As we’ve repeatedly pointed out, Mitch McConnell’s push to force tax reform through the senate is facing opposition from several disparate groups of senators, each of which is demanding its own set of changes.
Concerns primarily center on the taxation of partnerships, limited liabilities and other companies; on the overall cost of the tax bill itself; and on a familiar GOP stumbling block - Obamacare.
“It’s not going to be easy,” Senate Finance Committee Chairman Orrin Hatch of Utah said Monday. “This is going to be a tough, tough time.”
Since Republicans are facing unanimous opposition from Democrats, they can only afford to lose two Republican votes to pass the legislation with a tie-breaking vote from Mike Pence. Earlier this month, Republicans passed budget bills in the House and Senate that unlocked a special provision to circumvent a Democratic filibuster.
However, at last count, a grand total of eight Republican senators had expressed serious reservations about the tax plan in its current form. In fact, two senators, Wisconsin’s Ron Johnson and Montana’s Steve Daines, have said they’re outright ‘nos’.
Here’s a roundup of the holdouts and their specific objections, per Bloomberg:
Bob Corker, Jeff Flake and James Lankford:
"Corker, the retiring Tennessee Republican has staked a hard line against letting tax legislation add to federal deficits - saying that a single penny of new deficits would lose his vote. It turns out the Senate bill would add $1.4 trillion to the deficit over 10 years - at least before accounting for any economic growth - according to a Congressional Budget Office report released Sunday.
The bill’s supporters say it’ll boost economic growth enough to cover that shortfall, but Corker says he’s not satisfied. He wants a backstop mechanism - essentially a tax-increase trigger that would raise revenue in case the promised growth doesn’t result. Arizona’s Flake and Oklahoma’s Lankford also support that kind of trigger.
“Every economist is guessing,” Lankford said on Monday. “We should build in the ‘what if’ - what if this doesn’t work?’ If the revenue is not coming in, should the rates change?”
Corker is a member of the Senate Budget Committee, which meets Tuesday afternoon to decide whether to send the tax bill to the Senate floor. Republicans have a one-vote margin on the panel and cannot afford any defections.
Corker said Monday he may vote no if tax writers - who he said would be working overnight on a provision - can’t provide enough deficit safeguards."
Ron Johnson and Steve Daines:
Johnson became the first Republican senator to come out against the bill, and his vote remains up in the air. His concern? The legislation gives an advantage to large corporations at the expense of “pass-through” businesses, like the plastics company he used to run before his election to the Senate in 2010.
The Wisconsin senator is also a member of the Budget Committee, and he too wants his concern addressed by the time it meets. “I’m not exactly sure what’s going to happen in committee, and we’re working diligently to fix the problem,” he told reporters Monday. “If we develop a fix prior to committee, I’ll probably support it but if we don’t, I’ll vote against it.”
The Senate bill cuts the corporate rate to 20 percent, while creating a special deduction for business income from pass-through entities that would leave many owners paying an effective top rate of more than 30 percent.
Johnson wants to give those owners a larger deduction, and he said many have called to encourage him to stand firm.
Daines, a Montana Republican, joined Johnson Monday in opposing the bill as written, and for the same reason. An aide said Daines remains optimistic the legislation will change enough to win his vote.
A deal had yet to emerge Monday night. “We’re still negotiating; let’s put it that way,” said South Dakota Senator John Thune, the chamber’s third-ranking Republican leader, after an evening meeting of the Finance panel.
The moderate from Maine is the only Republican senator from a reliably Democratic-leaning state, and as such she’s always a difficult vote for party leaders. While Collins was initially warm to the tax bill, she has turned sour after party leaders opted to add repeal of the Obamacare individual mandate to help limit deficits.
Collins said it’s a mistake to ax the mandate in tax legislation, fearing that it’ll cause healthy people to drop their coverage and drive premiums higher for others - the same reason she cast a pivotal vote to block an Obamacare repeal bill in July. “I hope that will be dropped,” she said recently.
But eliminating the mandate is estimated to save the federal government more than $300 billion over 10 years - savings that would result from less demand for federal health-coverage subsidies. Some GOP leaders dispute that estimate, even though their tax bill depends on it to stay within budget rules.
Nobody is taking McCain’s vote for granted after he shocked the political world by voting against a rushed attempt to demolish the Affordable Care Act this summer.
He then delivered a speech demanding the Senate return to regular order - hearings, markups, bipartisan input and amendments - for passing major bills. So far, McCain has been warm to the GOP Senate’s tax effort, but he hasn’t taken an official position on the legislation.
McCain has a mixed record on tax cuts, voting against measures in 2001 and 2003. The top legislative priority of the Arizona Republican, who is 81 and fighting brain cancer, is to boost military spending. His vote on the tax bill could be in peril if he believes the $1.4 trillion in new deficits would put downward pressure on Pentagon funding.
The Kansas Republican is sensitive about the impacts of the bill in the wake of his state’s failed tax-cut experiment that lawmakers there ended this year to escape a fiscal crisis.
“I’m also cognizant of what people saw happen in Kansas,” Moran told constituents over Thanksgiving weekend, as quoted by the Topeka Capital-Journal. “The issue of tax cuts would be easier if you actually had faith that
Congress would hold the line on spending. It’s two components. It’s how much revenue you take in and how much money you continue to spend.”
Overall, Moran remained circumspect about the legislation, saying the goal must be to find tax cuts that grow the economy without raising the debt.
Meanwhile, President Donald Trump late last night praised Senator Rand Paul for publicly announcing that he would support the tax plan despite reservations that the cuts weren’t deep enough (meanwhile, deficit hawks like Bob Corker are hoping to limit cuts to make the bill revenue neutral).
So far, Paul has been one of the administration’s most obstinate opponents. However, Trump has repeatedly expressed admiration for the Kentucky senator, and had earlier vowed to win his support for tax reform. Of course, Paul’s support won’t necessarily guarantee passage – far from it. But it’s a small victory, and at this point, even small victories are cause for celebration.
Thank you Rand! https://t.co/NvPeleVmub— Donald J. Trump (@realDonaldTrump) November 28, 2017