A Last-Minute Threat to the Republican Tax Bill

A group of senators held up a procedural vote for more than an hour Thursday after a new report found the legislation would spike the debt, throwing its final passage into doubt.

Senators Ron Johnson of Wisconsin (left) and Bob Corker of Tennessee talk at a committee hearing.
Along with Arizona lawmaker Jeff Flake, Senators Ron Johnson of Wisconsin (left) and Bob Corker of Tennessee briefly held up the GOP tax bill on Thursday. (Joshua Roberts / Reuters)

The Senate tax bill is moving closer to a climactic final passage, but it faced an unexpected threat on Thursday after a new analysis found that it would increase the debt far more than party leaders had claimed.

Republican leaders were scrambling to rewrite portions of the far-reaching bill overnight on Thursday to win over deficit hawks and lock down the 50 GOP votes they’ll need to push it over the line. By Friday morning, they had secured the support of two holdouts, Senators Ron Johnson of Wisconsin and Steve Daines of Montana, who were demanding more favorable treatment of so-called “pass through” companies whose owners file their taxes as individuals. But Republicans still had a few more senators to secure ahead of a final vote expected later on Friday.

“We’re confident of the 50 and we’d like to build on that,” Senator John Cornyn told reporters on Friday, according to Bloomberg. While Republicans can pass the tax bill with just 50 votes and the tie-breaking assent of Vice President Mike Pence. But it would leave them with no margin for error as they head into negotiations on a final bill with the House, which would still have to pass both chambers.

A day earlier, a group of GOP senators led by Bob Corker of Tennessee refused for more than a hour to vote down a Democratic bid to defeat the $1.4 trillion tax cut. After huddling and trading proposals with colleagues on the Senate floor, the lawmakers each voted with their fellow Republicans to allow the measure to advance. However, Corker’s support for the chamber’s final legislation, which will soon go up for a vote, is still in doubt: The Senate parliamentarian ruled that his proposal for a tax-hike “trigger” would not comply with the chamber’s strict rules for passing bills with only a simple-majority vote. Corker and Senator John Cornyn of Texas, the second-ranking Republican, said the party would now consider automatically rolling back some of the plan’s tax cuts to secure its eventual approval.

Republicans had hoped to pass the bill late Thursday night, but they delayed further votes until Friday as leaders searched for hundreds of billions of dollars in additional revenue to secure the support of deficit hawks like Corker and Senator Jeff Flake of Arizona. Passage of the Senate bill would set up negotiations with the House on a reconciled package that President Trump could sign into law. That the party was still rewriting the bill at this late stage underscored the chaotic process Republicans have undertaken, which Democrats have denounced as rushed and irresponsible.

Whether scaling back the tax cuts will threaten the Senate bill remains unclear, but it is sure to upset House conservatives who have watched the Senate negotiations with alarm. Earlier on Thursday, several said they opposed the trigger, a measure that could cause taxes to go back up if the economy doesn’t grow as fast as congressional Republicans say it will. Conservative activists have also mobilized against the idea, arguing it would undermine the tax cuts and deter business investment.

The drama on the Senate floor occurred barely an hour after the nonpartisan Joint Committee on Taxation released a widely anticipated projection on the economic impact of the legislation. The panel’s analysts found that contrary to the party’s insistence that its tax cuts would send the economy into higher gear, the measure would only increase the GDP by a minuscule 0.8 percent over a decade.* As a result, the cuts would spike deficits by $1 trillion over that same period. The White House and Republican leaders had repeatedly claimed the bill would pay for itself with economic growth.

Republicans can lose no more than two of their 52 members. Corker, Flake, and Senator James Lankford of Oklahoma had all raised concerns about its impact on the deficit—worries that are unlikely to be assuaged by the JCT analysis. Johnson had wavered on the bill Thursday for a different reason, arguing it overly favored corporations over small businesses and so-called “pass-through” entities; the Wisconsin Republican is a part-owner of one such business in his home state. He was one of the three Republicans who held up the procedural vote Thursday afternoon.

But on Friday, he and Daines said GOP leaders had agreed to boost the tax exemption for pass-through businesses to 23 percent, up from 17 percent in the original Senate bill. That, Daines said, would be equivalent to a $100 billion tax cut for “Main Street.” Yet making the bill even costlier could make it harder to win over Corker and Flake. A third holdout is Senator Susan Collins, the Maine moderate, who had said party leaders were addressing her demands on health care and restoring a deduction for state and local property taxes up to $10,000.

If Republicans win over Collins, they might be able to pass the bill without Corker and Flake’s support. “I realize that there’s probably enough votes right now to pass it,” Corker told the Wall Street Journal on Friday morning.

GOP leaders earlier on Thursday seemed on the verge of success after Senator John McCain of Arizona, who had torpedoed the Senate’s health-care bill over the summer, announced his support for the tax cuts. But the deficit drama on the floor threw the final outcome, once again, into doubt.

* This article originally misstated the amount of economic growth the Joint Committee on Taxation projected the tax bill would add over a decade as 0.08. We regret the error.