The last few days in Washington have been dominated by the GOP’s steady march toward enactment of a tax bill in the Senate. One after one, Senate Republicans articulated objections to the bill, but then either expressed faith in their eventual satisfaction once the bill had become law, or pledged allegiance to the overriding importance of tax cuts even if their concerns went unaddressed. As likely opponents such as Susan Collins and John McCain climbed onboard the Tax-Cut Express, it looked very much like Mitch McConnell had finally showed he could manage his Senate majority to win on major legislation.
But just as the Senate was strolling through the complex Senate steeplechase to enactment of the bill, something bad happened off-camera with respect to a deficit trigger provision sacred to a handful of Republican deficit hawks. The idea, accepted by the GOP leadership, was to provide for a tax increase that would kick in if the tax bill produced terrible budget-deficit outcomes. Unfortunately for Republicans, Senate parliamentarian Elizabeth MacDonough ruled that the trigger provision did not pass muster under the budget rules governing the bill. Knowing this, trigger supporters Jeff Flake and Bob Corker — backed, Republicans feared, by one or more other colleagues — delayed a Senate vote on a motion-to-recommit by Democrats that might have killed the bill.
Suddenly back on their heels, Senate Republicans scrambled to come up with some alternative plan to keep deficit hawks in line, without the trigger. These included provisions that would actually limit tax cuts, according to the Hill:
Senate GOP leaders have agreed to roll back $350 billion in tax relief in response to a procedural ambush by deficit hawks led by Sen. Bob Corker (R-Tenn.) that nearly killed the GOP tax-reform bill.
Senate Republican Whip John Cornyn (Texas) told reporters after a round of intense discussions on the floor, “We have an alternative, frankly, tax increase we don’t want to do to try to address Sen. Corker’s concerns.”
Cornyn said the details of the proposal are being worked out.
What makes this all potentially important is that it exposes the fiscal and economic contradictions in the entire GOP tax scheme. If, for example, the GOP’s accommodation of Corker and company makes corporate tax-rate cuts temporary, the whole economic rationale of giving CEOs the confidence to make big investments in the U.S. economy becomes very dubious. And if Republicans shave middle-class tax relief to satisfy deficit hawks, that will erode the already terrible popularity of the bill.
All sorts of negotiations are certainly underway to get the tax bill out of the ditch, but it’s clear the GOP’s decision to move this tax bill via the special procedures of the budget process is proving to be problematic. In normal legislation (yes, the kind that requires bipartisan support), Elizabeth MacDonough’s opinion would be irrelevant. Now she’s causing all sorts of pinball reactions that could mess up this tax bill.