Tax Policy Update

CR, Episode V

Photo: REUTERS/Jonathan Ernst

Here We Are Again. Congress is getting ready to vote for its fifth continuing resolution (CR) this week. The current CR expires on Feb. 8, and congressional leaders still have not produced a long-term budget and spending agreement, which means another temporary funding bill is needed to keep the government open.

On Monday evening, House GOP leaders introduced a CR (H.R. 1892) that would extend most government funding at current levels through March 23. The Department of Defense, however, would be funded through Sept. 30 with an increased budget of $659 billion. The beefed-up defense spending isn’t likely to sit well with Senate Democrats who have been trying to secure parity between defense and domestic spending in the broader budget negotiations. Don’t be surprised if the Senate decides to take out the defense funding booster once it gets ahold of the CR. The House is expected to take a vote on the stopgap on Tuesday night.

The House CR also includes various provisions covering health and Medicare extenders. The temporary funding bill does not include disaster assistance as some had hoped. The White House’s $90 million request for the Internal Revenue Service has also been left out.

The CR, as written, is expected to clear the House, but it will undergo changes in the Senate. Some are hoping that the small tax section in the House CR will provide a placeholder for the upper chamber to insert its tax extenders package. But that decision is still up in the air.

Whatever the final form the CR may take, GOP leaders will likely get the votes they need to keep the government open — even though House conservatives are raising a stink about passing another short-term CR. Democrats are expected to support the CR to avoid making another strategic error like last month’s melodramatic three-day shutdown.

Given that negotiations on DACA and the two-year budget agreement are ongoing, Congress is unlikely to produce a budget deal until late March, which means the FY 2018 omnibus spending bill won’t be fully baked until April.

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