Do or die for Senate tax reform bill this week

The Senate is facing a small window of opportunity to pass tax reform before other, vital Senate business takes precedence.  Chief among the other issues the Senate must address is a short-term spending bill to avoid a government shutdown on December 8.

But it is tax reform that has taken on a serious urgency.  Without passage by the Senate in the next few days, the issue is likely to die before the next Congress is seated in early January.  And for Senate majority leader Mitch McConnell, that scenario is simply unacceptable.  Many observers – including many GOP lawmakers on the Hill – see passage of the tax reform bill as essential to their hopes to hang on to the House in the 2018 election. 

McConnell faces a daunting tax.  At least a half dozen GOP senators have serious issues with the tax reform package as it is currently written.  Senator Ron Johnson has already come out against the bill, objecting to small business "pass through" language that would raise taxes on many companies.

The Senate can't fix the pass through language without breaking the rules on tax reform, which require specific targets to be met while not raising the deficit over a ten-year period past a certain point.


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."

The "deficit hawks" are a day late and a couple of hundred billion dollars short.  The numbers being used by the GOP are fantasy numbers, bearing no relationship with the reality of what the bill will actually cost us in  increased budget deficits over the next decade.  But this is the way the government operates these days – using smoke and mirrors to get the result it wants.

Along with objections to tax reform issues, there is also the personality conflict with Trump by Senators Corker and Cornyn to consider.  Both senators are retiring, and given the viciousness of the war among those three personalities, it is not impossible to imagine one or both of them blowing up tax reform just to hurt Trump.

Trump will pay a visit to the Senate on Tuesday, ostensibly to lobby for the bill.  Whatever negotiating skills Trump has will have to be put to good use as he tries to fashion a bill that a majority of GOP senators can get behind.  McConnell won't bring the bill to the floor for a vote unless he is assured of passage.  At this point, that seems a tall order to fill.

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