Republicans clear major hurdle as tax bill advances

PHOTOGRAPHER: The New York Times

President Donald Trump walks alongside Sens. John Barrasso (left) and Senate Majority Leader Mitch McConnell.

WASHINGTON — Senate Republicans took a significant step toward passing a sweeping tax overhaul on Tuesday, with a key panel giving its approval and several wavering senators indicating they would support the tax package, helping clear the way for full Senate consideration later this week.

Passage of the tax overhaul, which seemed uncertain on Monday, strengthened considerably on Tuesday after the Senate Budget Committee voted along party lines to advance the plan. A flurry of last-minute dealmaking helped garner the support of a few Republican lawmakers who had expressed concerns about the $1.5 trillion package, including its treatment of small businesses and its effect on the deficit.

The rapid turnaround underlines the pressure Republicans face to pass a tax cut and notch a significant legislative victory in their first year controlling both Congress and the White House. To help push the effort forward, President Donald Trump went to Capitol Hill on Tuesday for a lunch meeting with Republican senators, where he made promises to some and admonished others.

“I think we’re going to get it passed,” Trump later said at the White House. “It’s going to have lots of adjustments before it ends, but the end result will be a very, very massive — the largest in the history of our country — tax cut.”

Republicans emerged from the lunch increasingly optimistic about the bill’s fate and playing down the concerns that had threatened to bedevil its passage. Three key Republican holdouts, Sens. Susan Collins of Maine, Bob Corker of Tennessee and Ron Johnson of Wisconsin, sounded positive about the bill Tuesday after gaining assurances from Trump and the Republican leadership that their worries would be addressed.

Several hurdles remain, however, including resolving differences with the House version of the tax bill, which differs in significant ways from that of the Senate. Both bills cut taxes on businesses and individuals, but differ in the scope and timing of those cuts.

The Senate bill would cut the corporate tax rate to 20 percent from a top rate of 35 percent. For individuals, it would make tax cuts temporary and creates seven income tax brackets, with a bottom rate of 10 percent and a top marginal rate of 38.5 percent, down from the current rate of 39.6 percent.

Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee, said that he felt encouraged that the two chambers would be able to align their bills but that the House would not simply pass the Senate legislation.

“For as much common ground as we have, there are some areas where we are taking different approaches that will be worked, and can only be worked out, in a conference,” Brady said.

Lawmakers are also awaiting a report from the Joint Committee on Taxation that would show the effects of the proposed tax cuts on the economy. That analysis is important, since it will indicate the extent to which the cuts will bolster growth and avoid adding to the deficit. Outside analysts expect the assessment to demonstrate that the Senate bill does not create nearly enough growth to generate revenues to offset those lost via tax cuts, essentially undermining Republicans’ claims that the bill would pay for itself.

Corker, who has voiced the loudest concerns about the bill’s effect on the deficit, said Tuesday that he received assurances that the final legislation would include a mechanism to avoid ballooning the debt, which has passed $20 trillion. While the exact details were not specified, the bill is expected to include some type of trigger that would require certain taxes to increase if the package does not generate as much revenue as projected.

“I think we’ve come to a pretty acceptable place, from my standpoint,” said Corker, who has stated that he would be unable to vote for the bill if it added to the federal deficit.

That trigger, however, could complicate the bill’s passage. Several other Republican lawmakers, including Brady and Sen. John Kennedy of Louisiana, are resistant to the idea of including a trigger that would increase taxes.

“I’m not too keen on automatic tax increases,” Kennedy said. “I’m just not too excited about this idea of automatically tying our hands.”

Americans for Prosperity, the conservative group backed by Charles G. and David H. Koch, also blasted the idea, calling a trigger mechanism “antithetical to the principles of the unified tax framework” that lawmakers have proposed.

Other holdouts, like Johnson, appear to have been swayed by both admonishments and assurances. Johnson objected to the bill on the grounds that it did not do enough to help so-called pass-through businesses, which pass their income on to their owners.

During lunch with Trump, the president chastised Johnson over objections he raised in the meeting, telling the senator at one point, “Come on, Ron,” according to a person familiar with the discussion who declined to be identified because the event was not public.

Johnson voted for the bill Tuesday, telling reporters: “The good news is, everybody agrees it’s a problem, it has to be fixed. I just keep getting assurances it’s going to be fixed. I just want to see how.”

Other Republican senators who have been skeptical of the tax bill also appeared ready to back it. Collins, who has not yet thrown her support behind the bill, said that she felt more optimistic about the plan after meeting with the president.

“I believe that a lot of my concerns, it appears, are going to be addressed and that I’m going to be getting the opportunity to offer amendments on the Senate floor,” she said.

Collins said that the president was supportive of her wishes that $10,000 of property taxes be deductible under the Senate plan, a change that would be similar to the compromise that House Republicans made on the repeal of the state and local tax deduction. She also said that Trump was supportive of backing legislation to help stabilize health insurance markets under the Affordable Care Act, which she said would help mitigate the effects of ending the law’s requirement that most people have insurance, as the tax bill would do.

Sen. Lamar Alexander, R-Tenn., said that Senate Republicans were increasingly united about repealing the requirement that most people have health insurance or pay a penalty. He said that Trump was very involved in the details of the tax package Tuesday and that the president took several questions from senators.

“He had a vigorous back-and-forth,” Alexander said.

Both Alexander and Collins demurred when asked whether they would be concerned if the Joint Committee on Taxation report showed that the bill would increase the deficit even with additional economic growth.

“I’m not going to be hypothetical about that,” Alexander said.

Democrats on the Budget Committee assailed their Republican colleagues for shedding their deficit-hawk feathers and backing a bill that they say is fiscally irresponsible. Many Republican senators left after protesters disrupted the meeting, chanting “Kill the bill.”

Acknowledging that a final vote was most likely days away, Democratic leaders appeared to have few procedural maneuvers left to slow the progress of the tax bill.

“Our Republican colleagues, in their rush to get a bill done, are legislating in an irresponsible way, especially when it comes to something as important and complex as the tax code,” said Sen. Chuck Schumer, D-N.Y., the minority leader.