After twisting arms and striking side deals, Senate Republicans appear poised to pass their far-reaching tax overhaul on Friday, having secured commitments from holdouts after a frenzied day of negotiations.
“We have the votes,” Majority Leader Mitch McConnell told reporters after a private party meeting to hash out the final details. Republicans plan to vote on the $1.4 trillion package of tax cuts later on Friday. Senate passage would set up negotiations with the House on a final bill that President Trump could sign into law.
Passage would also put Republicans, and the president, on the brink of their first major legislative accomplishment a year after voters gave them full control of the federal government. Though they failed to repeal and replace the Affordable Care Act earlier in the year, the Senate tax bill would eliminate the law’s mandate requiring most people to buy insurance. Its central provisions would reduce the corporate tax rate to 20 percent from 25 percent, double the standard deduction, and enhance the child tax credit for individuals.
But while it would modestly reduce personal income-tax rates, millions of middle-class families could face tax increases in later years if Congress does not act again to extend the bill’s provisions. And according to independent analyses, some people in larger, high-tax states like New York, California, New Jersey, and Illinois could see an immediate tax hike: Their cuts would be wiped out by the elimination of a provision allowing them to deduct their state-and-local taxes off their federal bill.
“Today may be the first day of a new Republican Party: one that raises taxes on the middle class,” warned Senator Charles Schumer of New York, the Democratic leader.
In the end, Republicans will have decided to essentially ignore a late report from the congressional Joint Committee on Taxation finding that their bill would add $1.4 trillion to the debt over 10 years because it wouldn’t translate to the kind of economic growth party leaders had promised. The nonpartisan analysis came out on Thursday at the same time that GOP deficit hawks, led by Senators Bob Corker of Tennessee and Jeff Flake of Arizona, were learning that their proposal for a provision triggering future tax increases would not comply with Senate budget rules.
But rather than accommodate the deficit hawks by scaling back the tax cuts, party leaders won the final critical votes elsewhere. They deepened tax breaks for so-called “pass-through” businesses to win over Senators Ron Johnson of Wisconsin and Steve Daines of Montana. Bowing to Senator Susan Collins of Maine, they restored a state-and-local property-tax deduction up to $10,000. And they made Flake a completely unrelated commitment to work on a fix for undocumented immigrants who are at risk of deportation starting in March, when Trump ends former President Barack Obama’s Deferred Action for Childhood Arrivals program.
The only holdout who apparently won nothing was Corker, the retiring Tennesseean who had vowed he would not support a tax bill that added “one penny” to the deficit. Republican leaders apparently decided they didn’t need his vote.
The Senate bill must still endure a process expected later on Friday known as a “vote-a-rama,” in which members of either party can offer virtually unlimited amendments to the bill. One of the most significant attempts to change the legislation will come from Senators Marco Rubio of Florida and Mike Lee of Utah, who have been pushing to expand the child tax credit even more than Republicans already plan to do. The current Senate proposal would double it to $2,000 per kid, but Rubio and Lee want to make it fully refundable so that lower-income families who pay less in taxes can take advantage. To offset the cost, they would cut the corporate rate to 22 percent instead of 20 percent—threatening a red line that Trump and conservatives have drawn on the latter number. (It is currently 35 percent.)
The other unresolved question is whether any Democrats will support the final bill. Most will oppose it, but Senators Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota have not ruled out working with Republicans. They are facing reelection bids in states where Trump remains popular, and while they are not expected to help pass the tax bill, they could jump on board once Republicans prove they already have the votes. With the final tally looming, it appears they do.