ObamaCare vote throws curve into tax reform

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ObamaCare vote throws curve into tax reform

 By Naomi Jagoda - 05/06/17 12:08 PM EDT

The House’s passage of legislation to repeal and replace ObamaCare has thrown a new curve into Republicans’ efforts to overhaul the tax code.

The vote, which came just a week after the White House rolled out its tax reform plan, took much of official Washington by surprise. A previous attempt to muscle through the legislation had failed in March.

Experts are mixed on what the sudden progress on ObamaCare repeal means for tax reform. While some said that House Republicans’ ability to coalesce around a bill bodes well for passage of tax legislation, others warned the Senate could get bogged down on healthcare, stalling the agenda.

“This may be one step forward, one step back,” said Sage Eastman, a lobbyist at Mehlman Castagnetti and a former senior counselor on the House Ways and Means Committee.

Republicans plan to pass both healthcare and tax legislation through a process known as “budget reconciliation” so that the bills can advance without Democratic support.

They have already passed a fiscal 2017 budget that contains instructions for a healthcare bill under reconciliation, and want to finish ObamaCare repeal before moving to tax reform legislation.

How long that might take is anyone’s guess.

Senate GOP leaders haven’t set a timetable for passing a healthcare bill, signaling quick action is unlikely.

The Senate appears likely to make significant changes to the healthcare bill. Already, several GOP senators have raised concerns that it would hurt states that have participated in ObamaCare’s Medicaid expansion, while other senators fret that the House bill does not provide enough help for people ages 50 to 64.

Additionally, Senate rules require that every provision in a reconciliation bill has an effect on the budget, and it’s unclear if some parts of the House’s healthcare bill will meet that test.

Several analysts said they view the hurdles to passing a healthcare bill in the Senate as a setback for tax reform.

“I think in some ways it actually makes it harder,” Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, said of the House healthcare vote’s impact on tax reform.

“If health was dead, they could just move onto tax,” he added.

Goldman Sachs’s Alec Phillips wrote in a report Thursday that “the main effect of House passage [of the healthcare bill] is to delay the consideration of tax legislation, which looks even more likely than before to be delayed until 2018.”

He said that “it is far from clear at this point whether the Senate will be able to pass its own version of the [ObamaCare repeal bill] at all, and at a minimum it is likely to take months to do so. “

Lawmakers and the Trump administration are working on tax reform even as the healthcare effort is unfolding. Republicans all want to lower rates and make the U.S. tax system more competitive, but they still need to come to agreement on some key areas.

For example, leaders of the House tax-reform effort have said they want to produce legislation that doesn’t add to the deficit after accounting for the economic effects of the bill. But other Republican lawmakers, including members of the House Freedom Caucus and Senate Finance Committee Chairman Orrin Hatch (R-Utah), have indicated that they are not wedded to revenue neutrality.

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http://thehill.com/policy/finance/332175-obamacare-vote-throws-curve-into-tax-reform