At a dinner with three of the most prominent supply side economists in the United States on Monday, House Budget Chairman Diane Black (R-TN) was given a reality check on what the final tax reform plan could look like if a budget resolution is not agreed upon, FOX Business has learned.
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Black had dinner at The Capital Grille in Washington D.C. with Heritage Foundation economist Stephen Moore, conservative economist Larry Kudlow and former economic adviser under Ronald Reagan Art Laffer as well as approximately 30 other attendees including FedEx Chief Executive Officer Fred Smith as well as Sens. Ted Cruz (R-TX) and Dan Sullivan (R-AK), according to sources familiar with the matter.
The spokespersons for Cruz, Sullivan and Smith did not return calls for comment. Kudlow did not return emails for comment.
During the course of the evening, the three economists approached Black for updates on lawmakers working to come to an agreement on the budget resolution and the possibility of more cuts to the already extensive House Republican resolution, according to those in attendance.
In July, the House Budget Committee released their proposed budget resolution that requires more than $200 billion in cuts to mandatory programs such as rolling back financial regulations and pulling back on social welfare programs. All of this was expected to be enough to pave the way for comprehensive tax reform.
Except, according to Moore, who also serves as an outside adviser to the Trump administration on tax reform, $200 billion will not be enough if they want to overhaul the nation’s tax code.
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“Right now the budget resolution allocates only $200 billion for a tax cut for 10 years and that just isn’t enough,” Moore told FOX Business.
According to dinner attendees, Black countered their argument by explaining there would likely not be enough votes within the House to support sweeping changes to the committee's budget resolution.
“She thinks there are just too many deficit hawks in the GOP that are standing in the way of tax reform,” Moore said. “You’re not going to be able to squeeze through [a] small business tax cut, [a] corporate tax cut and a family tax cut that way so it means you’re not going to pass the Trump plan because you won’t have enough votes to get that done,” he later added.
Laffer, a key player in passing the famous Reagan tax cuts in 1981 and 1986, which included reducing the income rates by 25% over three years, told FOX Business that the meeting was “a normal discussion” and insisted Black was reinforcing the pitfalls that every committee goes through when trying to pass legislation.
“She was describing pitfalls that every committee has that I’ve been involved with for 54 years. Committees are tough.” Laffer said.
A spokesman for Black did not deny the context of the dinner conversation and told FOX Business, “The House Budget Committee passed the most conservative budget in 20 years out of Committee with unanimous Republican support in July. It’s imperative that the House votes to continue moving the budget process along, or else tax reform will be impossible,” the statement said.
Agreeing to a budget resolution is the critical next step for passing a tax reform bill. Its passage gives Senate the ability to use reconciliation as a means to pass tax reform with a simple 51 vote majority in the Senate.
However, if Congress cannot come to an agreement on a budget resolution, then there may not be extensive reforming of the tax code until next year, according to Ryan Ellis, a Senior Tax Advisor at the Family Business Coalition.
In an op-ed for Forbes, Ellis says Congress will fail to pass a new tax reform bill if they are unable to decide on a budget resolution
“If Congress cannot pass the next budget resolution, the one that sets up tax reform via reconciliation, there will simply not be any tax reform bill this year or next. It's entirely possible that a unified Republican government will go home to the voters next November having promised to repeal Obamacare and reform taxes and done a whole lot of neither,” Ellis said.