Destruction of America by Tax "reform"...

Tax reform hangs in balance in critical week for GOP

GOP leadership has a narrow window to push through its tax bill in the Senate.

By SEUNG MIN KIM and BERNIE BECKER

It’s do-or-die time for Senate Republicans on tax reform.

Senate Majority Leader Mitch McConnell (R-Ky.) doesn't appear to have locked down 50 votes for his party’s tax overhaul, with at least half a dozen GOP senators showing varying levels of concern about the legislation released earlier this month.

Yet the GOP leadership has a narrow window to push through its tax bill in the Senate before lawmakers become consumed with spending fights that could trigger a shutdown, not to mention a special election in Alabama that could flip a reliable Republican vote to a not-so-reliable one — or even a Democrat.

“I think in the end, we’ll get the votes. But it’s a process,” South Dakota Sen. John Thune, the third-ranking Senate Republican, said on “Fox News Sunday.”

The leadership is juggling objections from multiple pockets of the Senate Republican Conference and is running short of time to convince the hold-outs as Republicans try to close out a frustrating year for their policy agenda with a major legislative accomplishment.

An influential and independent-minded bloc of deficit hawks, including Sens. Bob Corker of Tennessee and Jeff Flake of Arizona, have aired deep concerns about the tax bill’s red ink, even accounting for any economic growth that a tax overhaul might generate. Sens. Susan Collins of Maine and Jerry Moran of Kansas have voiced concerns about including in the tax proposal language that would repeal Obamacare’s individual mandate.

Sen. Ron Johnson (R-Wis.), so far the only declared “no” on the tax legislation, has argued that the overhaul unfairly disadvantages small businesses — although to fix the bill to his liking, the changes would likely cost hundreds of billions of dollars. Sen. Steve Daines (R-Mont.) has expressed similar concerns on so-called pass-throughs, according to Republicans.

GOP aides expect changes this week to the version of the tax plan that passed the Senate Finance Committee. Those adjustments could come before the legislation hits the floor or through amendments as the bill is considered.

Senate Republicans are discussing an increase in a tax deduction for pass-through businesses in an effort to win over Johnson and Daines, according to a person familiar with the talks. Allowing taxpayers to deduct up to $10,000 in property taxes, as proposed in the House bill, is also under consideration, as is barring corporations from writing off their state and local taxes. The proposed changes were first reported by The Washington Post.

Finding the money to pay for those changes could be an issue, too. Republicans can cut taxes by no more than $1.5 trillion over a decade — meaning that as of right now, they have well under $100 billion to play with in the Senate bill.

Thune stressed that some Senate Republicans have raised “legitimate concerns,” and said senators will have “plenty of opportunities” to change the bill when it comes to the floor later this week.

But Republicans also believe that the need for a big legislative accomplishment ahead of next year’s midterm elections will help sway any holdouts.

“For every Republican senator, the fate of the party is in our hands, as well as that of the economy,” Sen. Lindsey Graham (R-S.C.) said on CNN’s “State of the Union.”

There is private optimism about the legislation’s prospects for now, but the GOP tax bill’s fate will become much clearer once senators return to Washington on Monday. President Donald Trump is scheduled to attend Senate Republicans’ weekly policy lunch on Tuesday, though GOP senators have been far less susceptible to personal arm-twisting from the president than members of the House.

Republicans could face their first policy hurdle on Tuesday when the Senate Budget Committee meets to merge the tax bill with a separate measure that raises revenue by allowing drilling in the Arctic National Wildlife Refuge. The ANWR provisions were a major win for Sen. Lisa Murkowski (R-Alaska), often a swing vote on controversial bills.

The Budget Committee action should, in theory, be mostly a procedural move. But both Johnson and Corker sit on the committee — where Republicans hold just a one-seat majority – and the senators could use that leverage to force changes.

The Senate could vote to advance the tax bill as early as Tuesday, and that would set up a so-called “vote-a-rama” in which senators can offer a litany of changes before final passage sometime Thursday, although the timetable could change.

Even if the Senate is successful in passing a tax bill, Republicans would still need to settle the differences between that measure and the legislation that already passed the House.

The two bills call for permanently lowering the corporate tax rate from 35 percent to 20 percent and almost doubling the standard deduction for individual taxpayers, though the House increases the deduction by slightly more. But there are big differences, including in how the House and Senate measures treat pass-through businesses. The Senate will also be under pressure from the House to keep its compromise on state and local taxes.

Critics have also knocked both bills for phasing out tax relief for individuals, which would force millions of taxpayers to pay more in future years. Republicans say they expect future Congresses to vote to extend that tax relief, which has raised concerns among the deficit hawks because it would cause the bill to pile on even more debt.

Moran, in particular, has emerged as a tax reform wildcard. The Kansas senator, who also raised objections to his party’s plans to repeal Obamacare, told constituents in town halls over the Thanksgiving recess that he does not want the individual health insurance mandate repeal mixed in with tax policy.

He has also raised concerns about potential red ink of any tax overhaul.

“The easiest way to say this is, I am for some tax bill. Can we find taxes to cut that grow the economy?” Moran said at a town hall in Clay Center, according to the Topeka Capitol Journal. “We don’t want to increase the debt and deficit as a result of tax cuts. My goal is to find out which taxes you cut can actually help create more jobs, better jobs, higher-paying jobs.”

Sen. James Lankford of Oklahoma, another GOP senator worried about the tax bill’s impact on the federal debt, still wants to see how the bill could be amended to address those concerns, an aide said.

Republicans will likely have to push through their tax overhaul with solely GOP votes, although a handful of moderate Democrats are keeping their options open. A spokesman for Sen. Joe Manchin said Sunday that the West Virginia Democrat was still considering the measure. Sens. Heidi Heitkamp of North Dakota and Joe Donnelly have also been targeted by Republicans as possible “yes” votes.

The inclusion of the Obamacare mandate repeal makes it more unlikely, however, that Republicans can attract Democratic votes. Donnelly said in a Sunday statement that he’s been willing from the start to team up with Republicans on tax reform.

“This should not include making health care more expensive for or taking it away from millions of Americans," Donnelly added.