House Republicans are hours away from fulfilling their pledge of a full-scale tax overhaul. But all eyes have already shifted to the Senate, where the reality of tax reform is starting to bubble up: It’s complicated, it’s difficult and, at some point, the cruise control would be flicked off and this would start to get real. Well, now it’s getting real.
Of note
What House leaders have managed to do here is no small feat. They took something that hadn’t been done in 31 years and made it look like a relatively smooth process. And yes, even they are fairly surprised by how well this has gone so far, according to several aides.
Of note, pt. 2
Whenever the House votes on this again, it will look different, period. But Thursday’s vote plays the role of locking lawmakers in — to vote for this and then threaten to vote against whatever the House-Senate conference agrees to would be a big, big flip. GOP leaders will pass this bill with room to spare, and with good reason. They want to lock as many of their guys in as possible, because who knows what’s coming back their way in a couple of weeks.
Today’s schedule
House debate on the tax bill started at 9 a.m. ET, with two hours of debate remaining.
The Senate Finance Committee markup reconvenes at 10 a.m. ET.
President Donald Trump arrives at the Capitol 11:30 a.m.-12:30 p.m. ET.
The House vote on the tax bill, tentatively between 1:30 p.m.-2:30 p.m. ET.
About Ron Johnson
Contrary to some belief, Sen. Ron Johnson’s problems with the bill weren’t secret and aren’t new. The treatment of pass-through entities (LLCs, partnerships, S Corporations, etc., that file individual returns and are taxed by the individual rate) has always been the big issue for him. He’s been talking about it for weeks, if not longer, and grumbling about the direction the GOP proposals have been going for just as long.
In fact, one Republican aide who was ticking through where senators stood for me earlier this week explicitly pointed to Johnson as a potential problem. So GOP leaders were aware this was possible, and it’s happened numerous times in the past with other bills. But no, they were not given a heads-up, I’m told.
How real is the opposition
As the night moved along, Johnson appeared to moderate his language and terms, making clear he wants to get to yes if possible. As noted, he wants to be involved in the process and wants his proposals explored. He’s not on the Finance Committee and says he feels cut out. There are ways to address this in the weeks ahead. Not to mention no shortage of outside pressure that can put a target right on Johnson’s back. GOP aides think he will come around in the end. But they aren’t sure how yet.
How Johnson did it
This wasn’t a random hallway chat. This was a lengthy, calculated interview with The Wall Street Journal with a very clear threat. It had a purpose and it had a point. Keep that in mind.
What happened next:
CNN’s Ryan Nobles reports that Trump called Johnson shortly after the opposition was announced. Johnson said he told the President he hoped to get to “yes” and that the President understood his concerns on the pass-throughs.
Here we go, Senate edition
Here’s the thing about what’s happening right now — none of the dynamics are new. This has all been reported here (and elsewhere) over the past few weeks.
Let’s run down the potential problem roster:
Jeff Flake and Bob Corker: deficit concerns
Susan Collins: State and Local Tax, individual side concerns, individual mandate repeal
Ted Cruz: SALT, tax increases for some in the plan
John McCain: process, legacy consideration
Johnson: pass-through entity rates
Rand Paul: whatever Paul decides he’s opposed to on a given day
How senior Republicans and advisers see things
This from conversations with several aides and outside advisers over the last few days:
There is a belief the deficit concerns can be addressed, particularly with Corker, who has been very specific about what he needs to see and has been meeting regularly with administration officials to describe what he needs. (He met with Treasury Secretary Steve Mnuchin Wednesday and told CNN a Treasury analysis on the dynamic growth would be coming soon.)
Flake hasn’t been as specific yet, but leaders think he’ll come around. “You guys all seem to have forgotten he’s a conservative — a real, solid conservative,” one GOP aide said. “These are significant tax cuts.”
Collins will be difficult, no question. There’s some hope that what they do on the pass-through side, the NFIB support, the event with Ivanka Trump, etc., could get her there. But they know it’s a lift, especially now that health care is involved.
Nobody in leadership ever wants to have to count on Paul’s vote. There’s a lot he’s asked for that has ended up in this bill, with individual mandate repeal being one of them, but he makes very clear the scope of the cut on the individual side isn’t as deep as he’d like.
McCain is the clear wild card. He’s said positive things in recent days about both the process and the proposal, but he has made clear he needs to see the entire thing before really weighing in. Nobody has a good read on where he’ll end up, and that makes senior Republicans very worried. They don’t know what he’s using to base his support on, and they desperately want the President to just leave him alone through this process. When you can only lose two votes, that’s an unsettling place to be.
Bottom line here
This has always been the case: When it comes to the Senate, and Republicans only hold a two-seat majority, things are always on a razor’s edge.
Add retirements, a series of personal issues or resentments and a super complex subject issue, and things are going to get — and stay — interesting for awhile. GOP leaders and administration officials think they’re in a good place, all things considered. But as Wednesday demonstrated, there is a very long and precarious road ahead.
