It’s all on the line this week for Senate Republicans — they plan to have their tax proposal on the floor for a possible vote by the end of the week.
Do Senate GOP leaders have the votes? No.
Do Senate GOP leaders think they can get the votes? Yes.
Does this exercise sound familiar? Why, yes, it does.
The question is: Can Senate Majority Leader Mitch McConnell assuage them all, given most not only don’t overlap, but actually run contrary to one another?
Your Monday bottom line: Republicans involved in this process shade more toward optimism than pessimism as they head into this week. The pull of the political imperative — the power of which was seen in full force in the House — provides leaders with ammunition they simply didn’t have in their health care effort. But a lot has to happen in the next few days to clear the path for this bill.
The Senate comes back into session Monday evening, so taking the temperature of the rank-and-file when they vote will be key.
How tax week really kicks off
The Senate Budget Committee on Tuesday at 2:30 p.m. ET will mark up the full proposal. Remember: This is being done through the budget reconciliation, which means the budget panel has purview and will lead the process. It also means another piece will be added into the package, per the budget instructions — a proposal to open up Alaska’s Arctic National Wildlife Refuge for drilling. As we’ve mentioned several times: Yes, this appears random. And yes, senior GOP aides like to point out that this piece is a huge deal for Sen. Lisa Murkowski, for whom opening up the refuge for drilling has been a cornerstone push in her career.
Keep an eye on this mark up:
Committee markups have essentially been pro forma up to this point — all Republicans sticking together in support, all Democrats sticking together in opposition, the bill moving forward. But the Budget Committee has an interesting wrinkle in the seats occupied by GOP Sens. Bob Corker and Ron Johnson. Both have made clear they need to see specific things done before they support the proposal. Neither has said they’d sink the bill at this stage if those changes aren’t made, but Republicans only have a one seat advantage on the committee, so if they decide to cause problems, they could.
Bottom line: Changes to the proposal are in the works. Senators have deep respect for Budget Committee Chairman Mike Enzi, a Wyoming Republican. Aides don’t expect this to be a problem. But keep an eye on it for hints at where those changes currently stand/some hints as to how Johnson and Corker are feeling about the process.
The problems:
This is not a new list, save for one, and the issues have always been out there. Senate staff worked throughout the holiday week to try and address these concerns. They aren’t there yet and work will continue throughout the early part of this week.
Sens. Ron Johnson and Steve Daines:
Both senators have shown concerns over how the bill addresses the tax rate paid by business entities that pass-through their earnings to the individual side. Daines is a new addition to this list, with aides saying he informed leaders of his concerns last week, but hasn’t made a big public show of them. As for Johnson — well, he’s made a big public show of them. If there was any question whether changes were coming here, Sen. John Cornyn, the No. 2 Senate Republican, said this toward the tail-end of the late night Finance Committee markup before the break: “We still have quite a bit of work to do there.”
Sources say that likely involves boosting the current 17.4% credit up a few points. We’ll see if that does the trick or more is needed. Daines tweeted Monday that he’d spoken with Trump over the weekend to work through his “concerns.”
Sen. Susan Collins:
Collins has voiced concerns about the inclusion of the repeal of Obamacare’s individual mandate, as well as the repeal of the state and local tax deduction (also known as SALT). The former, for the time being, is staying in ($338 billion in extra revenue from it is the sole reason there), but keep an eye on the SALT issue. The Senate lining up with the House — which keeps the property tax deduction, capped at $10,000, is very possible. As one aide put it: “We know we’re going to have to end up there anyway to have the votes in the House, might as well just put it in now.”
Sens. Bob Corker and Jeff Flake:
For Corker and Flake, it’s never been a secret: it’s all about whether the growth created by bill would eventually pay for the $1.5 trillion it would add to the deficit over 10 years according to a static score. Here’s the reality: zero reputable analyses have said this bill would be paid for through growth.
Corker told CNN before Thanksgiving Treasury Secretary Steve Mnuchin said a Treasury analysis that did show growth paying for the bill would be provided to him at some point. Otherwise, Corker has kept his feelings/asks close to the vest.
Flake has been more pointed in his concerns, most notably on the idea that the individual cuts all expire at the end of 2025 so as not to add to the deficit. But GOP leader are saying out loud that no Congress would ever allow an across-the-board tax increase, so assume those will be extended. Just don’t assume that deficit cost in the current scoring. Yes, those things are very much contradictory.
Sen. John McCain:
McCain remains the GOP senator who leaves the most Republicans involved in this process uneasy. His issues haven’t changed — he cares about the deficit, but also cares deeply about the process. The hope was that the four day Senate Finance Committee markup would help address those concerns. Sources say it may not have and he’s frustrated by the number and scope of the changes made during that process.
Bottom line here: Nobody wants to be in the position where they have rely on McCain as the crucial 50th vote. He may come around in the end, but there’s no guarantee.
Sen. James Lankford and Sen. Jerry Moran:
GOP Leadership is confident these two lawmakers will come around, but they have voiced concerns — Lankford on the deficit side, Moran on the individual mandate side. If they continue to be on the fence throughout this week, look out.
That pesky revenue problem:
The constraints imposed by the reconciliation process — something that can absolutely be held, at least in part, responsible for sinking health care, are rearing their head again on the tax effort. Republicans have about $85 billion to work with, according to the CBO, while still staying inside their target of adding no more than $1.5 trillion to the deficit over 10 years. That’s not a ton of money to work with when it comes to adding things to the bill to lock in wary senators.
Where Democrats stand:
By all accounts, adding the individual mandate repeal into the bill likely snuffed out any GOP hope of attracting votes from a core group of Democrats up for re-election in 2018 who reside in Trump states. Their votes weren’t a necessity, but the stamp of “bipartisan” that would be gained by attracting just one of those votes would’ve been a very big deal. That effort appears all but dead now, though it will be worth keeping an eye on any movement on the Democratic side.
The vast majority of the Democratic caucus has been opposed to this effort from the start and all but sprinted to inclusion of the individual mandate repeal to try and rally the grassroots effort that was so effective in killing the Obamacare repeal effort. We’ll get a good look at whether that is working this week.
ICYMI:
CNN’s Lauren Fox scooping that Sen. Rand Paul is “likely” to support the tax proposal is a big deal — and potentially removes a constant headache from GOP leadership. Paul put out an op-ed Monday confirming that the Kentucky Republican planned to vote for the plan.
Sen. Lisa Murkowski raised some concerns about the inclusion of the individual mandate repeal in the tax proposal. No more, though she hasn’t officially decided to support the bill yet. This is also a big deal.
