Northwest Arkansas Democrat-Gazette
GOP mulls scaling back some tax cuts
WASHINGTON — Senate Republicans weighed scaling back the tax cuts in their major package to secure crucial support as congressional analysts said Thursday that the legislation would add $1 trillion to the deficit over the next decade.
Republicans were making major changes to the bill — a top political priority of President Donald Trump — up to the last minute, including one that would roll back some of the tax cuts after six years to appease deficit hawks.
The scramble to alter the bill came after senators said the chamber’s parliamentarian had ruled that automatic “triggers” designed to guard against big deficits would violate Senate rules. GOP leaders’ main concern was winning over lawmakers, including Sens. Bob Corker of Tennessee and Jeff Flake of Arizona, concerned about adding more red ink to the deficit.
Senate Majority Leader Mitch McConnell, R-Ky., had expressed confidence early
in the day, but he has little margin for error with a 52-48 majority. He can afford to lose two votes while counting on Vice President Mike Pence to break the tie.
“We’re certainly optimistic. As you know we had everybody on board to take the bill up. I think everyone is trying to get to yes. We’ll have an open amendment process but I’m optimistic,” McConnell said.
Sen. John Cornyn, R-Texas, said the bill will have “alternative, frankly, tax increases we don’t want to do” to deal with deficit concerns. Flake said the tax increases would raise about $350 billion over 10 years, though he didn’t specify which taxes would go up.
With the bill still being rewritten late Thursday, Republicans’ hopes of passing the bill slipped to today.
Democrats earlier Thursday forced a vote on whether to return the measure to the Senate Finance Committee so it could be rewritten to ensure smaller deficits. After holding out for nearly an hour during the vote, Corker, Flake and Ron Johnson of Wisconsin eventually joined fellow Republicans to scuttle the Democratic proposal.
Corker has been pushing to add automatic tax increases in future years if the package doesn’t raise as much revenue as projected.
With the provision dead, Corker said senators would change the bill to roll back some of the tax cuts in future years, regardless of whether tax revenue meets expectations. Flake said the tax increases would take effect after six years.
The overall legislation would slash the corporate tax rate, offer more modest cuts for families and individuals and eliminate several popular deductions.
Lawmakers would then try to reconcile the Senate bill with one passed by the House in the hope of delivering a major legislative accomplishment to Trump by Christmas. Republicans have cast passage of a tax overhaul as a political imperative to ensure they hold their House and Senate majorities in next year’s midterm elections.
A new analysis by the nonpartisan Joint Committee on Taxation found that the bill would add $1 trillion to the deficit.
The tax bill would increase economic growth, generating an additional $458 billion in tax revenue, according to the analysis. That’s far short of the $2 trillion promised by Treasury Secretary Steven Mnuchin.
MCCAIN, MURKOWSKI ON BOARD
Two Republican senators, John McCain of Arizona and Lisa Murkowski of Alaska, announced their support for the tax package Thursday, giving it a major boost. Both McCain and Murkowski had voted against the GOP bill to dismantle the Obama-era health care law over the summer.
“It’s clear this bill’s net effect on our economy would be positive,” McCain said in a statement. “This is not a perfect bill, but it is one that would deliver much-needed reform to our tax code, grow the economy, and help Americans keep more of their hardearned money.”
Murkowski said she supports the tax bill now that it would allow oil drilling in Alaska’s Arctic National Wildlife Refuge. Murkowski got the provision added earlier this week, but the initial version violated arcane Senate rules about which provisions can be added to the tax bill.
Murkowski said Thursday that the provision was tweaked to comply. “We have done it and we’re ready to go,” she said.
Drilling in the refuge has long been a contentious issue, pitting environmentalists against those who want to increase domestic oil production.
Senators were still grappling with several issues Thursday, including a provision to add a deduction for local property taxes. The current Senate bill completely eliminates the federal deduction for state and local taxes, a popular deduction in the Democratic- leaning states of New York, New Jersey, California and Illinois as well as many wealthy suburbs nationwide.
Sen. Susan Collins, R- Maine, proposed an amendment to let homeowners deduct up to $10,000 in local property taxes on their federal returns. It is similar to a provision in the Housepassed bill.
Without the deduction, Collins said, it would be “very problematic for me” to vote for the bill.
“I am not committed to vote for this bill because who knows what is going to happen on the Senate floor,” she said at a Christian Science Monitor breakfast Thursday morning.
Collins would make up the estimated $ 146 billion in lost revenue by keeping the personal income tax rate for the wealthiest earners at 39.6 percent and making a smaller cut in the corporate tax rate. Trump and other Republicans insist that the corporate tax rate must be reduced from 35 percent to 20 percent.
Sen. Steve Daines, R-Mont., backed the package Wednesday after securing an increase in the deduction for business income from 17.4 percent to 20 percent. The deduction is for business owners who report their business income on their individual tax returns.
Johnson, the Wisconsin Republican, said Thursday that he was still withholding support for the bill because he would like the deduction increased to 25 percent.
The tax package would mark the first time in 31 years that Congress has overhauled the tax code.
The plan would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples. The tax cuts for individuals would expire in 2026 while the corporate tax cuts would be permanent.
“I’m ready to vote,” said Sen. John Kennedy, R-La. “It is time for us to saddle up and ride and go vote.”
SHUTDOWN LOOMS
While Congress focuses on taxes, temporarily putting a bill to keep the government running on the backburner, people who have spoken with the president in recent days said he has concluded that a government shutdown might be good for him politically.
The people also said Trump is focusing on his hard-line immigration stance as a way to win back supporters unhappy with his outreach to Democrats this fall.
Over the past 10 days, the president has told advisers that it is important that he is seen as tough on immigration and as getting money for a wall along the U. S.- Mexico border, according to two people who have spoken with him. And he has asked friends about how a shutdown would affect him politically and told several people that he would put the blame on the Democrats.
Trump’s mixed messages on a partial government shutdown comes as congressional Republicans attempt to negotiate with Democrats, whose support they need to pass spending legislation in coming weeks. Many Republicans said this week that a shutdown is an unwelcome possibility they hope to avoid.
“When you run for office and you get elected and you are given the opportunity to govern, it strikes me as a bad idea to shut the government down. That seems like an abdication of responsibility,” said Cornyn of Texas, the second-ranking Republican senator.
Sen. Thom Tillis, R-N.C., added that any business that shut down abruptly “would go bankrupt. Actually, by definition they would be bankrupt. So, I think you have to avoid shutdowns at all costs.”
Up against a Dec. 8 spending deadline, House Republican leaders today are expected to unveil a measure to extend current funding until Dec. 22, said multiple aides, who were granted anonymity to describe private deliberations. If talks on a longer-term deal to fund the government are not resolved by that time, GOP leaders are prepared to pursue another stopgap plan that would kick the talks into January, the aides said.
GOP leaders know they will probably need Democrats to help pass any spending bill because of potential opposition from House conservatives and because Senate Democrats can filibuster spending legislation.
House Speaker Paul Ryan, R-Wis., said Thursday that Congress will pass a shortterm bill “to keep talks going. Hopefully, people will decide to participate in these talks.”
Trump has waffled on the idea of a shutdown in the past. In the spring, he tweeted that he would like a “good” government shutdown and thought it would be useful to him. This fall, he mused to others in a White House meeting that he thought the debt ceiling — often used as a negotiating point in complex spending talks — should be ended for good and has told advisers that a shutdown could make the administration look impotent.
Initially, Trump embraced media coverage of his deal this fall with Senate Minority Leader Charles Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., that extended government spending and increased the debt limit for three months. The move was heralded by Democrats as a significant victory, as it included concessions on immigration while also allowing Republicans to jump- start their debate over tax cuts. In the wake of the deal, Trump even called Schumer and Pelosi to rave about their agreement.
But the more Trump talked to advisers, read polls and watched developments on Capitol Hill, the more he became frustrated that he was “looking like the chump in the deal,” according to one person who spoke to him about the issue, who along with others insisted on anonymity to speak candidly. This time, Trump wants his political base to see him as winning the contest, two advisers said.
Inside the White House, Trump’s aides are trying to schedule a bipartisan meeting for next week with Ryan, McConnell, Schumer and Pelosi, according to a White House official with knowledge of the effort. Democrats backed out of a Tuesday meeting with Trump hours after he tweeted that he doubted he would be able to reach a spending deal with Democrats in part because of their position on immigration.
Sen. Lindsey Graham, R-S.C., who has golfed with Trump in recent weeks, said he believes Trump is committed to averting a shutdown.
“North Korea is looming large,” Graham said. “We’d look like crazy people to shut down the government in light of all of our problems.”
A new analysis by the nonpartisan Joint Committee on Taxation found that the bill would add $1 trillion to the deficit.