Republican tax code revamp hits House budget obstacle

WASHINGTON (Reuters) - Republican efforts to overhaul the U.S. tax code have hit a snag in the House of Representatives, where infighting over spending cuts is delaying adoption of a legislative tool they need to move a tax bill forward.

The House Budget Committee canceled plans to send a budget resolution for fiscal 2018 to the floor this week, lawmakers said on Tuesday, as conservative Republicans pushed to add hundreds of billions of dollars in mandatory spending cuts to the blueprint.

House and Senate passage of a budget resolution is vital to President Donald Trump's pledge to deliver on tax reform this year because the document would free Republicans to circumvent Democratic opposition in the Senate. But the push to cut programs including Medicaid and food stamps, which benefit the poor, could lead to a stalemate.

Trump administration officials and Republican leaders in Congress are working separately to agree on a tax bill that can be unveiled in September.

"No budget, no tax reform," said Representative Mark Walker, who chairs the Republican Study Committee, a group of more than 150 conservative lawmakers. "That's why there should be a sense of urgency to get this done pretty quick."

Their aim is to cut mandatory programs that are required by law and viewed as principle drivers of deficit spending. The result could be legislation containing lower taxes for the wealthy and corporations alongside reduced benefits for the poor.

Lawmakers say there is Republican agreement on topline discretionary spending levels of $621.5 billion for defense and $511 billion for non-defense programs.

Representative Jim Jordan, a leading member of the conservative House Freedom Caucus, is pushing to cut as much as $400 billion over a decade from a range of programs that benefit the poor. Freedom Caucus Chairman Mark Meadows said he wanted another $295 billion in cuts on top of that.

"It has to be linked to tax reform, because we believe tax reform is going to happen," Jordan said in an interview.

The budget committee canceled its plans this week after the chairmen of several other panels pushed back against efforts to include $250 billion in spending cuts.

"The end game is to get a budget out of the committee," House Budget Committee Chairwoman Diane Black told reporters. "I do see a viable path. And I am going to continue to push."

(Reporting by David Morgan; Editing by Lisa Von Ahn and Andrew Hay)