Washington Update

Congress to Focus on a Budget Resolution

The House and Senate are considering drastically different budget resolutions, working towards the same goal of passing a “fast-track” reconciliation provision for tax reform. The outcome of the reconciliation process could have a profound impact on higher education. 

While it has been widely reported that the intended outcome of this week’s budget process is to finalize a resolution that provides big picture spending totals, and a reconciliation instruction for tax reform, the steps getting to the final product are concerning for two of NAICU’s top priorities – student aid programs and higher education tax provisions.

On October 5, the House will vote on a version that reflects the plan voted out of committee in July, which proposes $20 billion over 10 years in deficit reduction from the Education and Workforce Committee, and a deficit neutral tax package.  In the education committee, this magnitude of cuts can only come from the student aid programs, which puts provisions like the in-school interest subsidy on student loans, Pell Grant mandatory funding, and Public Service Loan Forgiveness in jeopardy.  

For the tax instruction, a “deficit neutral tax package” means some tax provisions will be cut to increase others.  While the recently announced “Framework” for tax reform acknowledges the importance of maintaining tax benefits for charitable giving and higher education, there are no details as to which higher education benefits could be eliminated in the simplification process.  

The Senate version, which will be marked up in committee on October 4, does not target student aid programs for deficit reduction. Instead it provides reconciliation instructions for the tax committee to create reform legislation by increasing the deficit by $1.5 trillion over the next 10 years.  This version uses dynamic scoring, which shows tax reform generating offsetting savings that buys down some of the cost of tax reform over time.
 
A reconciliation instruction is the goal in this process.  This result would allow for a “fast-track” process in the Senate with limited hours of debate and limited amendments, no filibusters, and a simple majority (50 votes) for passage.  While these expedited “reconciliation” rules were originally created to reduce the federal deficit, they have since been high-jacked by both parties to pass everything from tax bills to health care reform to student loan changes. 

Once the House passes its version, and the Senate committee makes its draft official, the Senate will vote, and the chambers will quickly conference for a final outcome.  It is expected that this final version will closely resemble the Senate’s initial draft.  The President does not sign a congressional budget resolution, but both chambers must agree to the same final details for it to become effective.   
 

For more information, please contact:
Stephanie Giesecke

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