If the GOP Clears These Hurdles, Trump’s Tax Cuts Pass This Week

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McConnell is feeling pretty, pretty, pretty good. Photo: AARON P. BERNSTEIN/Bloomberg via Getty Images

Republicans moved closer to their goal of passing a tax-overhaul bill by the end of the week when the Senate voted 52 to 48, along party lines, on Wednesday to begin debate on the legislation. Now the only things preventing the bill’s passage, according to President Trump, are dummies who believe widespread reports that it mainly benefits corporations and rich people, and Democratic haters who want to prevent Americans from reaping the benefits of the GOP’s nonsensical economic policy.

Back in the real world where President Obama is definitely American and our current commander-in-chief bragged about sexual assault to Billy Bush, all that’s standing in the way of final passage in the Senate is a handful of GOP lawmakers who would like some tweaks to address their pet concerns. Unlike in the final days before the dramatic failure of the effort to repeal Obamacare in July, this time, Republicans are not at each others’ throats.

“It’s like night and day,” said Republican senator John Kennedy. “At this point in the health care debate, people were walking out and talking about each other’s mamas and getting mad and it just wasn’t healthy, it wasn’t productive. It was like a bunch of kids in the back of a minivan.”

“This time,” he continued, “it’s very constructive and we’re trying to make a good bill better and everybody’s in good faith.”

Many experts and nearly half of all Americans disagree with the idea that the Republicans have a good bill. Nevertheless, it seems quite likely that the GOP will resolve its internal issues and get the legislation passed by Friday. With ten senators expressing concerns about the bill and only two spare, here are the issues that need to be fixed in the next day.

Appeasing deficit hawks.
Most Republicans are suddenly fine with adding $1.4 trillion to $1.5 trillion to the deficit over the next ten years, but a handful remember that the GOP used to be worried about the national debt. GOP leaders claim the tax cuts will magically pay for themselves by sparking stunning economic growth, but economists say that’s not true.

Earlier this week, Senator James Lankford called his party’s bluff, suggesting that the bill should include a “trigger” that will increase taxes just in case economic growth isn’t as robust as his colleagues predict. Senators haven’t settled on what the trigger might entail. One proposal would raise taxes by $350 billion if the economy doesn’t grow by 0.4 percent yearly; another would increase the corporate rate from 20 percent to 21 percent, and reinstate the corporate and individual alternative-minimum tax.

Some Republicans are dead-set against triggers, particularly in the House. Senator Dean Heller worried that it would spook corporations. “There’s one word: It’s certainty,” Heller said. “I do not support triggers.”

But there may be a trigger that Republicans can get behind: instituting automatic spending cuts if the economy doesn’t perform as they hope. GOP aides said that could spark procedural issues, but Republicans seemed to find automatic spending cuts more attractive than tax increases, for obvious reasons.

Adjusting the rate for “pass-through” businesses.
Senators Steve Daines and Ron Johnson had threatened to oppose the bill if it didn’t offer deeper tax cuts to “pass-through” businesses, which are companies that pay their taxes through the individual tax code. Most privately owned businesses are set up in this manner, and Daines just happens to be a part-owner of one of them. (President Trump owns more than 500 pass-through entities through the Trump Organization.)

Both the House and Senate versions of the bill cut the corporate tax rate from 35 to 20 percent. Under the Senate version, pass-throughs would be taxed at the individual rate of up to 39.6 percent, but they get a 17.4 percent income-tax deduction. Daines said on Thursday that he’s reached a deal to increase the deduction from 17.4 percent to 20 percent. Before Wednesday’s vote, he said he’s “seen enough progress to vote yes to move the debate forward.”

Inserting a $10,000 property-tax deduction.
According to Politico, Senator Susan Collins said both the White House and GOP leaders support her request to add a deduction for up to $10,000 in property taxes. This would bring the Senate bill in line with the House version, but it’s unclear how Senate Republicans plan to pay for this change, which could add more than $100 billion to the cost of the legislation over the next decade.

Collins has suggested increasing the bill’s corporate tax rate from 20 percent to 21 percent, and keeping the top rate for individuals at 39.6 percent. “They’re not crazy about my pay-fors, I will admit,” said Collins.

Promising a vote to stabilize Obamacare, after taking an ax to Obamacare.
Collins, who helped kill the “skinny repeal” effort over the summer, is also concerned that the tax plan pays for its handout to the wealthy by repealing Obamacare’s individual mandate, which will cost 13 million people their health coverage, according to the Congressional Budget Office.

Collins has reportedly received assurances that the Senate will pass the Alexander-Murray “Obamacare stabilization” bill. She suggested that would solve the problem, though that bill was crafted to address the issues caused by Trump killing the health law’s cost-sharing-reduction payments to insurers. House Republicans have indicated that they won’t pass Alexander-Murray, and it may not matter; the CBO said that even if it passes, 13 million people will still lose their insurance under the GOP tax plan.

Decide whether to expand the child tax credit to more low-income families.
The current Senate bill increases the child tax credit from $1,000 to $2,000 annually per child, but that mostly won’t apply to families that don’t make enough to pay income taxes.

Senators Mike Lee and Marco Rubio said they will introduce an amendment that would decrease the income level where the credit kicks in, extending the benefit to a larger number of poor families. To pay for this, the new corporate tax rate would be increased from 20 to 22 percent.

The White House said on Wednesday that it’s opposed to increasing the corporate rate to help low-income families. While some other senators said they’re open to the amendment, the Washington Post said it’s unlikely to receive enough GOP support. Democrats might help Lee and Rubio push the amendment into the bill, or GOP leaders may pressure the two senators into dropping their effort.

So will it work?
It may seem like these issues are too complex to be resolved in a matter of hours, but Republicans are tantalizingly close to passing major legislation for the first time this year, and it’s hard to see them throwing it all away over something like the size of the child tax credit, or leaving a few million people with no health coverage.

“Susan’s got a concern; it’s a real legitimate concern. Ron Johnson’s got a concern. There’s a deficit concern,” said Senator Lindsey Graham. “It’s like making a cocktail. If you’ve got to add more of this and less of that, I’m fine. Failure’s not an option.”

If the GOP Clears These Hurdles, Tax Cuts Pass This Week