Republican tax Bill hits snag over deficit concerns

The Senate Republican tax bill, which had appeared to be cruising to victory, suffered a setback late on Thursday as lawmakers were forced to contemplate significant changes, including future tax increases, to help pay for the legislation.
 
The bill had gained momentum in the morning when it picked up a key swing vote. But it came to a grinding, if temporary, halt, as senators scrambled in the early evening to find ways to raise several hundred billion dollars after some members objected to moving forward without a plan to safeguard against ballooning the deficit. Lawmakers are now considering alternatives, including reinstating the alternative minimum tax on some corporations and wealthy individuals, and raising the corporate rate above 20 per cent after some number of years. A final vote on the bill is expected on Friday after a series of amendments are considered.
 

Sources: Joint Committee on Taxation, Penn Wharton Budget Model, The Tax Foundation, The New York Times; Compiled by Meghna Sen

The push to raise money came after an analysis by the congressional Joint Committee on Taxation found that the tax cuts would not pay for themselves by generating enough revenue through economic growth to offset the tax cuts, as Republicans have claimed, but would instead add $1 trillion to budget deficits over the next 10 years. Senator Bob Corker, Republican of Tennessee, had already been on the fence over deficit concerns, and he insisted on Thursday evening that the Senate leadership find a way to mitigate the cost of the bill, lawmakers said.
 
Senate Republicans Scramble to Find Revenue for Tax Bill With Vote Expected Friday November 30, 2017
 
“Senator Corker has been pretty clear he doesn’t want any deficit spending,” said Senator John Cornyn of Texas, the Number 2 Senate Republican. The last-minute attempt to find revenue slowed, at least temporarily, what had appeared to be a cascade of momentum for the bill. Republicans picked up a key swing vote, Senator John McCain of Arizona, earlier in the day, and had appeared to be on track to pass the bill along party lines. Now, they are under pressure to cut the cost of their bill by as much as one-third, a situation that could require Republicans to insert future tax increases into what was posited as a giant tax cut. That could complicate the final approval of the tax rewrite, particularly with House Republicans, who will be loath to approve a bill that would effectively raise taxes on firms and individuals after a period of lower taxes.
 
Several senators remain on the fence over the bill, and Republicans can lose no more than two of their members to pass the legislation without any Democratic support.
 
Corker, along with the Republican senators Jeff Flake of Arizona and James Lankford of Oklahoma, have expressed concern about piling up more debt as a result of the $1.5 trillion tax overhaul. Other Republican senators, like Ron Johnson of Wisconsin, have objected to how the bill treats businesses whose profits are distributed to their owners and taxed at rates for individuals.
 
During a procedural vote on Thursday that suddenly turned dramatic, Republican leaders huddled with Corker, who had wanted to add a triggerlike mechanism to the bill that would force future tax increases if federal revenues fell short of projections. The Senate parliamentarian deemed that trigger out of bounds under the budget rules that Republicans must abide by in order to shield their bill from a Democratic filibuster.
 
Corker, Flake and Johnson withheld their votes on a Democratic motion that would have relegated the bill back to a Senate panel, before finally relenting and joining their Republican colleagues in defeating the motion. The floor debate on the bill continued, and Republicans were discussing alternative provisions such as slowly raising the corporate rate above 20 per cent.  ©2017 The New York Times News Service