The Freedom Caucus knows that even without the BAT, if the party leadership is determined to be revenue-neutral, conservatives might be pressured into accepting a higher corporate tax rate to offset revenue losses, which they believe would reduce the economic growth generated by the bill.
That’s why caucus members are fighting for more dramatic mandatory spending cuts in the budget resolution — a welfare reform package that they say could in part pay for tax cuts.
With Medicare and Social Security off the table, the Freedom Caucus wants to put Medicaid, cash assistance, and food stamp programs on the chopping block. Currently the budget resolution has written in $203 billion in mandatory savings cuts overall. The Freedom Caucus wants something closer to $400 billion.
There are a lot of other dynamics at play here as well.
House Republicans, with overwhelming consensus, want to hike defense spending to $621.5 billion, which would bust the defense budget caps in the Senate — set at $549 billion. Authorizing that level of spending requires negotiating with Democrats, which would almost certainly increase to non-defense discretionary spending from the $511 billion the House has proposed.
House leadership has floated avoiding Democrats altogether by putting the additional defense funding in the Overseas Contingency Operations fund, which covers unplanned military expenses outside of the budget’s baseline. The proposed budget resolution already calls for $75 billion in OCO. For defense hawks in the House, like Armed Services Committee Chair Mac Thornberry (R-TX), “it’s better to have the money than not have the money,” but more than $100 billion in OCO is not ideal.
House conservatives, anticipating this negotiation with Democrats, are only heightening their call for more mandatory savings.
“Maybe we as the Freedom Caucus can live with a higher budget number if in fact we do real welfare reform on the tax bill — work requirements, time limits on able-bodied adults [are] part of that package,” Jordan said of a proposal to tie tax reform to welfare reform.
Because budget reconciliation instructions denote specific savings requirements for each committee, the Freedom Caucus is pushing for higher savings assigned to committees with purview over welfare programs, like the Agriculture Committee, which oversees food stamps.
That’s a difficult ask for committees that have their own spending priorities.
For example, Rep. Mike Conaway (R-TX), who chairs the Agriculture Committee, has a farm bill to think about — to cover rural, low-income, and farming constituents. He and Budget Committee Chair Rep. Diane Black (R-TN) have made assurances that he would push for reforms including renewed work requirements for the food stamp programs, but not necessarily through the reconciliation bill.
Leadership say members can sign on to either $203 billion in savings overall or zero, one Republican aide close to the Budget Committee said — and that’s not enough to bring the archconservatives on board.
But for now, the Freedom Caucus isn’t buying this “binary choice” — without their votes, this resolution will fail on the House floor, and with it any hope for tax reform.