Daniel Hemel (Chicago) & David Herzig (Valparaiso), The Art of the (Budget) Deal, Yale J. on Reg.: Notice & Comment (Dec. 2, 2016):

Republicans on Capitol Hill are reportedly planning to use the filibuster-proof budget reconciliation process to repeal the Affordable Care Act and overhaul the tax code. Against that background, Sam Wice says that “the most powerful person in America” in 2017 will be Senate Parliamentarian Elizabeth MacDonough, the nonpartisan official who will “determine” how much of their agenda Republicans can pass through reconciliation. This, of course, is an exaggeration: like it or not, the most powerful person in America in 2017 will be Donald J. Trump, who will wield all the power of the imperial presidency. But Wice’s post helpfully directs our attention to the budget reconciliation process, the rules of which quite likely will determine whether the Republican leadership on Capitol Hill can repeal the ACA and reform the tax laws.

Yet while one should not underestimate the importance of reconciliation, one should also not overestimate the power of the Parliamentarian in the reconciliation process. As a formal matter, the Parliamentarian’s role is advisory; and as a practical matter, the Parliamentarian has little say over significant aspects of reconciliation. Other actors—most notably, Senate Budget Committee Chairman Mike Enzi (R-Wy.)—wield at least as much influence as the Parliamentarian. Most importantly, Enzi—not MacDonough—will determine whether the provisions in any reconciliation bill violate various rules against deficit-increasing legislation being passed via reconciliation. And unlike the Parliamentarian, the Budget Committee Chairman is very hard to fire. …

President Trump wants to eliminate the Affordable Care Act’s 3.8% net investment income tax, wants to repeal the estate and gift taxes, and wants to allow U.S. corporations to bring home foreign profits while paying a holiday repatriation tax at a reduced 10% rate. All of those provisions—even if enacted as temporary measures in a reconciliation bill—would have long-run revenue effects: investors would realize gains before the 3.8% tax returns; high net worth individuals would make large gifts to their children now before the estate and gift taxes come back, and corporations would repatriate earnings during the holiday instead of potentially paying a higher tax later on. And so to offset the out-year effects of those temporary provisions, the Republicans are going to need some revenue-raisers. Will gimmicks like the Roth IRA trick work this time? Will Congress rely on dynamic scoring to estimate the out-year budgetary impacts of the Trump tax plan? In the Senate, these aren’t questions for Elizabeth MacDonough. They’re questions for Mike Enzi.

There is much more to be said about reconciliation than this—the two of us are working on an article tentatively titled “The Law of Reconciliation” that explores the nuances of the congressional budget process in greater detail. Watch this space for more on the subject. And in the meantime, keep your eyes on the senior Senator from Wyoming. He won’t be the most powerful man in town (that man will live at 1600 Pennsylvania Avenue, and sometimes at 721 Fifth Avenue, and sometimes at 1100 South Ocean Boulevard). But when it comes to budget reconciliation, Mike Enzi may be the man holding the trump card.

rest at http://taxprof.typepad.com/taxprof_blog/2016/12/hemel-herzigthe-art-of-the-budget-dealusing-reconciliation-to-repeal-obamacare-and-pass-tax-reform.html


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