The Republican Budget Fight, Explained in 5 Minutes

McConnell; Ryan. Photo: Getty Images

Long story, short

Republicans are trying to pass a budget that would pare back the safety net, increase defense spending, and lay the groundwork for tax cuts. But there are such deep divisions within the House GOP, and between the congressional leadership and their reality-star president who just demanded a government shutdown unless his Mexican-border wall is funded the party may just tear itself to pieces and let America default on its debt by early October. While the budget process tends to be mundane in more normal political circumstances, this bill (for various procedural reasons) is shaping up to be a battle royal over the Republican agenda.

What’s at stake

The strength of the safety net — and the right’s highest policy ambition
For eight decades, conservative elites have been trying to topple pillars of the New Deal. Under Obama, House Speaker Paul Ryan drew up and passed budgets — never enacted, of course — slashing spending on virtually every program that benefits the poor. To make that blueprint a reality and fulfill a generations-old ideological ambition, all Ryan and the billionaires who back him thought they needed was a Republican president with “enough working digits to handle a pen.” But now that they have that and the moment of truth is here, the challenge of getting enough Republican congresspeople and senators to vote for such a radical, regressive agenda looks daunting.

America’s credit rating
Congress needs to raise the “debt ceiling” — the limit on how much the Treasury is allowed to borrow — before the end of September, or else Uncle Sam will go into default. A debt default would damage our nation’s credit rating; swell the costs of future government borrowing (and, thus, increase the national debt); tank the stock market; and, quite possibly, plunge the economy back into recession.

House Republicans can raise the debt ceiling without passing a budget. But if House conservatives aren’t satisfied with the state of the budget negotiations, they’re likely to hold the nation’s credit rating hostage to their demands.

The survival of Donald Trump’s legislative agenda
Now that Obamacare has sneaked past its own death panel, the president’s hopes for notching a major legislative win before 2018 all ride on tax reform. But in order to even begin the process of passing the president’s proposed tax cuts, congressional Republicans will have to pass a budget. Although, expect there to be some overlap between those goals …

What will likely be hiding in the budget bill

Republicans want to pass large, deficit-expanding tax cuts for the wealthy and corporations. The vast majority of Democrats do not want to do that. And the Donkey Party has enough votes in the Senate to mount a filibuster against any bill that does.

Except, that is, for an annual budget bill. To prevent intransigent minorities from undermining the basic functioning of government, Senate majorities can pass budget bills with 51 votes, so long as said bills don’t increase the deficit ten years after they’re passed. So, if Republicans can pass a budget, they can attach giant, temporary tax cuts to it — and pass them into law without a single Democratic vote.

The GOP’s first huge problem

Trump promised to pass the biggest tax cut in history; dramatically increase military and border-control spending; preserve Medicare and Social Security at their current benefit levels; and balance the federal budget. It is not mathematically possible to do all of these things. Nor is it politically tenable to cut taxes on the rich, while simultaneously passing entitlement reforms and spending cuts Draconian enough to balance the budget within a decade.

The GOP leadership’s nominal solution includes pretending that the American economy will grow by an average of 2.6 percent per year over the next decade (even though most economists think we’d be lucky to get 2 percent). That, along with various other sleights of hand and half-measures, would be enough to balance Uncle Sam’s books, they unconvincingly claim.

The second huge problem

The proposed cuts — including $200 billion to mandatory programs and a whopping 24 percent to domestic discretionary spending — would likely increase America’s (already exceptionally high) rates of child poverty and hunger, threaten Medicare benefits jealously guarded by the GOP base, and jeopardize the federal bureaucracy’s capacity to perform its most basic functions. Intuitively, the issue here would seem to be getting Republican moderates to sign on. (And that will be difficult.) But that’s only half the issue: The leadership’s proposed cuts are quite small, relative to the ones House conservatives are demanding. Which is to say: Ryan’s caucus is split by irreconcilable goals. The conflict can’t be solved by compromise, only by one side’s surrender.

The third huge problem

For some in the GOP, increasing spending on conservative priorities is more important than reducing funding for liberal ones. President Trump is desperate to build his border wall (and his much-touted Mexican financing appears to have fallen through). The House’s defense hawks want to add a few new wings to the military-industrial complex. But Senate Democrats can — and will — filibuster wall funding. And if Republicans insist on domestic spending cuts, then Chuck Schumer & Co. will block the defense appropriations, too: The 2011 Budget Control Act puts a hard cap on annual military spending, one that the GOP can’t lift without Democratic votes.

The president is now threatening to veto any spending bill that doesn’t fund his wall, out of the (bizarre) belief that fear of government shutdown will convince Democrats to do his bidding. But political dysfunction hurts the party in power far more than the opposition. Trump’s threats won’t get his wall built — but they could encourage the House’s far-right fanatics to continue holding the federal government hostage to their untenable demands.

Key movers

Diane Black
Chair of the House Budget Committee, she’s taken a lead role in the deliberations thus far, and helped craft the preliminary “compromise” budget (decried by conservatives and moderates alike). Black recently announced that she will run for governor of Tennessee in 2018, an ambition that may make her even more reluctant to embrace the Freedom Caucus’s unpopular plans for Medicaid and Medicare.

Mark Meadows
Chair of the Freedom Caucus, Meadows has warned the GOP leadership that he and his fellow conservatives won’t vote for any debt-ceiling bill that doesn’t include large spending cuts or deregulatory measures — provisions that are certain to doom the legislation in the Senate. He has also said that they will need to see larger spending cuts — and more details on the party’s tax-reform plan — before agreeing to back any budget.

Charlie Dent
Head of the moderate Tuesday Group, Dent led the moderates’ revolt against Black’s budget. Unlike the House’s other weak-willed GOP “centrists,” Dent voted against Trumpcare — a decision that many of his moderate colleagues surely envy, now that the bill has been rhetorically rejected by the president, and legislatively rebuffed by the Senate.

Donald Trump
President of the United States, Trump could, ostensibly, tip the balance in the House GOP’s civil war, if he can find time between livetweeting Fox & Friends, undermining the GOP leadership, and trash-talking his way to the brink of nuclear war.

Inflection points

September 29
The debt-limit deadline.

September 30
The federal government runs out of funding. To avoid a shutdown, the House will need to pass, at the very least, a short-term spending bill. That legislation will also need to renew the Children’s Health Insurance Program. There’s a good chance Ryan will likely need Democratic votes to get this done.

December 15
Final day of Congress’s 2017 session (for now). Trump has pledged to pass tax reform by year’s end.

Possible outcomes

Best-case scenario for the GOP
Ryan raises the debt ceiling with the votes of Democrats and moderate Republicans. His far-right faction takes the hit, learns humility, and decides it can accept a “mere” $200 billion in budget cuts. GOP moderates cave after being assured that said cuts won’t survive the Senate. Senate Majority Leader Mitch McConnell gets around budget caps on military spending — which under normal circumstances would require Democratic votes — by duplicitously treating the spending increase as war funding. After months of haggling, McConnell finds a set of spending reductions and tax cuts that 50 GOP senators can live with. Those clowns in Congress finally get something done. America’s rich get richer; the poor, poorer.

More plausible, pretty-good-case scenario for the GOP
Ryan raises the debt ceiling with the votes of Democrats and moderate Republicans. The far right is furious — but not furious enough to sabotage tax cuts for the rich. With maximum whininess, they agree to pass a short-term spending bill in September, and then go along with the same cop-out their party used to get the ball rolling on health care: a shell budget that does nothing but lay the groundwork for passing temporary tax cuts in the Senate. The Draconian spending cuts will have to wait for next year (or never).

Best-case scenario for Democrats
Ryan raises the debt ceiling with the votes of Democrats and moderate Republicans. His far-right faction declares a mutiny. Their demands for the budget grow more extreme. Ryan is forced to pass a budget with Democratic votes; Nancy Pelosi secures money to shore up Obamacare, in exchange for Trump’s requested funding for defense and border control. There are no major spending cuts. The betrayal costs Ryan his speakership, the GOP descends into a civil war, and tax reform dies in utero.

Worst-case scenario for the country
Ryan attaches entitlement cuts to the debt ceiling, passes it with Freedom Caucus and (spineless) moderate votes. Senate Democrats filibuster. America defaults on its debt. The economy goes into recession.

The Republican Budget Fight, Explained in 5 Minutes