Senate tax bill stalls on deficit-focused ‘trigger’

FAN Editor
Demonstrators gather outside the U.S. Capitol to protest the Republican tax plan as it works through the Senate in Washington
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

December 1, 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.


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.

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.


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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