Reconciling Reconciliation

Republicans are locked in one of those inside the beltway debates that only they and an opposition hoping to divide them pay attention to. Ostensibly, how to get ‘one big, beautiful bill’ to the President’s desk by summer.

Much of America is tuned out to the inside baseball over a reconciliation package that aims to preserve existing tax cuts, control federal spending, boost energy supplies and strengthen border security—but should it fail the country will start paying attention very quickly.

There’s trouble in the Senate over the House-passed version that calls for $1.5 trillion in budget reductions over a decade, without which spending will start to eat into the reauthorization of $4.5 trillion worth of tax relief in the 2017 Tax Cuts & Jobs Act (TC&JA). And now that blood is in the water, a few political misfits in the lower house are rethinking their support as well.

It goes without saying that Democrats want to let the clock run out on TC&JA. Since many of its provisions expire at the end of the year, no action on the reconciliation bill means a massive tax hike on the American economy. That is, as usual, what liberals desire.

Yet what’s really threatening the domestic centerpiece of Trump’s second term is once again Republicans circling the wagons—and shooting inward. Having far less to do with principle and far more to do with self-preservation, GOP ‘moderates’ on the left and a few LINOs (‘libertarians in name only’) on the ‘right’ are holding the ‘one big beautiful bill’ hostage.

If it all sounds too familiar, it should.

This is exactly how our bill to repeal and replace Obamacare in Trump’s first term failed. The same toxic one-two punch from purists in safe districts and never-Trumpers in blue ones culminated in the late Sen. John McCain’s coup de grâce, costing Republicans dearly in the 2018 midterms.

And now it’s coming back to haunt them in more ways than one. If the GOP doesn’t quickly renew the TC&JA soon, history may repeat itself in next year’s midterms. Moreover, one of the fiscal drivers making it more difficult to do so is a direct result of failing to repeal Obamacare in the 115th Congress.

The Affordable Care Act’s (aka Obamacare) biggest cost driver was the massive Medicaid expansion now at the heart of negotiations over the ‘one big beautiful’ bill in front of Congress. According to a Democrat-media complex, touching this new ‘third rail’ is out-of-bounds.

Despite the howling, getting the tax cut extensions to the President’s desk is not a heavy lift, no matter what ‘baseline’ you’re operating off. Indeed, finding modest budget reductions from federal outlays that will total over $54 trillion through 2035 shouldn’t be difficult. There are more than enough offsets to comply with ‘pay-go’ provisions to get the job done.

Indeed, had the Border Adjustment Tax (BAT)—removing tax breaks for costs associated with imports and exempting exports from taxation—remained part of tax reform in the 115th, the TC&JA could have reduced income tax rates even further.

Instead of opposing Trump’s modest tariffs or fretting about protecting Big Pharma price gouging in America, grandstanders who wear their Koch brothers libertarian bona fides on their sleeves (in order to fend off primary challenges) might want to take a look at, say…Medicaid spending in Kentucky.

Or leveling a fair tax rate on Wall Street’s carried interest (no, they’re not capital gains), $840 billion in university endowments and a $3.3 trillion ‘non-profit’ economy? All would go a long way towards meeting the targets and maybe even help pay for the President’s priorities of ‘no tax on tips,’ overtime and some sort of relief for seniors.

The silliest apostasy, however, would have to be reserved for those blue state Republican ‘moderates’ from California to New York. They can rarely be counted on when the ‘going gets tough’ so perhaps it’s no surprise they are now running cover for big spending Democrat governors. This time by insisting a perversion in the tax code called SALT be expanded—or else.

Eliminating the $10,000 per capita limit for the state and local tax deduction costs federal taxpayers about $1 trillion in lost revenue that would have to be made up by raising taxes elsewhere. Instead of giving wealthy filers in high-tax states a massive SALT subsidy, Republicans should zero out the deduction for all state and local taxes and cut federal income tax rates further.

Not only are these ‘centrists’ also disinclined to real reductions in the 40 million-plus Supplemental Nutrition Assistance Program (SNAP) program (despite the fact states routinely bypass congressionally enacted ABAWD work requirements for food stamps), but now they’re demanding that the green-energy credits from Biden’s bloated Inflation Reduction Act be spared as well.

And just when you thought the insanity couldn’t any worse, along come Senate armchair warriors Mitch McConnell, Susan Collins and Roger Wicker and blasting President Trump’s 2026 Budget for not increasing a $1 trillion DOD budget enough.

Let’s see, the whiz kids at DOGE identify billions in waste and fraud at the Pentagon so naturally pork-barreling politicians clamor for a massive increase in…wait for it, the Defense Department. In the process, making it all the more difficult to meet the reconciliation bill’s targets.

But budget hawks are no match for defense hawks. In the Senate and in what’s left of the Liz Cheney caucus (led by the insufferable Don Bacon) in the House. Word has it that they are now demanding $200 billion more for a Pentagon that can’t pass an audit.

The administration is proposing a reduction of $163 billion from annual appropriation bills that have ballooned to over $1.8 trillion. The cuts are all nondefense discretionary because the ‘war caucus’ insists on plussing-up the DOD to levels Democrats are only too happy to accommodate in exchange for jettisoning Trump’s ‘one big beautiful’ tax cut.

When I got to Congress in 2017, sequestration (enacted as a fallback for raising the debt ceiling in the 2011 Budget Control Act) was keeping a lid on both defense and nondefense discretionary spending of just over $1 trillion. Deficits were falling; automatic cuts were working.

Then the ‘uniparty’ got to work. The budget caps died via the appropriately named 2018 Bipartisan Budget Act. Since, Pentagon spending has almost doubled along with rest of discretionary spending, soon to be followed by a $5 trillion COVID ‘relief’ blowout.

Tax revenues, far higher than before passage of the TC&JA, have never been the problem. Spending is.

Former Congressman Jason Lewis is the author of “Party Animal, The Truth About President Trump, Power Politics and the Partisan Press.” This article was originally published on the author’s Substack page, which can be viewed here. Lewis is also the weekday host of Jason Lewis Live on Patriot.TV.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.