The House and Senate set up a Conference Committee to resolve differences formally, but the actual meeting of this Committee is unlikely to be where real decisions are made. A Conference Committee includes membership from both houses and both parties but when they do meet it will be likely to be to approve what has been negotiated by Republicans members of the Senate Finance Committee and House Ways and Means Committee.

The tax legislation which would trigger across-the-board sequestration cuts because it will increase the deficit by $1.5 trillion will likely not result in those cuts.  There seemed to be a willingness to waive those across the board cuts even by House conservatives.  That feeling may have been strengthened by the Speaker’s comments about cutting entitlements next year through a separate effort..

The across-the-board budget cuts would be so severe as to wipe out the Social Services Block Grant (SSBG) funding and cut Promoting Safe and Stable Families (PSSF) by 85 percent and take $21 million out of Foster Care and Adoption Assistance administration (and approximately $1 to $2 million from Chaffee Independent Living program not a 14 percent cut reported here last week).  A waiver could be a part of another legislative package after the tax bill has passed.

Despite the one-party only approach, the final tax bill is facing numerous challenges to fit everything together under the $1.5 trillion deficit cap.  It seems almost certain the repeal of the ACA mandate will be included since it generates revenue that can be used for other tax cuts.  Generally, if both bills include the same provision then it should not be a point of negotiation although there can be variations.  That means the Adoption Tax Credit will be in the final deal.

The December 22, CR also allows more time to negotiate a final tax deal since members will have to stay around to act on the next CR.  It’s the goal of Congressional Republicans to get a tax deal by the 18th or 19th.