PARTY-LINE DREAMS, MEET REALITY Speaker Mike Johnson briefly lunched with senators this afternoon to discuss the GOP’s ultimate Election Day fantasy — a Republican sweep of the House, Senate and White House. Johnson’s conference has grand aspirations for making the most of that potential trifecta: Namely, they’re eager to deploy budget reconciliation and its power to skirt the filibuster. But across the Capitol, their Republican colleagues are already reality-checking them. “I do think, at the end of the day, we're going to have more limitations on what we're able to use reconciliation for than perhaps a number of our House colleagues would like,” said Minority Whip John Thune (R-S.D.), who’s running to become the Senate’s next GOP leader. The complex budget maneuver would technically unlock a path for Republicans to realize their wildest fiscal ambitions. But the move comes with plenty of restrictions on what the GOP could accomplish policy-wise, leaving aside its prospect of sparking intraparty war over clashing Republican priorities. Important detail: Republicans’ chances of holding the House this fall are not nearly as strong as their prospects of taking back the Senate. And both would have to turn red in order for reconciliation to work — Democrats won’t be playing along here. Back to the GOP wish list: House members are already sketching out a wish list that includes addressing the expiration of Trump-era tax cuts, which will trigger some angst about their possible multi-trillion-dollar price tag. Other ideas getting floated are regulatory rollbacks, a Pentagon budget boost, domestic spending cuts, border security investments, changes to mandatory spending programs like Medicaid, a reversal of Obamacare and Inflation Reduction Act policies … and more. “The challenge,” Thune told us, is that the House doesn’t need to heed the Senate rule that limits what can be accomplished with the special budget maneuver. “So they can take sort of a wider lens on this and say, we can pack all these things in reconciliation. And we are talking with them. I think they need to understand what the limitations are going to be.” The House counterargument: Republicans across the Capitol push back that Democrats went big with their last two reconciliation packages, and so can the GOP. “When Democrats were in control, the parliamentarian’s determination on what was reconcilable was pretty expansive,” said House Budget Chair Jodey Arrington (R-Texas). “The Byrd rule was interpreted pretty broadly for the Inflation Reduction Act,” echoed House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.), referring to the parliamentary restriction on reconciliation’s use in the Senate. The Inflation Reduction Act of 2022 is an interesting choice as an anecdote for a slam-dunk reconciliation attempt. Enacting that climate and spending package was neither quick nor painless for Democrats – in fact, they wrestled with its contents for well over a year, amid dissent from Sen. Joe Manchin (D-W.V.) and the upper chamber’s parliamentarian. “Having a trifecta sometimes can be a curse and a blessing,” said Manchin, the holdout who tanked his party’s initial and far more expensive reconciliation bill, known as Build Back Better, before steering a pivot to the less progressive plan that was eventually enacted. Next year, quick action would be key. “The problem is, once the next inauguration occurs, then if you don't get some of the stuff done in the first few months, you might as well kiss it goodbye,” Sen. John Cornyn (R-Texas) told us. Cornyn, who’s also running to be Republican leader in the Senate next year, said heading off the expiration of the 2017 tax cuts is “front of mind,” since the individual breaks expire on New Year’s Eve 2025. But Cornyn said he also wants to use reconciliation to raise the debt limit and enact Sen. Roger Wicker’s (R-Miss.) plan to grow U.S. defense spending to 5 percent of GDP. Figuring out what works under reconciliation is notoriously time-consuming. Senate staff from both parties typically prepare arguments, much as lawyers in a court case would, for why the Senate parliamentarian should rule that a specific policy change does or doesn’t qualify. The biggest rules: Every piece of a reconciliation package must directly affect federal spending, tax flow or debt. As Republicans were reminded in their push to pass the 2017 tax package, the scrutiny applies to every line. The parliamentarian ruled that they couldn’t dictate how the state of Alaska and tribal governments would split revenue from Arctic drilling, because that specific language didn’t change federal cash flow. Democrats later learned in 2021 how strict the parliamentarian can be about what qualifies as directly budget-related when their plan to raise the minimum wage was rejected. The House’s top tax writer, Missouri Republican Rep. Jason Smith, said abiding by the constraints of the reconciliation process will be essential to clearing a tax package without big delays. “That's why we're starting now, so that we're prepared to do it in the first quarter of next year,” said Smith, chair of the Ways and Means Committee. “But I think that we'll get it done. We'll just make sure we do reconciliation appropriately. And it's the rules that we can live within.” — Jennifer Scholtes, with an assist from Caitlin Emma
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