GOP: Tax Plan Panic
The Last Chance For 2017
In a chaotic day on Capitol Hill, President Trump met with Senate Republicans in a last-ditch maneuver to save the GOP tax plan that would be the first major tax revision in 30 years. The Senate is expected to vote on the plan by the end of the week.
The Senate vote is a high-stakes game for the President and the Republican majorities in the House and Senate. It is the last chance for Republicans to produce a major legislative achievement in a year that saw GOP control of both houses of Congress and the White House. Success or failure of the tax plan will be a major factor as Congress moves into 2018 and the long campaign before the midterm elections in November.
As the clock runs down, there remain an unusual number of GOP holdouts in the Senate. While some will be satisfied with concessions and side deals, doubt remains about reaching the required number of 50 votes, given the reality that no Democrats will vote for the plan. Senate majority leader Mitch McConnell and others in the Senate GOP leadership remained positive on Tuesday. But the leadership showed only cautious optimism about success for final passage.
Here is a rundown of the eight Republican holdouts as compiled by Sahil Kapur of Bloomberg Politics:
Bob Corker, Jeff Flake and James Lankford
Corker, the retiring Tennessee Republican has staked a hard line against letting tax legislation add to federal deficits — saying that a single penny of new deficits would lose his vote. It turns out the Senate bill would add $1.4 trillion to the deficit over 10 years — at least before accounting for any economic growth — according to a Congressional Budget Office report released Sunday.
The bill’s supporters say it’ll boost economic growth enough to cover that shortfall, but Corker says he’s not satisfied. He wants a backstop mechanism — essentially a tax-increase trigger that would raise revenue in case the promised growth doesn’t result. Arizona’s Flake and Oklahoma’s Lankford also support that kind of trigger. “Every economist is guessing,” Lankford said on Monday. “We should build in the ‘what if’ — what if this doesn’t work?’ If the revenue is not coming in, should the rates change?”
Corker is a member of the Senate Budget Committee, which meets Tuesday afternoon to decide whether to send the tax bill to the Senate floor. Republicans have a one-vote margin on the panel and cannot afford any defections. Corker said Monday he may vote no if tax writers — who he said would be working overnight on a provision — can’t provide enough deficit safeguards. “We’re working very closely with the administration and also some members of the Finance Committee to design a trigger or backstop that in the event the revenues are not there, there’s a way to recoup them,” he said.
Some senators want nothing to do with a trigger. “I think the problem with triggers is they create uncertainty about what the tax rate is” since it’s subject to change, said Republican Pat Toomey of Pennsylvania, during a Bloomberg Television interview. Resulting hesitancy among investors could make the predictions of too little growth “a self-fulfilling prophecy,” he said. Corker disagrees. “There are ways of doing this that you don’t damage the aspects that are very pro-growth,” he said.
Flake and Corker have two things in common beyond deficit concerns: Both are retiring after 2018, and both have sparred extensively with Trump. So it’s unlikely that any presidential salesmanship would sway either one. “He’ll be a NO on tax cuts because his political career anyway is ‘toast,”’ Trump said on Twitter this month about Flake, whom he called “Jeff Flake(y).”
Ron Johnson and Steve Daines
Johnson became the first Republican senator to come out against the bill, and his vote remains up in the air. His concern? The legislation gives an advantage to large corporations at the expense of “pass-through” businesses, like the plastics company he used to run before his election to the Senate in 2010. The Wisconsin senator is also a member of the Budget Committee, and he too wants his concern addressed by the time it meets. “I’m not exactly sure what’s going to happen in committee, and we’re working diligently to fix the problem,” he told reporters Monday. “If we develop a fix prior to committee, I’ll probably support it but if we don’t, I’ll vote against it.” The Senate bill cuts the corporate rate to 20 percent, while creating a special deduction for business income from pass-through entities that would leave many owners paying an effective top rate of more than 30 percent. Johnson wants to give those owners a larger deduction, and he said many have called to encourage him to stand firm.
Daines, a Montana Republican, joined Johnson Monday in opposing the bill as written, and for the same reason. An aide said Daines remains optimistic the legislation will change enough to win his vote.
A deal had yet to emerge Monday night. “We’re still negotiating; let’s put it that way,” said South Dakota Senator John Thune, the chamber’s third-ranking Republican leader, after an evening meeting of the Finance panel. Daines says the more generous tax cut that he and Johnson favor would cost about $60 billion more over 10 years — and they have a proposal to pay for it: Eliminate the income-tax deduction that corporations can take for the state and local taxes they pay. A similar provision to eliminate so-called SALT deductions for individuals has stirred opposition among Republican House members in high-tax states; adding corporations to the list may engender still more resistance.
The moderate from Maine is the only Republican senator from a reliably Democratic-leaning state, and as such she’s always a difficult vote for party leaders. While Collins was initially warm to the tax bill, she has turned sour after party leaders opted to add repeal of the Obamacare individual mandate to help limit deficits.
Collins said it’s a mistake to ax the mandate in tax legislation, fearing that it’ll cause healthy people to drop their coverage and drive premiums higher for others — the same reason she cast a pivotal vote to block an Obamacare repeal bill in July. “I hope that will be dropped,” she said recently.
But eliminating the mandate is estimated to save the federal government more than $300 billion over 10 years — savings that would result from less demand for federal health-coverage subsidies. Some GOP leaders dispute that estimate, even though their tax bill depends on it to stay within budget rules. Collins has also said she opposes lowering the top individual rate from 39.6 percent to 38.5 percent, as the Senate bill does.
Nobody is taking McCain’s vote for granted after he shocked the political world by voting against a rushed attempt to demolish the Affordable Care Act this summer. He then delivered a speech demanding the Senate return to regular order — hearings, markups, bipartisan input and amendments — for passing major bills. So far, McCain has been warm to the GOP Senate’s tax effort, but he hasn’t taken an official position on the legislation. McCain has a mixed record on tax cuts, voting against measures in 2001 and 2003. The top legislative priority of the Arizona Republican, who is 81 and fighting brain cancer, is to boost military spending. His vote on the tax bill could be in peril if he believes the $1.4 trillion in new deficits would put downward pressure on Pentagon funding.
The Kansas Republican is sensitive about the impacts of the bill in the wake of his state’s failed tax-cut experiment that lawmakers there ended this year to escape a fiscal crisis. “I’m also cognizant of what people saw happen in Kansas,” Moran told constituents over Thanksgiving weekend, as quoted by the Topeka Capital-Journal. “The issue of tax cuts would be easier if you actually had faith that Congress would hold the line on spending. It’s two components. It’s how much revenue you take in and how much money you continue to spend.” Overall, Moran remained circumspect about the legislation, saying the goal must be to find tax cuts that grow the economy without raising the debt.
During the course of his career, Walker has worked in Chicago, Washington DC, New York City, and Phoenix. He served as a reporter in Chicago, a press secretary and speechwriter in Washington, and in numerous positions in New York in corporate and financial services communications.
Walker is a graduate of the University of Wisconsin and the Medill School of Journalism at Northwestern University.