican Congress and President Trump can make meaningful progress this fall on tax reform say those efforts could be upset by difficult legislative hurdles in September.

Looming deadlines to avert a government shutdown and raise the debt limit have created a busy month for Congress, and one that could create new obstacles for tax reform if they are not handled carefully.

{mosads}If Republicans can get through September’s agenda with few hiccups, they could have more momentum and time for tax reform during the rest of the year.

If there are hiccups, and the Congress struggles to pass a government funding bill, disaster relief for Hurricane Harvey and a measure raising the debt limit, it could at a minimum delay tax reform while raising questions about the GOP’s ability to govern.

“This is really make or break time for Congress,” said Rep. Tom Cole (R-Okla.), a senior member of the House Appropriations Committee, noting the dual deadlines to fund the government and raise the debt limit.

“We have to get tax reform done or we’re going to be labeled in my view as a Republican Congress that can’t get things done,” he said.

Overhauling the tax code, has been a major priority for Republicans for years, and they view 2017 as the best opportunity for success because the GOP controls the House, Senate and White House.

Still, Republicans haven’t reached a consensus on all of the specifics of a tax bill and have not yet released legislation. The difficulties inherent in rewriting the tax code have led some analysts to predict that tax reform will be pushed back to early 2018 or that lawmakers will end up passing tax cuts only instead of a broader tax code rewrite.

Congress returns to Washington next week following its August recess, and GOP lawmakers and administration officials will continue their endeavors on tax reform during September. But the spotlight during the month will be focused on items such as the debt limit, government funding, Harvey aid and potentially a last ditch effort to finally repeal ObamaCare.

Some congressional observers say that if lawmakers struggle with these issues, it could use up time that they would otherwise have to focus on taxes.

“If we’re dealing with a potential shutdown, messing with the debt limit, those are all distractions,” said Gordon Gray, director of fiscal policy at the American Action Forum. 

On the other hand, a September with few problems could breed goodwill within the Republican caucus, which could be beneficial for the tax-reform efforts.

“Clearly smooth sailing on that is the best outcome,” said John Gimigliano, head of federal tax legislative services at KPMG. Gimigliano said, however, that hang-ups in September won’t doom tax reform since congressional GOP leaders know that there are multiple ways to solve problems. 

Government funding, debt-limit and disaster-relief bills have all been tough votes for Republicans in the past. Fiscal hawks in recent years opposed raising the nation’s borrowing authority without reducing spending and have sought for disaster-aid spending to be offset. 

But there are reasons to believe that Congress will be able to clear must-pass items in September without too much difficulty.

The White House and GOP lawmakers now appear unlikely to force a government shutdown if a stopgap spending bill in September doesn’t include money for a wall along the U.S.-Mexico border. 

Additionally, Rep. Mark Meadows (R-N.C.), head of the conservative Freedom Caucus faction, has said he doesn’t think that Harvey relief needs to be offset, though he did tell the Washington Post on Thursday that Harvey aid should be kept separate from legislation to increase the debt limit. 

Leslie Belcher, managing director of government affairs and public policy at Steptoe & Johnson and a former aide to Cole, predicted that September will be “less controversial” than many people anticipate.

While there may be “pockets of opposition” to legislation, Belcher said that policy disagreements probably won’t be fought over a likely short-term spending bill and Harvey aid will “sail through.”

“I think Harvey changes the equation a little bit to a more positive tone,” she said.

In a speech in Missouri on Wednesday, Trump said he doesn’t “want to be disappointed by Congress” on tax reform. Trump’s push could inspire GOP lawmakers to resolve other issues in a prompt fashion, said Mattie Duppler, a senior fellow at the National Taxpayers Union.

Congressional Republicans “have an extra motivation to get those done and find consensus quickly,” Duppler said.

House Ways and Means Committee Chairman Kevin Brady (R-Texas), whose Houston-area district has been impacted by Harvey, expressed optimism that Congress could approve both Harvey aid and tax reform and said that the tax efforts are running on a “parallel track.”

“All this is a challenge, no question about it, but again we are still focused on delivering [tax reform] this year,” he said in a Fox News interview on Thursday.

Harold Hancock, a partner at McGuireWoods and former Ways and Means Committee aide, said that lawmakers have been working on tax reform for years and are likely to continue that work regardless of what else is on Congress’s plate.

“It’s not a project that just started a couple of months ago that could be derailed,” he said.