Follow Thursday’s updates here: McCain announces support for tax bill in boost to GOP effort
A massive GOP tax bill cleared a key procedural hurdle in the Senate on Wednesday, as lawmakers voted 52 to 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 (R-Ky.) and President Trump, signaling support and momentum for the legislation that overhauls the 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 for final passage. Key issues that remained included how to prevent the bill from driving up the federal deficit by too much and whether to shift more of the legislation’s rewards from corporations, which are some of the bill’s main beneficiaries, to working-class families, who receive more modest benefits.
“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 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 “vote-a-rama” in which lawmakers can offer endless amendments into all hours of the night Thursday. Then will come the final vote.
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 top goal for both men as they pursue a tax cut sought by donors and corporations, as well as a political victory to present to voters ahead of next year’s midterm elections.
Numerous issues were being negotiated throughout the day Wednesday, the most problematic being demands from GOP Sen. Bob Corker (Tenn.) and others for a “trigger” to kick in and raise taxes if economic growth estimates don’t pan out.
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 to $1.5 trillion over 10 years to the federal budget deficit.
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 doesn’t materialize.
Details of Corker’s trigger idea remained in flux Wednesday. Negotiators were looking at a package that would raise taxes by as much as $350 billion if the economy doesn’t grow by more than 0.4 percent yearly above a baseline established by the Congressional Budget Office, according to several people briefed on the discussions. The people spoke on the condition of anonymity because they weren’t authorized to reveal private negotiations.
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.
“A lot of people hate it, but it may be the only way to get the tax bill passed,” said Steve Moore, a top economic adviser to Trump during the 2016 campaign.
But the idea faces sharp opposition within the GOP. Several Republicans said they were strongly opposed to a trigger, 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.).
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 trigger issue was being negotiated along with other matters — including demands about additional relief for businesses whose owners pay taxes through the individual code, known as “pass-throughs.”
Sen. Steve Daines (R-Mont.) who has been working with Sen. Ron Johnson (R-Wis.) on the issue, announced that he had secured a deal increasing a tax deduction the owners of such businesses can take on their income from 17.4 percent to 20 percent, which he said would raise $60 billion for them.
Sen. Susan Collins of Maine said she was pleased with promised changes from Trump that would allow Americans to deduct up to $10,000 in property taxes from their taxable income.
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, although no final decision has been made, the people briefed on the talks said.
Other issues remained outstanding.
Collins, for instance, was seeking assurances that the Senate will vote on a companion health care bill if the tax legislation retains a provision repealing the Affordable Care Act mandate for nearly all Americans to carry health insurance or pay a fine.
“Susan’s got a concern,; it’s a real legitimate concern. Ron Johnson’s got a concern. There’s a deficit concern,” Sen. Lindsey O. Graham (R-S.C.) said. “It’s like making a cocktail. If you’ve got to add more of this and less of that, I’m fine. Failure’s not an option.”
Republican leaders were under pressure to make another change that could alter the bill significantly. Sens. Marco Rubio (R-Fla.) and Mike Lee (R-Utah) are pushing an amendment that would expand child tax credits to millions of poor families, particularly those who don’t pay income taxes. To offset the cost of this change, they propose lifting the corporate tax rate in the bill from 20 percent to 22 percent.
The change would essentially transfer some of the benefit of the bill away from corporations and toward low-income Americans.
They are unlikely to get enough GOP support in the Senate to pass their amendment, but Democrats could band together and push the amendment into the bill if they receive help from only one or two more Republicans. That could force GOP leaders to make a last-minute decision about whether to back the child tax credit amendment or decide whether to pressure the lawmakers to withdraw it.
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. But momentum was slowly gathering in leadership’s direction, with Sen. Lisa Murkowski (R-Alaska), who opposed a repeal of the Affordable Care Act this year, saying she planned to back the legislation.
Although 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 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 help the middle class.
“Our focus is on helping the folks who work in the mail rooms and the machine shops of America,” Trump said during a speech Wednesday in St. Charles, Mo. “The plumbers. The carpenters. The cops. The teachers. The truck drivers . . . The people that like me best.”