"Suspense Mounts" - Timing Of Tax-Reform Votes In Limbo As More Senators Get Cold Feet

With Bloomberg writing this morning that "Mystery, Suspense Mount" two days after President Donald Trump told the American public that Congress was “just days away” on tax reform, two more senators  - including one-time Trump rival - Marco Rubio appear to be getting cold feet - much to the market’s chagrin. Yesterday afternoon, stocks dropped and the VIX jumped above 10 as Rubio and Utah’s Mike Lee said they had reservations about the draft bill being put together by the conference committee.

While Rubio and Lee’s objections are different from Hatch’s, several senators have expressed concerns about one of the tax-reform plan’s overarching themes: namely, it benefits corporations and the wealthy, while not doing enough to help extend tax breaks to the middle and working classes.

Worries about the bill’s impact on the deficit have persisted, and if anything, they only intensified after the Treasury Department released a laughable one-page report about the tax plan’s impact on GDP and revenue that was widely ridiculed.

As the fast-moving Republican tax package has evolved, it has tilted increasingly toward benefiting businesses and wealthy taxpayers, a trend that aides were saying privately is a growing concern for some lawmakers. Provisions for offsetting the revenue costs of last-minute changes also were becoming worrisomely unclear, they said.

 

After resisting demands for weeks to cut the top income tax rate for the richest taxpayers, the bill’s authors did agree in recent days to lower it to 37 percent from 39.6 percent. “My concern is that if you found the money to lower the top rate ... you can’t find a little bit to at least somewhat increase the refundable portion” of the child credit? Rubio said.

Specifically, Rubio and Lee are pushing the bill’s authors to set aside more money for the child tax credit for working and middle class families - “I‘m a no ... It has to be higher than $1,100,” Rubio told Reuters.

White House spokeswoman Sarah Sanders said the White House will continue to work with Rubio on the child tax credit. So far, the bill’s biggest feature is a steep cut of the income tax rate to 21% from 35%, a step that corporate tax lobbyists have been pursuing for many years.

Meanwhile, Orrin Hatch, chairman of the Senate tax committee and one of the bill’s chief authors, said the Senate would probably vote on a final Senate-House measure on Monday, and that “he hoped” Rubio and Lee’s concerns would be addressed.

As Bloomberg pointed out, Hatch injected some more uncertainty into the process yesterday when he said he “didn’t know” if lawmakers would be able to meet Rubio’s demand. Asked if the Senate could pass the bill without Rubio’s vote, he said, "Probably." Separately, Sen. Cornyn, the Republican whip and one of the key stewards of the bill, has said Rubio and Lee’s concerns are being addressed.

“Sen. Rubio would like to see us do a little more, and we’re trying to work with him to get there,” said Sen. John Cornyn (R., Texas), a member of the tax negotiating team. “We’re trying to figure out what we can do. I can’t give the current state of play on that since it’s in flux, but the goal is to give a $2,000-per-child tax credit, with a significant portion of that to be refundable."

Rubio and Lee aren’t the only potential holdouts. Tennessee senator and deficit hawk Bob Corker - the lone Republican who voted with the Democrats against the initial Republican tax plan - has said his concerns about the Senate bill, specifically the addition of some $1.5 trillion to the national debt over 10 years, have not been addressed.

Corker’s not the only one who feels that way. As Bloomberg points out, at least three other senators have yet to publicly declare their support for the reconciled bill - and may well vote against it.

Jeff Flake of Arizona, who has voiced concerns about tax cuts adding to the deficit, said Thursday he’s undecided as well.

 

Susan Collins of Maine has voiced opposition to cutting the tax rate for incomes above $1 million and has pushed for passage of two health-care stabilization bills that the House has been cold to. She hasn’t committed to supporting the final tax measure. “I am going to review the tax bill over the weekend,” she said. “There’s lots of rumors about what’s in it, what isn’t."

 

There’s also uncertainty around the votes of GOP senators John McCain of Arizona and Thad Cochran of Mississippi. Both have been absent from the Senate this week with health issues, but officials have said both will be able to return for votes next week.

According to WSJ, the original plan had called for the Senate to vote on Monday, with the House following on Tuesday. Now, the sequence of those votes is up in the air.

House Speaker Paul Ryan said Thursday he’s not sure which chamber will vote first on the final bill. One consideration, he said, was “managing absences in the Senate” - likely an allusion to McCain’s and Cochran’s medical issues.

Trump has promised to pass the bill by Christmas. And earlier this week, the task of passing tax reform took on a new sense of urgency when Alabama Democrat Doug Jones defeated Republican Roy Moore in a tightly contested senate race that was marred by allegations of pedophilia against Moore.

Still, even if Republicans fail to pass tax reform - an outcome that would have wide-ranging implications for markets - we’ll always have this video of President Trump symbolically cutting the “red tape” representing America’s overwrought tax code...

...Even if they fail to pass the bill.

Comments

Peanut Butter … Juggernaut x2 Fri, 12/15/2017 - 09:30 Permalink

Why should my tax dollar be giving to you just because you have extra brats? Hell, there shouldn't be any tax credit for kids at all so that dumbass doesn't just sit there and breed like rats while the rest of us have to work to subsidize your brats. Fuck this child credit, the only ones that should have kids are the ones that can afford to have them!

In reply to by Juggernaut x2

J J Pettigrew Fri, 12/15/2017 - 08:07 Permalink

Joe Manchin is right...Corporate rates slashed to 21% is too much.  Until it is proven that lower corporate rates ramps up revenues and GDP, cut the rate to 25%, and see.  IT wouldnt take long.  And if the desired result occurs, then the vote to lower again should be an easy one. This would take the corporate rates to 25% and bring at least one Democrat into the postitive column.

ElTerco CJgipper Fri, 12/15/2017 - 14:01 Permalink

A flat tax is a bad idea. The portion of your wage-labor that the employer keeps for themselves is an implicit tax on you, and an explicit source of income for your employer.

At the end of the day, a flat tax is lopsided more in favor of the wealthy, while the current tax structure is closer to balanced (but still lopsided in favor of the wealthy).

In reply to by CJgipper

shankster Fri, 12/15/2017 - 08:21 Permalink

Rubio getting pressure from the Hispanics in Miami-Dade which make up about half the population there, the other half is Haitian and Dominican Republic and South American.

swmnguy silverer Fri, 12/15/2017 - 09:19 Permalink

What bill?  What is there to read?  There's no leadership, no coordination, no coherent bill, no over-arching philosophical purpose or intent.  The only reason to do this seems to be so they can say they did something.  Which is the worst reason to do anything, other than "saving money," which is the second-worst reason.Nobody thinks businesses are going to start hiring people just because they get a tax reduction.  Nobody.  Because nobody has ever hired anybody for any reason other than that they can meet more demand by adding more labor, thereby profiting more.  And the whole problem is, demand is stagnant at best.  And nobody is going to give out raises just because they get a tax reduction, either.  In our system, stupidly, labor is merely a cost to be cut as much as possible in the name of "Productivity."  Even robots are counted on the asset side, after their cost is subtracted on the debit side.  But not labor.And money left in corporate pockets by this tax bill will go straight into mergers and acquisitions, and stock buybacks.  Nothing else.  Not R&D for new products nobody can buy because wages have stagnated for decades.And the rest of this hodgepodge dog's dinner of a bill, whatever it really contains, is just a bunch of payoffs to cronies and petty partisan swipes at specific targets that make for some political red meat but which really amount to cutting off one's nose to spite one's face.  Taxing tuition waivers for grad students will push Americans out of advanced degree programs, which sounds great to the militant ignorant who want to pull everyone down to their level of misery rather than lift themselves up; but it will require US employers to bring in even more foreigners on H1-B visas from countries that don't punish educated people for their voting patterns.  The petty spiteful measure will play well on certain websites and media outlets for a news cycle, while accelerating America's decline as a world leader in every aspect.Fuck Rubio anyway, but this whole exercise  advertises the degraded nature of the steepening decline.

In reply to by silverer

ElTerco swmnguy Fri, 12/15/2017 - 13:53 Permalink

"And the whole problem is, demand is stagnant at best."

Exactly. Lower income earners would spend every penny of their tax cut in the real economy and stimulate growth. The wealthy are just going to use the money to artificially inflate prices of pieces of paper.

The tax reform bill should cut taxes for the lower incomes by 3%+ and the uber-wealthy by 0.5%, but the current bill does the opposite.

In reply to by swmnguy

east of eden Fri, 12/15/2017 - 08:31 Permalink

It isn't just the 1.5 Trillion that this so called 'legislation' would add to the debt over ten years, it is the other 1 Trillion, per year, that will also be added, and with the way Trump is throwing hundreds of billions at the military, I suspect that the annual 1 Trillion deficit is going to be a lot larger.So, what do we have. Well, adding up the numbers: 20 Trillion current debt + 10*1 Trillion annual deficits + 1.5 Trillion more from this 'non-tax bill' and you get a 31.5 Trillion dollar debt, which I have previously calculated will actually come in at 35 Trillion.Now, the Fed can run hidden inflation to make it 'appear' that US GDP is growing, when it is not, so it may be that in ten years time the debt-to-gdp ratio may not appear to be much worse than it is now, BUT, long, long before you ever get to 35 Trillion in debt, the world will have abandoned your Treasury auctions and you will be left, essentially playing with yourselves,What needs to happen is that every single multi-millionaire, and billionaire has to decide whether they 'like' being citizens of the US. IF they do, then they should be forced to pay up - minimum tax on them at 60% of assets, not income. IF they don't like being citizens, then they can pay the 35% 'exit tax', surrender their passports at the airport, and fuck off and die.

herkomilchen Fri, 12/15/2017 - 08:32 Permalink

Why should some people subsidize other people's choice to have children.  Plus pay for their schooling, health care, etc. through taxpayer funded government programs.If you can't afford to pay for your own children, you shouldn't be having children.

small axe Fri, 12/15/2017 - 08:39 Permalink

this is the time that the good senators crave up the spoils and add them to their empire of political favors and public-paid pork.it's good to be first at the trough

TGDavis Fri, 12/15/2017 - 08:41 Permalink

The Republicans get what they deserve with Cochran.  The guy,  I think his name was Sullivan,  won the primary, the Republicans pulled all kinds of shananigans to get the old geezer Cochran elected. I haven't donated to them since.  They can go to hell. 

brushhog Fri, 12/15/2017 - 08:42 Permalink

They're looking for a pay-off. We saw the same stunt when they passed Obamacare, senators would play coy and Obama would run down to meet with them behind closed doors...who the fuck knows what he offered them?

Dg4884 Fri, 12/15/2017 - 08:43 Permalink

This is just bad theater.  Unfortunately, if you don't have the dough, you don't get invited to the show.  Our reps are all bought and paid for no matter what they say.    It's that first special interest "donation" that gets them.  After that, if they don't tow the line, they will be shamed out of office.Record taxes have been taken from us over the past 15 years and it's why we are in the bird bath with the turd.  I hope it doesn't come down to it, but, we the people are going to have to take our Country back by force if necessary.