GOP tax legislation hits snag over deficit concerns
WASHINGTON — The Senate Republican tax bill, which had appeared to be cruising to victory, suffered a setback late Thursday as lawmakers were forced to contemplate significant changes, including future tax increases, to help pay for the legislation.
The bill had gained momentum in the morning when it picked up a key swing vote. But it came to a grinding, if temporary, halt as senators scrambled in the early evening to find ways to raise several hundred billion dollars after some members objected to moving forward without a plan to safeguard against ballooning the deficit.
Lawmakers are now considering alternatives, including reinstating the alternative minimum tax on some corporations and wealthy individuals, and raising the corporate rate above 20 percent after some number of years. A final vote on the bill is expected Friday after a series of amendments are considered.
The push to raise money came after an analysis by the congressional Joint Committee on Taxation found the tax cuts would not pay for themselves by generating enough revenue through economic growth to offset the tax cuts, as Republicans have claimed, but would instead add $1 trillion to budget deficits over the next 10 years.
Sen. Bob Corker, R-Tenn., had already been on the fence over deficit concerns, and he insisted Thursday evening that the Senate leadership find a way to mitigate the cost of the bill, lawmakers said.
“Sen. Corker has been pretty clear he doesn’t want any deficit spending,” said Sen. John Cornyn of Texas, the No. 2 Senate Republican.
The last-minute attempt to find revenue slowed, at least temporarily, what had appeared to be a cascade of momentum for the bill. Republicans picked up a key swing vote, Sen. John McCain, R-Ariz., earlier in the day, and had appeared to be on track to pass the bill along party lines.
Now, they are under pressure to cut the cost of their bill by as much as one-third, a situation that could require Republicans to insert future tax increases into what was posited as a giant tax cut. That could complicate the final approval of the tax rewrite, particularly with House Republicans, who will be loath to approve a bill that would effectively raise taxes on companies and individuals after a period of lower taxes.
Several senators remain on the fence over the bill, and Republicans can lose no more than two of their members to pass it without any Democratic support.
Corker, along with Republican Sens. Jeff Flake of Arizona and James Lankford of Oklahoma, have expressed concern about piling up more debt as a result of the $1.5 trillion tax overhaul. Other Republican senators, like Ron Johnson of Wisconsin, have objected to how the bill treats businesses whose profits are distributed to their owners and taxed at rates for individuals.
During a procedural vote Thursday that suddenly turned dramatic, Republican leaders huddled with Corker, who had wanted to add a trigger-like mechanism to the bill that would force future tax increases if federal revenues fell short of projections. The Senate parliamentarian ruled that trigger out of bounds under the budget rules that Republicans must abide by in order to shield their bill from a Democratic filibuster.
Corker, Flake and Johnson withheld their votes on a Democratic motion that would have relegated the bill back to a Senate panel, before finally relenting and joining their Republican colleagues in defeating the motion. The floor debate on the bill continued, and Republicans were discussing alternative provisions such as slowly raising the corporate rate above 20 percent.
Even before the parliamentary snag, critical components of the bill remained under debate, including the size of the corporate tax cut and whether it will retain any ability for individuals to deduct state and local taxes. Still, Republican leaders expressed optimism that they were close to approving the bill.
“We’re on the cusp of a great victory for the country,” Sen. Mitch McConnell, R-Ky., the majority leader, said earlier in the day, adding that Senate Republicans were “headed toward the finish line either late tonight or early tomorrow.”
McCain, one of the three Republicans who sank the party’s attempt to repeal and replace the Affordable Care Act earlier this year, released a statement Thursday saying that he would vote for the tax bill. One of the other health care holdouts, Lisa Murkowski of Alaska, had said Wednesday she would vote for the tax bill as well.
Other senators remained undecided Thursday, including Susan Collins, R-Maine, who said she was optimistic her concerns would be addressed but was not yet ready to support the legislation.
“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 said she remained concerned about the impact of the Senate plan to repeal the Affordable Care Act’s mandate that most Americans have insurance or pay a penalty, and she also wants to add a provision allowing individuals to deduct up to $10,000 in property taxes.