A massive Republican tax bill cleared a key procedural hurdle in the Senate Wednesday, as lawmakers voted to move the legislation forward toward a showdown vote on final passage by week’s end.

The party-line 52-48 vote was an important victory for Majority Leader Mitch McConnell and President Trump, signaling support and momentum for the legislation that overhauls the loophole-ridden tax code for the first time in three decades while delivering enormous cuts to corporations and the wealthy. But it was not a guarantee of ultimate success, as several Republican lawmakers agreed to open debate on the bill so they could pursue amendments, and have not yet committed to voting “yes” on final passage.

Maine’s senators split their votes, with Sen. Susan Collins, a Republican, voting in favor, and Sen. Angus King, an independent, voting against.

“Passing tax reform is the single most important thing we can do right now to shift the economy into high gear and deliver much-needed relief to American families,” McConnell, of Kentucky, said on the Senate floor ahead of Wednesday’s vote, as he urged fellow Republicans to support the measure to open debate.

Passage of the “motion to proceed” started the clock on 20 hours of debate on the legislation, which will be followed by a so-called “vote-a-rama” in which lawmakers can offer endless amendments into all hours of the night Thursday. Then will come the final vote.

With Democrats unanimously opposed, McConnell can lose only two Republican senators in the closely divided Senate and still prevail on the bill. Despite well-documented disagreements between McConnell and Trump, the tax legislation is the No. 1 goal for both men as they pursue an economy-boosting tax cut sought by donors and corporations, as well as a political victory to present to voters ahead of next year’s midterm elections.

The most divisive issue on Wednesday was a demand from several Republicans that the legislation include a “trigger” that would automatically raise taxes if economic growth targets aren’t met.

Sen. Bob Corker, R-Tenn., and others have threatened to oppose the bill if a version of this idea isn’t put into the final version, and Corker said Tuesday that he had reached a deal on the issue.

As the potential parameters of that deal emerged, several Republicans said Wednesday they were strongly opposed to including it, worried that the possibility of future tax increases could dampen corporate enthusiasm.

“There’s one word: It’s certainty,” said Sen. Dean Heller, R-Nev. “I do not support triggers.”

Other Republican senators raised similar concerns but said they were trying to work out a solution that all Republicans could live with. “I don’t want to see this bill destroyed because of a pursuit for perfection,” said Sen. David Perdue, R-Ga., said.

One possibility discussed by several senators Wednesday would use a trigger to prompt spending cuts, not tax increases. But Republican aides warned that could cause procedural issues, threatening the party’s ability to pass the bill with a simple majority vote.

The last-minute negotiations are precarious. With Democrats unanimously opposed to the tax plan, Senate Republican leaders can afford to lose no more than two Republican votes if they hope to pass their bill. And success on the Senate floor can never be assured, as illustrated in July when a dramatic eleventh-hour defection from Sen. John McCain, R-Ariz., sunk the Republicans’ efforts to repeal the Affordable Care Act.

Yet most senators and others involved were increasingly optimistic Wednesday of success.

Some recalcitrant Republicans signaled they would fall in line: Sen. Lisa Murkowski, R-Alaska, who like McCain had helped to derail the health care bill, said Wednesday she would back the tax legislation. And Sen. Steve Daines, R-Mont., who wanted deeper cuts for businesses, said he had secured changes to improve the bill.

“I’ve seen enough progress to vote yes to move the debate forward,” he said.

Though the legislation would still have to be reconciled with a House version, passage on the Senate floor this week would clear the bill’s toughest hurdle and hand as a major victory to Trump and Republican leaders.

Republicans are moving at breakneck speed, shutting Democrats out of the process completely as they push a tax code rewrite that few understand and that could have uncertain impacts on the entire economy and every American over decades to come.

Numerous analyses have found the bill disproportionately benefits the wealthy and even hurts poorer Americans over time. Trump, Republican leaders and many businesses nonetheless insist it would be a boon for the economy that would boost growth. And after failing to pass any major legislation so far this year despite full control of Congress and the White House, Republicans are hungering for a win.

Republicans have tried to frame the tax plan as a boon for workers despite analysis that shows the majority of the benefit would go to corporations and the wealthy.

“Our focus is on helping the folks who work in the mail rooms and the machine shops of America,” Trump said during a speech in St. Charles, Mo. “The plumbers. The carpenters. The cops. The teachers. The truck drivers. … The people that like me best.”

The procedural vote Wednesday would allow the Senate to begin formally debating the bill and move it a step closer to a final vote that could come Thursday or Friday.

Corker’s demand for the trigger provision stems from concern over how the bill would affect the federal budget.

The total package of tax cuts is projected to add $1.4 trillion over 10 years to the national debt, and Republicans are expected to make a number of changes in the next two days to push the addition up to $1.5 trillion.

Republicans have promised that the package of tax cuts would spur more economic growth, leading to more investment, hiring, and higher wages for workers. But many economists dispute these forecasts, and Corker has sought assurances that some steps would automatically be taken if growth didn’t perform as promised.

In its most recent economic forecast, CBO projected rather weak growth over the next five years, predicting the economy would grow by 2.2 percent in 2017, 2.0 percent in 2018, and averaging 1.5 percent in 2019 and 2020. The economy is already showing signs of growing faster than that. It has grown faster than 3.0 percent in each of the past two quarters, though it hasn’t notched an annual growth rate of that high in years.

Details of Corker’s trigger idea remained in flux Wednesday. Negotiators were looking at a package that would raise taxes by as much as $350 billion if the economy doesn’t grow by more than 0.4 percent yearly above a baseline established by the Congressional Budget Office, according to several people briefed on the discussions. The people spoke on the condition of anonymity because they weren’t authorized to reveal private negotiations.

Lawmakers were still discussing where the new taxes would come from. One idea being considered would include raising the bill’s proposed corporate tax rate of 20 percent up to 21 percent, reinstituting the corporate alternative-minimum tax, and reinstituting the alternative minimum tax paid by individuals and families.

Under the bill as written, the alternative minimum tax for corporations and individuals is scheduled to be eliminated, and the corporate tax rate would be lowered from 35 percent to 20 percent in 2019.

It’s unclear if these details will all be settled by Wednesday afternoon. But the scheduling of the initial procedural vote is a sign that Majority Leader Mitch McConnell (R-Ky.) that expects to secure enough support.

While Corker’s demands for the trigger are rankling many Republicans, it stops far short of his initial red-line statements about what he needed to see in the tax bill in order for him to support it. Several weeks ago, he said he would only support the tax bill if it did not add a “penny” to the debt based on a “reasonable analysis” of the plan’s economic impact.

Neither the Trump administration or nonpartisan congressional scorekeepers have released any official analysis supporting the GOP’s growth claims. Even many conservative economists believe the emerging tax plan would add hundreds of billions, if not more, to the debt. A number of the plan’s provisions would be only temporary, including the tax cuts for families and individuals, and extending them in the future would add even more to budget deficits.

If Corker refuses to support the tax package without the trigger, many Republicans could be forced to vote for something they don’t like to ensure the broader package is signed into law.

“A lot of people hate it, but it may be the only way to get the tax bill passed,” said Steve Moore, referring to the idea of a trigger. Moore was a top economic adviser to Trump during the 2016 campaign.

One other unresolved issue remains the business tax cuts that Sen. Ron Johnson, R-Wis., continues to demand. Like Daines, he wants taxes to be lowered for “pass through” companies whose earnings are taxed at individual rates. Johnson himself retains partial ownership of a plastics manufacturing company in Oshkosh, Wis., and could benefit from such changes.

Top White House officials have tried to at times cajole and at other times prod Johnson into going along with the plan. He has at times been defiant but there were signs that he was softening and warming to concessions from GOP leaders.

“We have been making some real progress,” Johnson told Bloomberg News on Wednesday.

The Senate bill would allow the partners and owners of millions of American companies known as “pass throughs” to deduct 17.4 percent of the corporate income from their taxable income as a way to effectively lower their tax rates. Daines said Wednesday that Senate leaders tentatively agreed to raise it to 20 percent, which would add more than $60 billion to the cost of the package.

But one person briefed on the talks said Johnson wants the deduction to be raised even more, and he is being met with resistance from Republican leaders, who are already concerned about the total cost of the package. They can’t allow the package to grow to more than $1.5 trillion over 10 years or they will violate Senate rules, and there are other costly measures being added in the coming days.

While Republican leaders are still trying to resolve the issues raised by Corker and Johnson, they appear to have won over several other holdouts as they approach key floor votes.

Sen. Susan Collins, R-Maine, has suggested she’s pleased with promised changes from Trump that would allow Americans to deduct up to $10,000 in property taxes from their taxable income, as well as assurances that the federal government will make payments to help subsidize health insurance premiums. This was a key sticking point for her because the tax bill would repeal the individual mandate of the Affordable Care Act, a change that the CBO said could drive up health insurance premiums by 10 percent.

Allowing Americans to deduct $10,000 in property taxes could add more than $100 billion to the cost of the tax package over 10 years. But the House bill included the provision, and numerous Republican lawmakers there have said it must be included in the final bill. Senate leaders are looking at prohibiting corporations from deducting state and local taxes as a way to raise some of the offsetting revenue, though no final decision has been made, the people briefed on the talks said.

House Majority Leader Kevin McCarthy, R-Calif., said Wednesday that House lawmakers should be ready to mobilize quickly to work out differences with Senate colleagues over their bills. He told members in a closed-door meeting they could vote to start the conference process as soon as Friday.

,

« Previous

Next »

Related Stories