After a flurry of last-minute concessions by President Trump to win over reluctant Republicans, the GOP tax plan cleared a key committee vote Tuesday and appeared better positioned for passage when the full Senate votes, probably later this week.
Even so, with Republicans’ slim 52-seat majority in the Senate, it would take only three of the remaining half a dozen or so GOP holdouts to block the bill, which Republicans hope will be their signature legislative achievement of Trump’s first year in office. The bill, which still needs to be reconciled with a House version, remains a work in progress.
Many of the latest changes were aimed at winning support from Sen. Susan Collins, the Maine centrist who helped kill the GOP’s Obamacare repeal earlier this year.
Dealing directly with Trump at times, including in a private meeting, Collins apparently won concessions on two major fronts, according to those familiar with the negotiations.
Trump vowed to support an Affordable Care Act fix that would continue so-called cost-sharing reduction payments for two years, as long as the tax bill includes a provision that would repeal the Obamacare requirement that all Americans have insurance. The cost-sharing payments help reduce co-payments and deductibles for low-income Americans.
Collins also won assurances that the Senate bill would allow homeowners to deduct property taxes up to $10,000, matching a provision in the House GOP tax bill. That’s good news for Californians and residents of other high-tax states. The original Senate bill ended all deductions for state and local taxes.
Even some GOP leaders seemed surprised by the proposed changes as they left Trump’s lunch meeting with the Republican caucus.
“Susan’s a negotiator,” shrugged Sen. John Thune of South Dakota, GOP Conference chairman. “We’d love to have her get to yes.”
Collins voiced appreciation for the modifications, but has not endorsed the bill.
"I feel like we're making progress, but I’m not there yet," Collins said. She is also pushing to keep the top individual tax rate at 39.6%, as in the House plan, rather than lower it to 38.5%, as currently proposed in the Senate version.
The Senate planned to open formal debate Wednesday and vote by Friday on the sweeping $1.5-trillion package that permanently reduces corporate taxes and temporarily cuts some individual rates. The bill has drawn criticism for being too heavily tilted toward big business and the wealthy.
Senate Majority Leader Mitch McConnell of Kentucky acknowledged that changes were still being made to win over votes.
“Think of sitting there with a Rubik’s cube trying to get to 50,” he said, referring to the votes needed for passage, assuming Vice President Mike Pence breaks a tie.
“We do have a few members who have concerns and we’re trying to address them,” McConnell added. “We know we will not be able to go forward until we get 50 people satisfied, and that’s what were working on.”
GOP senators have a range of concerns. Sen. Ron Johnson (R-Wis.) is trying to create more parity between small businesses, whose tax cuts would expire in eight years, and corporations, whose reductions would be permanent.
Sen. Marco Rubio (R-Fla.) tweeted about making sure that an enhanced child tax credit is refundable. And Sen. Bob Corker (R-Tenn.) wants to ensure tax cuts don’t add to the deficit.
The current plan would add about $1.5 trillion to the deficit over 10 years, though Republicans insist those costs will be offset by the economic growth spurred by the tax cuts.
Economists are skeptical, noting previous tax cuts have failed to deliver significant growth. Corker wants a legislative trigger that could claw back some of the tax cuts if growth doesn’t occur and deficits spike.
Corker said he had reached an agreement with GOP leaders, but senators said details about a trigger, such as when it would take effect and whether it would affect individual or corporate tax cuts, remained under negotiation. Many oppose including any kind of trigger.
“I have been working feverishly with my colleagues and the White House to improve the #TaxReform legislation and ensure fiscal responsibility should economic growth estimates not be realized,” Corker tweeted early Tuesday.
Both Corker and Johnson had been potential holdouts as members of the Senate Budget Committee. But despite their ongoing reservations, they joined their GOP colleagues on the panel to pass the package Tuesday in a party-line vote that showcased the urgency lawmakers face in sending it to the Senate floor.
Trump engaged personally with Corker, Johnson and Collins at the lunch meeting, and he also tried to appeal to senators’ sense of history and momentum as he pushed them toward passage.
“His message was primarily that you get a once-in-a-generation chance to improve the economy and the tax system for your kids and grandkids, and it’s gut-check time,” said Sen. John Kennedy (R-La.).
“The attitude in there is can-do,” Sen. David Perdue (R-Ga.) said afterward. “Everybody’s trying to get to a yes.”
GOP leaders are still working behind the scenes with Johnson and Sen. Steve Daines (R-Mont.) to address their concerns.
One idea was to eliminate the ability of corporations to deduct state and local taxes. Critics argued that since the Senate bill already repeals that deduction for individuals, corporations should also have to give up the write-off. Trump in earlier talks with Daines seemed to agree. But GOP leaders panned the idea Tuesday.
“That’s probably not the best way to do it,” Thune said.
Overall, analysts give the GOP tax bills mixed reviews. Analyses show that many Americans would benefit initially from reduced taxes under the GOP bills, but outcomes would be uneven.
Lower-income households would average $50 in cuts while the top 1% would see more than $34,000 a year, according to the Tax Policy Center. Nearly 1 in 10 filers would actually have a tax hike under the Senate plan, the center found.
According to the nonpartisan Congressional Budget Office, by 2019 those earning less than $30,000 would either pay more or see their federal benefits cut.
Republicans are anxious, though, for a year-end accomplishment, especially after the failed healthcare repeal and as lawmakers face voters in the 2018 midterm election.