GOP Lays Out Budget Plan That Could Be Path to Tax Overhaul

House Republicans took the first step Wednesday toward a plan to overhaul the U.S. tax code as they considered a federal-budget resolution they must pass to advance a tax bill without any Democratic support.

But it isn't yet clear whether there is enough Republican support for House leaders to bring up the resolution for a vote on the House floor next week before lawmakers leave for a five-week summer recess.

The House Budget Committee was expected late Wednesday to approve the measure, which amounts to a blueprint for the fiscal 2018 spending plan. It proposes $6.5 trillion in deficit reduction over the next decade, forecasts 2.6% average annual economic growth and calls for cutting projected Medicare costs and cutting spending on nondefense programs to balance the budget by 2027.

"The budget resolution before us takes real steps to put our country on a real fiscal path that balances in 10 years and will allow us to start paying down our national debt," Budget Committee Chairwoman Diane Black (R., Tenn.) said Wednesday.

Republicans plan to use the budget resolution to advance their landmark tax bill as well as $203 billion in mandatory spending cuts, through a process known as reconciliation. That allows lawmakers to pass a spending-oriented bill with a simple majority vote in both chambers of Congress and a signature from the president, as long as it meets certain requirements.

Centrist Republicans have warned that efforts to include deficit-reduction measures -- such as imposing work requirements for certain welfare recipients -- could complicate their efforts to advance a tax bill, and have said top-line funding levels included in the resolution are unrealistic.

The reconciliation bill would advance only a fraction of the spending cuts contemplated by the GOP budget. Lawmakers are assuming cuts to Medicare to get their budget to balance but have no immediate plans to pass a bill that would follow through on that. President Donald Trump campaigned against cuts to Medicare, the federal health-insurance program that primarily benefits older Americans.

Conservatives have said the cuts don't go far enough, and they want more details about the GOP's tax overhaul plan before voting.

In a separate but related development, House Republicans found there was insufficient support to pass a package of 12 spending bills written to the same funding level next week and will bring up a smaller package of spending bills instead, a sign the budget could face similar resistance.

Rep. Peter Roskam (R., Ill.), who is helping write the tax bill, said Republicans shouldn't hold up the budget by imposing conditions on the tax plan, noting that they would still get to vote on the tax plan itself later.

But he also said Republicans could wait to adopt a budget until after top negotiators from the House, Senate and White House release a framework tax deal. That move, not expected until September, could give Republicans more certainty about the tax plan they would be expediting.

Democrats meanwhile blasted the GOP budget resolution Wednesday, which they labeled a more extreme version of the proposed budget unveiled by Mr. Trump earlier this year.

"The enormity of these cuts and the severity of the consequences for American families cannot be overstated," said Rep. John Yarmuth (D., Ky.), the committee's top Democrat.

--Kristina Peterson and Richard Rubin contributed to this article.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

July 19, 2017 18:43 ET (22:43 GMT)