Senate road to tax cuts rocky after House OK
Middle-class hikes, health care losses present dilemma.
WASHINGTON — Republicans have stretched closer to delivering the first big legislative victory for President Donald Trump and their party, whisking a $1.5 trillion overhaul of business and personal income taxes through the House. Thorny problems await in the Senate, though.
The House passage of the bill Thursday on a mostly party-line 227-205 vote also brought nearer the biggest revamp of the U.S. tax system in three decades.
But in the Senate, a similar measure received a politically awkward verdict from nonpartisan congressional analysts showing it would eventually produce higher taxes for low- and middle-income earners but deliver deep reductions for those better off.
The Senate bill was approved late Thursday by the Finance Committee and sent to the full Senate on a party-line 14-12 vote. Like the House measure, it would slash the corporate tax rate and reduce personal income tax rates for many.
But it adds a key feature not in the House version: repeal of the Affordable Care Act’s requirement that everyone in the U.S. have health insurance. Elimination of the so-called individual mandate under the Obama health care law would add an estimated $338 billion in revenue over 10 years that the Senate tax-writers used for additional tax cuts.
The nonpartisan Congressional Budget Office has projected that repeal of the mandate would result in 13 million more uninsured people by 2027, making it a political risk for some lawmakers.
The Senate panel’s vote came at the end of four days of often fierce partisan debate. It turned angrily personal for Chairman Sen. Orrin Hatch, R-Utah, as he railed against Democrats’ accusations that the legislation was crafted to favor big corporations and the wealthy.
“I come from the poor people. And I’ve been working my whole stinking career for people who don’t have a chance,” Hatch insisted.
The analysts’ problematic projections for the Senate bill came a day after Wisconsin Sen. Ron Johnson became the first GOP senator to state opposition to the measure, saying it didn’t cut taxes enough for millions of partnerships and corporations. With at least five other Republican senators yet to declare support, the bill’s fate is far from certain in a chamber the GOP controls by just 52-48.
Even so, Republicans are hoping to send a compromise bill for Trump to sign by Christmas.
“Now the ball is in the Senate’s court,” Vice President Mike Pence said after the House vote. Speaking at a conservative Tax Foundation dinner in Washington, Pence said, “The next few weeks are going to be vitally important and they’re going to be a challenge.”
A White House statement that “now is the time to deliver” also underscored the GOP’s effort to maintain momentum and outrace critics. Those include the AARP lobby for older people, major medical organizations, realtors — and, in all likelihood, every Senate Democrat.
Despite controlling both chambers of Congress and the White House, the Republicans are still smarting from this summer’s crash of their effort to dismantle President Barack Obama’s health care law. They see a successful tax effort as the best way to avert major losses in next year’s congressional elections. House Republicans concede they are watching the Senate warily.
“Political survival depends on us doing this,” said Rep. Kevin Cramer, R-N.D. “One of the things that scares me a little bit is that they’re going to screw up the bill to the point we can’t pass it.”
The House plan and the Senate Finance bill would deliver the bulk of their tax reductions to businesses.
Each would cut the 35 percent corporate tax rate to 20 percent, while reducing personal rates for many taxpayers and erasing or shrinking deductions. Projected federal deficits would grow by $1.5 trillion over 10 years.
As decades of Republicans have done before them, GOP lawmakers touted their tax cuts as a boon to families across all income lines and a boost for businesses, jobs and the entire country.
“Passing this bill is the single biggest thing we can do to grow the economy, to restore opportunity and help those middle-income families who are struggling,” House Speaker Paul Ryan of Wisconsin said.