The US Senate voted last night night to pass a budget resolution that would protect a $1.5trn tax cut from a Democratic filibuster, an important step towards the Republican plan to rewrite the tax code.
The resolution ensures that the Republicans can use a special parliamentary procedure so that the tax reform bill can pass with just 50 votes in the Senate, as opposed to 60.
The budget’s passage could see a tax package approved late this year or early in 2018, but the majority of Republicans in Congress will still need to back the blueprint without changes as early as next week
After the 51 to 49 vote, the dollar index increased 0.2 percent to 93.458.
Senator Rand Paul of Kentucky was the only Republican to oppose the resolution on the grounds that it would result in excessive government spending.
US president Donald Trump has yet to pass a landmark piece of legislation, putting pressure on the Republican party to succeed with the tax reform bill.
Senator Lindsey Graham, Republican of South Carolina and a member of the Budget Committee said:
This is the last, best chance we will have to cut taxes.
He added that the consequences of failing to reform the tax code would be serious:
That will be the end of us as a party, because if you’re a Republican and you don’t want to simplify the tax code and cut taxes, what good are you to anybody?
Trump applauded the non-binding Senate vote on Twitter in the early hours on Friday morning:
3 Things That Will Change the World Today
— Donald J. Trump (@realDonaldTrump) 20 October 2017
“This resolution creates a pathway to unleash the potential of the American economy through tax reform and tax cuts, simplifying the overcomplicated tax code, providing financial relief for families across the country, and making American businesses globally competitive,” the White House said in a statement.
“President Trump looks forward to final enactment of the Fiscal Year 2018 budget resolution so we can bring jobs back to our country,” it added.
Democrats, however, have been vocal about their criticism of tax reform.
Senate minority leader Chuck Schumer said the Republican tax plan is “entirely divorced from the real problems in our economy and our society”.
“Our economy suffers from massive inequality — which is growing — a concentration of wealth at the very apex of our country’s elite. The rich are doing well in America. God bless them, I’m glad they are. And American corporations are recording record high profits — just look at the stock market, which reflects that. God bless them too, we hope they do well. But middle class incomes have not risen with the rise in corporate profits or record levels of wealth concentrated among the wealthiest families,” he added.
Fifty-two percent of Americans oppose Trump’s recent tax reform proposals, according to a CNN poll conducted by SSRS, while just 34 percent said they support the plans.
When it comes to the future of the US economy, Trump has another imminent decision to make.
He is expected to announce the next chair of the Federal Reserve before travelling to Asia on 3 November.