Senate tax bill stalls on deficit-focused 'trigger'
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[December 01, 2017]
By Amanda Becker and David Morgan
WASHINGTON (Reuters) - The U.S. Senate on
Thursday delayed voting on a Republican tax overhaul as the bill was
tripped up by problems with an amendment sought by fiscal hawks to
address a large expansion of the federal budget deficit projected to
result from the measure.
The Senate debated the legislation late into Thursday and adjourned,
putting off any votes until Friday morning. It was unclear if a decisive
vote on the bill would occur then.
The delay underscored nagging concerns among Republican fiscal
conservatives about the deficit impact of the bill. That set up the
possibility that its deep tax cuts might have to be moderated, that
future tax increases might be built in, and that some conservatives
might seek to attach spending cuts, all approaches that could throw up
new political problems.
White House legislative affairs director Marc Short told reporters in
the Capitol: "I don’t think tax cuts are going to be scaled back. I
think it would still be historic tax relief for corporations and for
middle-income families."
The tax bill is seen by Republicans as crucial to their prospects in the
November 2018 elections, when they will fight to keep control of the
Senate and the House of Representatives.
Since taking office in January, President Donald Trump and Republicans
now in control of Congress have yet to pass major legislation, a fact
they hope to change with their proposed tax- code overhaul, which would
be the biggest since the 1980s.
Democrats, expected to unanimously oppose the tax bill, have dismissed
it as a giveaway to the wealthy and corporations.
Republican Senator Bob Corker and others had tried to add a provision to
the bill to trigger automatic future tax increases if the tax cuts in
the bill did not boost the economy and generate revenues sufficient to
offset the deficit expansion.
But the Senate parliamentarian barred Corker's "trigger" proposal on
procedural grounds.
The trigger amendment was needed to win Corker's vote and those of
others worried about the deficit - worries that intensified when
congressional analysts said the bill would not boost the economy enough
to offset the estimated deficit expansion, as the Trump administration
had said it would.
Senate Finance Committee Chairman Orrin Hatch told reporters in the
Capitol that it had not been easy to accommodate Corker, Senator Jeff
Flake and other fiscal hawks. “It’s been pretty hard to make them happy
so far. We’re going to keep working on it ... and we’re going to do it,"
Hatch said.
CORPORATE TAX MAY CHANGE
Senate Republicans were considering making a proposed corporate income
tax rate cut temporary, instead of permanent, so the rate would rise
back to an unknown level after six or seven years, said one Republican
senator and an aide.
By that time, Trump might no longer be in office and a future Congress
might change the law.
When asked if the tax bill was in trouble, Republican Senator Mike
Rounds told reporters: "No, I don’t think so. It’s just a matter of once
again trying to make the bill work."
Optimism had reigned earlier in the day, when the bill won the backing
of Republican Senator John McCain. Stocks surged on hopes that a key tax
overhaul vote was imminent. The S&P 500 hit a record closing high and
the Dow Jones industrial average topped the 24,000 mark for the first
time.
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Demonstrators gather outside the U.S. Capitol to protest the
Republican tax plan as it works through the Senate in Washington
November 30, 2017. REUTERS/James Lawler Duggan
But the Joint Committee on Taxation, or JCT, a nonpartisan fiscal analysis unit
of Congress, said the bill as passed earlier by the Senate Finance Committee,
would generate only $407 billion in new tax revenue from increased economic
growth.
JCT had earlier estimated the tax bill would balloon the $20 trillion national
debt by $1.4 trillion over 10 years. The new estimate, counting "dynamic"
economic effects, put the deficit expansion at $1 trillion, far short of
assertions by some Republicans that the tax cuts would pay for themselves.
'FAIRY DUST'
House of Representatives Democratic leader Nancy Pelosi said the new JCT
estimate showed "no amount of dynamic scoring fairy dust will fix the
catastrophic deficits of the GOP tax scam."
McCain, a key player in July's collapse of a Republican effort to gut Obamacare,
backed the tax bill. While "far from perfect," the party's 2008 presidential
nominee said it would boost the economy and help all Americans.
Republican Senator Susan Collins, who also played a role in the failure of the
Obamacare rollback, told reporters she was still not committed to the bill.
Several Republicans were withholding support while pushing for including a
federal deduction for up to $10,000 in state and local property taxes and bigger
tax breaks for "pass-through" companies, including small businesses.
As drafted, the Senate bill would cut the U.S. corporate tax rate to 20 percent
from 35 percent after a one-year delay and reduce the tax burden on businesses
and individuals, while ending many tax breaks, but would still expand the
deficit,
Trump wants to enact tax cuts before January. The House approved its own tax
bill on Nov. 16. It would have to be merged with the Senate bill, if it is
approved, before any final measure could go to Trump for his signature.
Republicans have 52 votes in the 100-member Senate, giving them enough to win if
they hold together. With Democrats opposed, Republicans could lose no more than
two of their own votes, with Vice President Mike Pence able to break a 50-50
tie.
Trump has attacked Corker and Flake on Twitter. Both senators are not seeking
re-election.
In early October, the president called Corker, "Liddle' Bob Corker" in a tweet.
Corker tweeted that the Trump White House was an "adult daycare center." Days
later, he called Trump a liar who had damaged U.S. standing in the world. Trump
tweeted back saying Corker "couldn't get elected dog catcher."
Trump earlier this month tweeted that Flake's political career was 'toast'" In a
dramatic Senate speech, Flake said U.S. politics had become inured to "reckless,
outrageous and undignified” behavior from the White House.
(Additional reporting by Susan Cornwell, Makini Brice and Richard Cowan in
Washington, and Lewis Krauskopf in New York; Writing by John Whitesides; Editing
by Kevin Drawbaugh and Peter Cooney)
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