GOP budget feud

Internal House GOP budget feud threatens agenda

Republicans are increasingly worried about their ability to pass a budget.

By RACHAEL BADE and SARAH FERRIS

House GOP efforts to write a fiscal 2018 budget are deadlocked amid Republican infighting, a divide that threatens to undermine President Donald Trump’s agenda by stalling tax reform and delaying progress on appropriations.

The House Budget Committee is months behind its usual timeline in releasing and marking up its annual fiscal blueprint. While the panel said it hoped to release the budget by early June, conference-wide bickering over priorities and spending levels have all but ground the process to a halt.

“A lot of us are really, really frustrated right now by our inability to move,” said Rep. Steve Womack (R-Ark.), who sits on both the Budget and Appropriations committees. “It’s a lot of divisive issues within the committee — which is also a reflection of the conference — that has dogged us for a long time… There is absolutely no clarity into what we’re doing.”

The feud pits defense hawks demanding more money for the Pentagon against appropriators unwilling to offset such increases with what they consider unrealistic cuts to nondefense programs like housing or transportation. And while many Republicans are already calling on leaders to negotiate with Democrats and raise spending caps put in place years ago, conservatives want to go the opposite direction and take an ax to welfare programs.

The disagreement also extends to the budget panel and leadership. The committee's chair, Diane Black of Tennessee, for weeks has been crafting a plan that would use reconciliation to slice $400 billion in mandatory spending in addition to tackling tax reform — an idea applauded by hard-liners in the Freedom Caucus.

But concerns are brewing in leadership that committees won’t be able to identify those savings. If they don’t meet that $400 billion threshold, the fast-tracking tool allowing them to circumvent the filibuster in the Senate could die.

“We still have the same divisions as the conference has: We still have defense hawks, we still have budget hawks… and we still have humble appropriators,” said senior Republican Tom Cole of Oklahoma, who also sits on both the Budget and Appropriations committees. “So those debates haven’t been fought out.”

With all parties seeming unwilling to cave, a darker mood has settled over the conference. Republicans railed for years about the importance of budgeting and fiscal responsibility. But now in control of Washington's key levers, their inability to pass a budget would be a huge embarrassment.

“Right now, a budget cannot pass in the House of Representatives,” said Freedom Caucus ringleader Jim Jordan (R-Ohio) at a Friday Heritage Foundation event. “It can’t.”

Republicans increasingly think the window for approving a budget resolution is closing. Asked his own thoughts on the budget, Rep. Chris Collins of New York laughed. “I have to smile because you made an assumption there that there is going to be a budget,” he said.

Others agree with him. “Unless we get it on the floor in the next couple weeks, I don't think it’s going to happen,” one GOP aide close to the budget process said.

House Republicans could decide on a path forward as soon as this week. Speaker Paul Ryan told lawmakers Tuesday that he plans to lay out the possible scenarios for this year’s budget cycle at another members-only meeting on Friday, according to a GOP appropriations aide.

Failing to pass a budget has far-reaching consequences for Republicans. The document sets top-line spending numbers that greenlight appropriators to begin writing funding bills. The delay has already forced GOP appropriators to take a reverse approach by writing bills without any official word about how much to spend.

Some long-serving Republican appropriators are hinting it's time to again abandon the budget resolution in favor of a simple spreadsheet that sets spending levels.

“We don't have much choice here because of the time problem,” former House Appropriations Chairman Hal Rogers told POLITICO last week. The Kentucky lawmaker added, “We still don’t have a number to mark up to.”

Without a budget, however, Republicans will run into major problems with tax reform. They need it to unlock the fast-tracking tool, reconciliation, which leaders had planned to use to ram a partisan tax bill through Congress.

Several GOP insiders expect leadership in the next month or two to make this case to the Republican Conference, advocating for what’s known as a “shell” budget that focuses only on the reconciliation tool and discards the rest.

The same tactic was used for the fiscal 2017 budget to unlock reconciliation for repealing Obamacare. But conservatives are balking at doing the same thing again — and some aren’t sure such a document could even pass the committee.

“We can try to do a bare-bones budget, just like we did in January,” the GOP aide said. “But I don't think that’s going to make it out of committee.”

Hoping to complete the process by the looming July 4 recess, the House Budget Committee has charged ahead this month with negotiations in all corners of the GOP. Black has met or dispatched other members on the Budget panel to talk with the chairmen of authorizing committees to discuss potential reconciliation instructions for spending cuts. She’s also huddled with the more moderate Tuesday Group and kept in contact with Freedom Caucus leaders.

While the vast majority of the budget text, including Medicare reforms first drafted by House Speaker Paul Ryan, has been ready since March, GOP lawmakers have been stuck at an impasse over the spending numbers.

In one corner are the defense hawks, led by House Armed Services Chairman Mac Thornberry (R-Texas). Pointing to Trump’s promise to boost the military, they’re pushing for a $640 billion budget next year — much more than the current $549 billion defense cap. While Pentagon cheerleaders like Rep. Mike Turner (R-Ohio) have led the charge pushing leadership to raise the cap on defense, that would require a bipartisan budget agreement with Democrats to pass — meaning more non-defense spending, too.

Echoing the Trump budget, conservatives, meanwhile, have been pushing for defense increases to be offset by nondefense programs. But appropriators say there’s little left to cut in government agencies. Most of the spending driving up the nation’s $20 trillion debt comes from mandatory programs like Medicare, Social Security and Medicaid anyway, they argue.

Budget writers already are looking to simply tuck more defense money into the Overseas Contingency Operations account funding the war on terror, which is not subject to the caps and is a loophole lawmakers have used before. But conservatives — and more than a few budget writers — view that as a gimmick, and it's unclear whether that could pass.

Black and some budget writers think the key to uniting the GOP on total spending levels could be a separate agreement to cut billions from mandatory programs. Conservatives in the House Freedom Caucus are expected to take a position this week backing the idea, and they’ve signaled a willingness to compromise on other areas of the budget if they could get these cuts.

“We’re reaching out real hard to try to find that sweet spot, even in spite of the fact that a number of us believe that the top line numbers may have to increase for defense,” said Freedom Caucus Chairman Mark Meadows in an interview. “If we can make some reforms in other areas, I’m optimistic we’ll be able to get there.”

Not everyone is buying the idea. Moderates and some chairmen for authorizing committees are squeamish at the thought of cutting programs like food stamps, farm subsidies and housing assistance for the poor — reductions that would affect the most vulnerable populations in the country.

Leadership has also been lukewarm. When Black first pitched the mandatory savings package to GOP leadership, she had to personally convince them, according to one source familiar with the process.

Leadership has always looked at the budget as a tool for tax reform, some worry that complicating the process with spending-cut instructions as well would only make the already tough task of passing tax cuts more difficult.

House Ways and Means Committee Chairman Kevin Brady of Texas, whose panel would be asked to cut large sums of Medicare spending, said he’s “clearly focused” on ensuring the budget resolution can be used for tax reform, “and then we’ll have discussions about other areas that they want or are considering.”

There’s also a fear that authorizing committees won’t be able to find $400 billion to cut, which would declaw the fast-tracking tool. That’s why leadership wants the Tennessee Republican to shrink her number to as little as $1 billion per committee instead of several hundred billion. Committees can cut more, even if they set the bar low, the thinking goes.

“It’s leadership’s job to take the easy way out. It’s usually the member’s job to push them towards something better,” Cole said. “People don’t want to have to put their fingerprints on something that they don’t think will happen, and to be fair, we’re unlikely to get those mandatory cuts through the Senate. But if you don’t start talking about mandatory spending, if we surrender to our instincts, you’ll never get anything done.”

A smaller $1 billion cut is likely to prove unsavory to hard-liners like Meadows, who said it’s the “wrong way to go.”

The divide puts Black in a tough spot of trying to find something that can please everyone, Womack said: “Diane wants to get the budget resolution out, so how do you appease two masters?... She’s got a real challenge.”

Some budget writers are frustrated leadership isn’t helping her more.

“The only way this gets across the finish line is if leadership says, ‘This is the compromise.’ I don't hear anyone besides us talking about compromise,” the aide added. “Because we have complete Republican control of government, there should be more of an effort and more of a willingness to find the numbers that work for everybody.”