Tax Policy Update

WORD OF THE WEEK: PARITY

Both the House and Senate are back this week, and it’s déjà vu. The continuing resolution is set to expire Jan. 19 — lawmakers must come to an agreement on funding for the remainder of fiscal year 2018 to avoid a government shutdown. Sound familiar?

Congressional leaders are working out an agreement to raise the budget caps and put together a long-term spending bill (so-called “omnibus”) to keep the government running through Sept. 30. Spending numbers are at the heart of the fight between Republicans and Democrats. Republicans want to increase funding for the military, but that will require Congress to bump up the statutory caps on discretionary spending. Increasing the caps will require Democratic support. Democrats are willing to play ball so long as they get a commensurate increase for domestic spending. Negotiating for parity between defense and domestic spending reached an impasse in December.

Even though congressional leaders made some progress in their negotiations at the White House last week, another stopgap measure will likely be necessary to give appropriators more time to crunch the numbers and finalize a deal. Lawmakers must also decide whether to attach other policy riders to the omnibus, namely disaster assistance, debt limit increase, and a fix for DACA. If talks between Republican and Democratic leaders take a more productive turn, an omnibus spending bill may be unveiled in February, if not sooner.

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