Senate GOP clears key hurdle on tax bill, moving closer to a final vote
President Donald Trump, center, walks with Sen. John Barrasso, R-Wyo., left, and Senate Majority Leader Mitch McConnell of Ky., right, as he arrives on Capitol Hill in Washington, Tuesday, Nov. 28, 2017. (AP Photo/Susan Walsh) (Susan Walsh/AP)
By Erica Werner, Damian Paletta and Mike DeBonis November 29 at 6:15 PM
A massive GOP tax bill cleared a key procedural hurdle in the Senate Wednesday, as lawmakers voted 52-48 to move the legislation forward toward a showdown vote on final passage by week’s end.
The party-line vote was an important victory for Majority Leader Mitch McConnell and President Trump, signaling support and momentum for the legislation that overhauls the loophole-ridden tax code for the first time in three decades while delivering enormous cuts to corporations and the wealthy. But it was not a guarantee of ultimate success, as several Republican lawmakers agreed to open debate on the bill so they could pursue amendments, and have not yet committed to voting “yes” on final passage.
“Passing tax reform is the single most important thing we can do right now to shift the economy into high gear and deliver much-needed relief to American families,” McConnell (R-Ky.) said on the Senate floor ahead of Wednesday’s vote, as he urged fellow Republicans to support the measure to open debate.
Passage of the “motion to proceed” started the clock on 20 hours of debate on the legislation, which will be followed by a so-called “vote-a-rama” in which lawmakers can offer endless amendments into all hours of the night Thursday. Then will come the final vote.
[VIDEO:] 2:03 The GOP tax proposal is really, really unpopular Republicans are forging ahead with their promise to overhaul the tax code, even with very little public support for their proposal. (Video: Jenny Starrs/Photo: Jabin Botsford/The Washington Post)
With Democrats unanimously opposed, McConnell can lose only two GOP senators in the closely divided Senate and still prevail on the bill. Despite well-documented disagreements between McConnell and Trump, the tax legislation is the No. 1 goal for both men as they pursue an economy-boosting tax cut sought by donors and corporations, as well as a political victory to present to voters ahead of next year’s midterm elections.
The most divisive issue on Wednesday was a demand from several Republicans that the legislation include a “trigger” that would automatically raise taxes if economic growth targets aren’t met.
As the potential parameters of that deal emerged, several Republicans said Wednesday they were strongly opposed to including it, worried that the possibility of future tax increases could dampen corporate enthusiasm.
“There’s one word: It’s certainty,” said Sen. Dean Heller (R-Nev.). “I do not support triggers.”
Other GOP senators raised similar concerns but said they were trying to work out a solution that all Republicans could live with. “I don’t want to see this bill destroyed because of a pursuit for perfection,” said Sen. David Perdue (R-Ga.) said.
One possibility discussed by several senators Wednesday would use a trigger to prompt spending cuts, not tax increases. But GOP aides warned that could cause procedural issues, threatening the party’s ability to pass the bill with a simple majority vote.
The last-minute negotiations are precarious. With Democrats unanimously opposed to the tax plan, Senate GOP leaders can afford to lose no more than two Republican votes if they hope to pass their bill. And success on the Senate floor can never be assured, as illustrated in July when a dramatic eleventh-hour defection from Sen. John McCain (R-Ariz.) sunk the GOP’s efforts to repeal the Affordable Care Act.
Yet most senators and others involved were increasingly optimistic Wednesday of success.
Some recalcitrant Republicans signaled they would fall in line: Sen. Lisa Murkowski (R-Alaska), who like McCain had helped to derail the health care bill, said Wednesday she would back the tax legislation. And Sen. Steve Daines (R-Mont.), who wanted deeper cuts for businesses, said he had secured changes to improve the bill.
“I’ve seen enough progress to vote yes to move the debate forward,” he said.
Though the legislation would still have to be reconciled with a House version, passage on the Senate floor this week would clear the bill’s toughest hurdle and hand as a major victory to Trump and GOP leaders.
Republicans are moving at breakneck speed, shutting Democrats out of the process completely as they push a tax code rewrite that few understand and that could have uncertain impacts on the entire economy and every American over decades to come.
Numerous analyses have found the bill disproportionately benefits the wealthy and even hurts poorer Americans over time. Trump, GOP leaders and many businesses nonetheless insist it would be a boon for the economy that would boost growth. And after failing to pass any major legislation so far this year despite full control of Congress and the White House, Republicans are hungering for a win.
Republicans have tried to frame the tax plan as a boon for workers despite analysis that shows the majority of the benefit would go to corporations and the wealthy.
"Our focus is on helping the folks who work in the mail rooms and the machine shops of America," Trump said during a speech in St. Charles, Mo. "The plumbers. The carpenters. The cops. The teachers. The truck drivers...The people that like me best."
The procedural vote Wednesday would allow the Senate to begin formally debating the bill and move it a step closer to a final vote that could come Thursday or Friday.
Corker’s demand for the trigger provision stems from concern over how the bill would affect the federal budget.
The total package of tax cuts is projected to add $1.4 trillion over 10 years to the national debt, and Republicans are expected to make a number of changes in the next two days to push the addition up to $1.5 trillion.
Republicans have promised that the package of tax cuts would spur more economic growth, leading to more investment, hiring, and higher wages for workers. But many economists dispute these forecasts, and Corker has sought assurances that some steps would automatically be taken if growth didn’t perform as promised.
In its most recent economic forecast, CBO projected rather weak growth over the next five years, predicting the economy would grow by 2.2 percent in 2017, 2.0 percent in 2018, and averaging 1.5 percent in 2019 and 2020. The economy is already showing signs of growing faster than that. It has grown faster than 3.0 percent in each of the past two quarters, though it hasn’t notched an annual growth rate of that high in years.
Lawmakers were still discussing where the new taxes would come from. One idea being considered would include raising the bill’s proposed corporate tax rate of 20 percent up to 21 percent, reinstituting the corporate alternative-minimum tax, and reinstituting the alternative minimum tax paid by individuals and families.
Under the bill as written, the alternative minimum tax for corporations and individuals is scheduled to be eliminated, and the corporate tax rate would be lowered from 35 percent to 20 percent in 2019.
It’s unclear if these details will all be settled by Wednesday afternoon. But the scheduling of the initial procedural vote is a sign that Majority Leader Mitch McConnell (R-Ky.) that expects to secure enough support.
While Corker’s demands for the trigger are rankling many Republicans, it stops far short of his initial red-line statements about what he needed to see in the tax bill in order for him to support it. Several weeks ago, he said he would only support the tax bill if it did not add a “penny” to the debt based on a “reasonable analysis” of the plan’s economic impact.
Neither the Trump administration or nonpartisan congressional scorekeepers have released any official analysis supporting the GOP’s growth claims. Even many conservative economists believe the emerging tax plan would add hundreds of billions, if not more, to the debt. A number of the plan’s provisions would be only temporary, including the tax cuts for families and individuals, and extending them in the future would add even more to budget deficits.
If Corker refuses to support the tax package without the trigger, many Republicans could be forced to vote for something they don’t like to ensure the broader package is signed into law.
“A lot of people hate it, but it may be the only way to get the tax bill passed,” said Steve Moore, referring to the idea of a trigger. Moore was a top economic adviser to Trump during the 2016 campaign.
One other unresolved issue remains the business tax cuts that Sen. Ron Johnson (R-Wis.) continues to demand. Like Daines, he wants taxes to be lowered for “pass through” companies whose earnings are taxed at individual rates. Johnson himself retains partial ownership of a plastics manufacturing company in Oshkosh, Wis., and could benefit from such changes.
Top White House officials have tried to at times cajole and at other times prod Johnson into going along with the plan. He has at times been defiant but there were signs that he was softening and warming to concessions from GOP leaders.
“We have been making some real progress,” Johnson told Bloomberg News on Wednesday.
The Senate bill would allow the partners and owners of millions of American companies known as “pass throughs” to deduct 17.4 percent of the corporate income from their taxable income as a way to effectively lower their tax rates. Daines said Wednesday that Senate leaders tentatively agreed to raise it to 20 percent, which would add more than $60 billion to the cost of the package.
But one person briefed on the talks said Johnson wants the deduction to be raised even more, and he is being met with resistance from GOP leaders, who are already concerned about the total cost of the package. They can’t allow the package to grow to more than $1.5 trillion over 10 years or they will violate Senate rules, and there are other costly measures being added in the coming days.
While GOP leaders are still trying to resolve the issues raised by Corker and Johnson, they appear to have won over several other holdouts as they approach key floor votes.
Sen. Susan Collins (R-Maine) has suggested she’s pleased with promised changes from President Trump that would allow Americans to deduct up to $10,000 in property taxes from their taxable income, as well as assurances that the federal government will make payments to help subsidize health insurance premiums. This was a key sticking point for her because the tax bill would repeal the individual mandate of the Affordable Care Act, a change that the CBO said could drive up health insurance premiums by 10 percent.
Allowing Americans to deduct $10,000 in property taxes could add more than $100 billion to the cost of the tax package over 10 years. But the House bill included the provision, and numerous GOP lawmakers there have said it must be included in the final bill. Senate leaders are looking at prohibiting corporations from deducting state and local taxes as a way to raise some of the offsetting revenue, though no final decision has been made, the people briefed on the talks said.
House Majority Leader Kevin McCarthy (R-Calif.) said Wednesday that House lawmakers should be ready to mobilize quickly to work out differences with Senate colleagues over their bills. He told members in a closed-door meeting they could vote to start the conference process as soon as Friday.
Adding deficit 'trigger' to Senate tax plan raises new hurdle
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I wondered what exactly was the problem with the trigger. Have a better idea now.
Sen. Jeff Flake wouldn’t say whether he’d still back the overall tax plan without the trigger, but predicted, “I think it will be structured so it won’t” be in violation. | Drew Angerer/Getty Images
By BRIAN FALER
11/30/2017 10:28 AM EST Updated 11/30/2017 01:32 PM EST
A bid by Republican leaders to get deficit-minded senators fully on board their tax overhaul may be on a collision course with Senate rules, which could tank efforts to quickly muscle the legislation through the chamber.
Sens. Bob Corker of Tennessee, Jeff Flake of Arizona, and others are demanding lawmakers include a trigger mechanism in the plan that would impose automatic tax increases if their tax cuts don’t jog the economy as much as they hope. It’s emerged as perhaps the biggest issue standing in the way of the swift vote on the tax plan that leadership hopes for Thursday or Friday.
Republicans can only afford to lose two votes.
But it’s unclear whether such a provision is allowed under the chamber’s rules that will be part of the “reconciliation” process Republicans are using to jam their plan through the Senate. Lawmakers have been litigating the issue behind closed doors with the chamber’s parliamentarian, Elizabeth MacDonough, who interprets the rules.
If she decides the trigger idea would violate the rules, it could be struck down on the Senate floor — raising questions about whether a band of deficit hawks would abandon their party’s tax-rewrite plan.
If the past is any guide, Republicans may be headed for trouble. They failed in efforts to use a similar backstop as part of the first round of tax cuts when George W. Bush was president.
Flake acknowledged there’s a risk the current trigger could flunk the test.
“Yep — there is some concern,” he said. “It’s a challenge” making it fit within the rules.
He wouldn’t say whether he’d still back the overall tax plan, H.R. 1 (115), without the trigger, but predicted, “I think it will be structured so it won’t” be in violation.
Asked about the possibility of violating the rule, Corker said: “I don’t think it does, but if it does, we have a solution.”
He declined to discuss specifics, saying, “I can’t talk about it — if I start talking about it, it will be picked to pieces.”
Senate Budget Chairman Mike Enzi, of Wyoming, declined to comment, saying he didn’t want to be seen as publicly lobbying the parliamentarian.
“It’s a parliamentary issue and I’m not going to put anything out there that makes it sound like I’m trying to tell the parliamentarian what to do,” he said.
Republicans may also have to drop provisions allowing drilling in the Arctic National Wildlife Refuge — important to Sen. Lisa Murkowski, of Alaska, a key swing vote on taxes — though aides said that it still being debated.
They’ve tried, unsuccessfully, to use a similar mechanism before, when they were debating Bush’s 2001 tax cuts. At the time, some Republican senators wanted a trigger that would stop his tax cuts if projected budget surpluses didn’t materialize.
But they were forced to abandon the idea because they couldn’t figure out a way to make it fit the same rules now bollixing Republicans, said Bill Hoagland, who was a top Republican budget aide in the Senate at the time.
He and other outside budget experts say Corker’s proposal could meet a similar fate.
“Maybe there’s a clever way of getting around it, but I don’t know how,” said Hoagland, who added that he’s sympathetic to Corker’s trigger idea.
The problem is what’s known as the Byrd rule, named after the late Sen. Robert Byrd. It severely restricts what sort of provisions may be included in reconciliation measures.
The rule is complicated and persnickety, and one of its strictures bars provisions that don’t have a major impact on the budget. An arcane question now before lawmakers is whether Corker’s trigger would meet that standard.
Republicans say it would because it could force tax increases. But Hoagland says it’s impossible to know, at least at the moment, whether those tax increases will ever happen, so lawmakers can’t know whether their trigger will affect the budget.
“Yes, if the trigger is pulled in the future, obviously it would have a budgetary consequence,” he said. “But you don’t know if that trigger is ever going to be pulled.”
“Does it have a consequence today? No,” he said.
One way around the rules, said Hoagland, would be to drop the trigger, and pencil in future tax increases with the promise that Congress will undo them later, before they can take effect.
That’s what Corker is now considering as a fallback plan in case he can’t get his trigger idea past the parliamentarian, said Senate Majority Whip John Cornyn.
“They’ve got a fallback position that wouldn’t involve a trigger — it would involve an increase in the [corporate] rate in the out-years,” he said. The details are still being negotiated, but Cornyn said it could involve a half-percentage point increase in the corporate rate “in year six” of the plan.
That would be controversial, especially with the business community, because it would raise questions about whether lawmakers would really be able to agree to shut them off.
Cornyn said he wasn't thrilled with the idea either, but suggested it may be necessary.
“I don’t really like it, but you know, we’ve got 52 senators and we need 50 votes, so we’re going to have to work with everybody,” he said.
It’s also possible that if the parliamentarian rules against the trigger, she could be overruled by lawmakers, though that would be highly unusual.
Said Pete Davis, a former Republican budget aide: “I guarantee you they’re working like crazy” to come up “with a parliamentarian ruling that the trigger will pass Byrd-rule muster.”
November 30, 2017 / 10:07 PM / Updated 2 hours ago
Senate tax bill stumbles on deficit-focused 'trigger'
Susan Cornwell, Amanda Becker
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JCT had earlier estimated the tax bill would balloon the $20 trillion national debt by $1.4 trillion over 10 years. The new estimate, counting “dynamic” economic effects, put the deficit expansion at $1 trillion, far short of assertions by some Republicans that the tax cuts would pay for themselves.
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