WASHINGTON ― Hours before Senate Republicans were scheduled to vote on a tax proposal that doesn’t technically exist in final legislative form, Senate Majority Leader Mitch McConnell (R-Ky.) strode to the floor on Friday and said he was confident the bill would pass.
“We have the votes,” he told reporters.
McConnell was foiled over the summer and fall by the GOP effort to repeal and replace the Affordable Care Act, suffering a number of embarrassing defeats that illustrated his inability to wrangle the Republican Senate conference. Tax reform would be different, promised McConnell and other GOP leaders.
After months of negotiations and false starts, Republicans finally seem prepared to pass their most sweeping rewrite of the U.S. tax code in three decades.
To pass the bill, Republicans were forced to make significant last-minute changes, including some to a deduction for certain types of businesses. Republicans hadn’t provided any detailed explanations or legislative text for the changes.
Sen. Jeff Flake (R-Ariz.), one of the last holdouts on the GOP bill, announced Friday morning that he would vote for the bill despite concerns that the legislation would add ― as the Joint Committee on Taxation said Thursday ― more than $1 trillion to the debt over the next 10 years.
“From the outset of the current debate on tax reform, my goal has been to ensure that Congress passes a tax reform package that is both fiscally-responsible and promotes economic growth,” Flake said in a statement.
Flake said he’d obtained a “firm commitment” from Republican leaders and the Trump administration to protect beneficiaries of the Deferred Action for Childhood Arrivals program, and changes to a budgeting gimmick that made the bill seem less expensive than it actually is.
An agreement on DACA would be a significant development in the tax debate, as well as in a coming struggle over a year-end government funding bill. But Marc Short, the White House director of legislative affairs, told reporters Friday there was not yet an agreement on DACA, only a deal to include Flake in the discussions.
Although we don’t know exactly what Flake got on DACA, we do know that Sens. Ron Johnson (R-Wis.) and Steve Daines (R-Mont.) secured changes in the last 24 hours to a business deduction that would cost approximately $60 billion over the next decade, according to Daines. The amendment would raise how much these businesses could deduct off the top of their tax bill, from the 17.4 percent currently in the Senate bill to 23 percent.
Sen. Susan Collins (R-Maine) also appeared to secure agreements. One would ensure the passage of the so-called Alexander-Murray legislation, a bill that would fund Cost Sharing Reductions for Obamacare. Another bill sponsored by her and Sen. Bill Nelson (D-Fla.) would hand states $2.25 billion a year to subsidize the cost of individuals requiring the most expensive medical attention. It also looks like Collins will get changes to the bill allowing for individuals to deduct up to $10,000 of their state and local property taxes. That change would match the House bill.
What wasn’t clear Friday afternoon was what, if anything, Sen. Bob Corker (R-Tenn.) had secured in the bill. Corker, along with Flake and Johnson, threatened to hold up the bill on Thursday after the Senate parliamentarian ruled that his “trigger” proposal ― which would have brought back certain taxes if the government failed to meet specific revenue targets ― could not be included in the reconciliation bill. (Republicans are using the budget reconciliation process in order to pass the bill with a simple majority. As a consequence, however, there are certain policy changes they are not allowed to make under Senate rules.)
It appears as if Republicans may not have satisfied Corker and just decided to accept that he would vote no. If Corker were the lone GOP dissenter, the bill would pass 51-49.
Even though the bill looks to be headed toward being passed by the Senate on Friday, the House and Senate still need to agree on the same legislation.
The bill the House passed last month differs in several ways from the Senate version. Lawmakers will have to work out agreements on the estate tax, which the House bill repeals but the Senate bill merely reduces, and differences on provisions governing “pass-through” businesses that pay individual instead of corporate taxes. Perhaps most significantly, almost all of the Senate bill’s tax cuts for individuals expire after seven years as a budget gimmick to reduce the bill’s cost.
Lawmakers have said they expect the two bills to be merged into one, which will require approval by each chamber, but there is still a lingering chance that the House will take the Senate bill in the end.