Republican leaders in the House and Senate emerged from a meeting at the Treasury Department Tuesday afternoon sounding upbeat about their “big, beautiful bill” that has an extension of the 2017 tax cuts as its centerpiece. But lawmakers on key committees are sounding nervous about divisions they have over the bill, issues that range from spending cuts and accounting assumptions to the far-reaching scope of the legislation itself. “I think it’s good that the House and Senate leadership and the leads on the bills are meeting, but make no mistake: We’ve got a lot of internal — within our own conference — issues to resolve before we moved forward,” Sen. Thom Tillis (R-N.C.), a member of the Finance Committee, the Senate’s top tax-writing body, told The Hill Tuesday. Major sticking points in the House-passed budget resolution include nearly $1 trillion dollars of budget cuts required from the Energy and Commerce Committee, which will mean reductions to federal healthcare that some Republicans are loath to support. Republicans are also divided over how many additional tax cuts should be included beyond those that are expiring. There’s also the issue of raising the debt ceiling. Republicans are increasingly in agreement that they want to raise it in their tax cut and spending package, but such a move could alienate the budget hawks within their conference, such as Sens. Rick Scott (Fla.) and Rand Paul (Ky.) who could demand additional budget cuts beyond the $2 trillion sought by the House to get their support. The Congressional Budget Office (CBO) estimated Wednesday that the government’s ability to borrow money will likely run out in August or September if Congress does not pass legislation to increase the debt limit. The range of issues has some Republicans thinking outside the box and even beyond the framework of the dueling one-track versus two-track budget process that’s been advanced alternatively in the House and Senate. “I’m supporting not just a two-step but a three-step process,” Finance Committee member Ron Johnson (R-Wis.) said Tuesday, arguing that the extensions of the 2017 Tax Cuts and Jobs Act (TCJA), which the Senate has already split off from legislation on border security and energy production, should be split off again from any additional tax reforms, such as those pledged by President Trump while campaigning. “I would just extend current law. I would prevent a massive automatic tax increase and then sit down and do the hard work, returning to a reasonable pre-pandemic baseline of spending,” he told The Hill. “The House bill to me is completely unacceptable,” Johnson added, saying that he would vote to increase the debt limit only if serious spending cuts are made. Senate Finance Committee member Chuck Grassley (R-Iowa) doubted Wednesday whether Trump’s proposed additional tax cuts — measures that include cancelling taxes on tips, overtime and Social Security as well as breaks for family caregivers and people paying auto loans — will get enough consideration to be acceptable to the president. “I’m not saying that it’s going to get enough consideration to satisfy the president, but some of it’s going to be adopted,” Grassley said. Republicans are trying to pass their tax cut, border enforcement and energy production bill through a procedure called budget reconciliation. The process has become the norm in recent decades for advancing mainline agendas, including GOP tax cuts going back to former President Reagan, the Affordable Care Act and the 2022 Inflation Reduction Act. Reconciliation allows for a party-line vote that avoids the filibuster in the Senate, but it comes with special restrictions about what can be included, and the rules aren’t always black and white. What can be included depends on the judgment of the parliamentarian, a non-partisan Senate rulemaker who could present additional obstacles for Republicans outside the divisions within their own conference. The parliamentarian’s judgment on Republicans’ preferred accounting assumption for measuring the deficit impact of their law — which is called the “current policy baseline” and allows them to bake in the $4 to $5 trillion cost of the extending expiring tax cuts — is a central concern for House budgeteers. In an interview with The Hill on Tuesday, House Budget Committee Chair Jodey Arrington (R-Texas) said the positions of parliamentarian Elizabeth MacDonough, who was in the role when the expiring cuts were passed in 2017, were currently a “great question.” Arrington said that even if the parliamentarian approves the policy baseline, he’s concerned that it would still violate reconciliation rules, notably a provision called the Byrd Rule that requires legislation to have a budgetary impact and not to add to the deficit after a 10-year period. “My concern with their rendering a positive position on it is that according to the Byrd Rule, whatever policy you legislate has to have a material impact to the budget. ‘Current policy’ wouldn’t show an impact to the budget. One of the other main tenants is [that] you can’t increase the deficit outside the 10-year window. Well, even though there’s no impact to the budget, there is an increase to the deficit outside the 10-year window,” he said. Whatever problems the policy baseline may encounter from the parliamentarian, it’s already an extremely controversial assumption, even among some Republicans who think of it as a deceitful way to hide borrowing costs. Democrats have called it “magic math” and congressional watchers in the think tank world have told The Hill that using it as a reconciliation instruction has never been done before. The Joint Committee on Taxation, which is the official scorer of tax laws, has stressed the legal requirement to estimate costs based on what’s in the law as opposed to alternative assumptions, citing the Budget Act of 1974. “For any budget year, the baseline refers to a projection of current-year levels ... based on laws enacted through the applicable date,” the Budget Act says. The 2017 tax cuts expire at the end of this year. ...read more read less