Fate of GOP Tax Bill Hinges on Small Handful of Senators

Daines and Johnson are holding back their support over small-business provisions, while others remain on the fence over deficit concerns.

Sen. Ron Johnson speaks to the media on Aug. 16 in Madison, Wis.
AP Photo/Scott Bauer
Nov. 27, 2017, 8 p.m.

The GOP effort to rework the tax code is moving into a critical period in the Senate, where lawmakers plan to vote on the bill in the full chamber as soon as this week, but have yet to secure the necessary votes.

Republicans need to convince 50 of their 52 Senate members to vote for the bill, and negotiations will take place all week to sway about a half-dozen GOP senators who are either uncommitted or oppose the legislation. The negotiations could include changes to provisions on pass-through entities or new measures to combat the federal deficit as leadership scrambles to lock down the last remaining votes.

If Senate Majority Leader Mitch McConnell can corral enough votes through cajoling, deal-making, or however else, it would mark a significant step toward the bill becoming law and put Republicans closer to achieving their sole major legislative victory in 2017.

But two Republicans have already come out against the measure over its treatment of pass-through entities—businesses that pass their profits onto the owner, which are then taxed at the individual rate. Wisconsin’s Ron Johnson and Montana’s Steve Daines have said they won’t vote for the bill as it is.

“I want to see changes to the tax-cut bill that ensure Main Street businesses are not put at a competitive disadvantage against large corporations,” Daines said in an emailed statement, adding that he remained optimistic about arriving at a deal.

One option could be to raise the 17.4 percent deduction for pass-through entities laid out in the Senate tax bill. Another could be to treat the state and local income tax deduction the same between corporations and pass-throughs.

A more immediate issue is whether Johnson would vote for the tax bill when the Senate Budget Committee considers the measure Tuesday. Johnson said late Monday he would vote against the bill in committee if his concerns were unresolved.

“A number of us I don’t think are going to vote for it unless we have these issues fixed,” Johnson told reporters.

The makeup on the committee is 12 Republicans and 11 Democrats. As would be the case for a vote in the full chamber, the bill is unlikely to get any Democratic backing. Johnson said he would be meeting with leadership staff Monday night on the issue.

Efforts to provide more tax relief to pass-through entities could bump up against the other big issue that some lawmakers have with the sweeping tax bill: its deficit impact.

According to a Congressional Budget Office report released Sunday, the Senate tax bill will add about $1.4 trillion to the deficit over a decade. And that figure doesn’t factor in the notion that a future Congress would likely renew several personal tax breaks the bill sets to expire in 2025, at a cost of several hundred billion dollars.

Deficit-hawk senators such as Jeff Flake, Bob Corker, and James Lankford have balked at the idea of adding so much to the national debt.

That’s why Corker has proposed creating “backstop” provisions in the legislation in case the economy doesn’t achieve the economic growth needed to pay for the bill, possibly through changing tax rates.

Corker told reporters that he has been working throughout the Thanksgiving break on the issue with members of the administration and Finance Committee, talking “nonstop throughout the weekend” with White House chief economic adviser Gary Cohn. The administration, he said, is receptive to the idea.

Corker is also a member of the Senate Budget Committee and said it was possible that he would vote no on the bill unless he received a deal on the deficit issue. Corker didn’t give details on the structure of any revenue-raiser but said it should be large enough to make up the shortfall.

“It’s got to be at a point in time that allows you to recoup what hasn’t been met up until that date, so the order of magnitude depends on what shortfall might exist,” Corker said.

Elsewhere, Sen. Susan Collins’s vote remains an open question after she voiced concern over the Senate bill’s proposal to repeal the Affordable Care Act’s individual mandate on purchasing health insurance.

Others who could voice opposition include Sens. John McCain, Lisa Murkowski, and Jerry Moran—who told a Kansas newspaper last week that he preferred the Senate drop the individual-mandate repeal from its bill and address it separately.

That’s an unlikely proposition, however, as the individual-mandate provision would raise between $300 and $400 billion and is necessary for the bill to meet fiscal constraints in the Senate.

The White House, which has so far applied a light touch in whipping tax-reform votes in Congress, is ramping up its efforts this week as well.

President Trump hosted members of the Senate Finance Committee on Monday. The president is set to push the tax plan at the GOP senators’ weekly policy lunch Tuesday.

After Monday’s meeting, Senate Finance Committee Chairman Orrin Hatch said that he wasn’t concerned about the major differences between the Senate and House tax plans, which treat the deduction for state and local taxes differently, among other provisions.

“We’re generally able to get together and solve these problems, and I think we will,” Hatch told reporters.

If the Senate passes its tax bill, it would need to be reconciled with the House version, which passed earlier this month. But some analysts have said congressional GOP leaders may push for an informal conference between the House and Senate, applying the changes to the final Senate version and having the House then take up that bill, avoiding a potentially weeks-long conference-committee process.

Hatch said he hoped to get a bill to the White House by Christmas.

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