Having recently passed a budget as a result of communal efforts between the House and Senate which were notably absent during healthcare reform efforts earlier this year, the stage is set for Congress to enter a very intense multi-week period leading up to Thanksgiving, filled with headlines on tax reform. From a market standpoint, the outcome of this process will determine whether US interest rates continue to go up or retrace the recent increase. Meanwhile, from a purely political perspective, from here the two main questions surrounding tax reform are: what is the process to get from these budget resolutions to actual tax reform and what are the potential pitfalls that Congress needs to avoid in order to successfully pass the bill.
In terms of next steps, the progression from budget resolutions to tax reform is as follows:
Having recently passed a 2018 budget, an important step which unlocks “budget reconciliation”, or the process by which tax reform can be passed with a simple majority vote, the next step is to write the actual bill; this will be done by the Ways and Means Committee in the House and the Senate Finance Committee in the Senate, likely in unison (much like with the budget resolutions) in an effort to speed up the process. After it passes the committee vote, it will be brought to the floor for a full vote in the House, which will then be sent to the Senate upon approval. At this point, the Senate can vote for the bill as is and send to the president’s desk, vote to kill the bill, or they can add amendments to the bill and vote on their new version. In the latter case where the Senate adds amendments, the new bill will be sent to a ‘conference committee’ of both Senators and House Representatives, in which they would reconcile the bill and send it back to House/Senate for passage and then sent to the President’s desk.
This post was published at Zero Hedge on Oct 30, 2017.
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