Make no mistake about it: Tuesday was a very, very big step forward for the Senate Republican tax plan.
The committee approval was a hurdle, but it was formulating the parameters of the various deals that need to be made that was the most important — and potentially biggest breakthrough — element of the day.
The Senate will vote to take up the tax proposal Wednesday, as GOP leaders and their rank-and-file work behind the scenes to turn those deal outlines into actually legislative text.
Inside the room: What Ron Johnson said
Several top Republicans were buzzing about the exchange President Donald Trump had with Sen. Ron Johnson — who walked into the meeting still planning to vote to stall out the tax plan in committee.
During the question-and-answer session, the President listened to Johnson go on at length about the pass-through issue — with Johnson at one point going so far as to disparage his colleagues: “Nobody up here understands numbers,” Johnson said at one point, according to multiple sources in the room. It was … not received kindly by fellow Republicans.
He then told the President nobody cares about or listens to him on anything. The President countered that he had been listening to Johnson in recent days — and noted that his top advisers had been in close contact with Johnson.
“Well, you’re the only one,” Johnson replied, before continuing.
After a back-and-forth over how various business entities could be structured, Johnson finally finished, at which point Trump told him flatly: “that’s not a reason to vote no,” according to one source in the room.
Johnson spent the rest of the day appearing somewhat chastened. He made clear his concerns had been heard and he thought they’d be addressed at some point. But notably, given the heartburn his potential opposition caused for leaders and staff in the 10 days prior, Johnson received no specific commitment from leaders in exchange for his “yes” vote in committee.
With all of that, there is still a long way to go. Promises and commitments do not a final bill make. Those need to be turned into legislative language and real action. And that’s what staffer were meeting late tonight with administration officials to try and lock in.
How it’s going to work
Here’s your abbreviated refresher on how the voting process will work:
At some point Wednesday, a vote on the motion to proceed to the bill will be scheduled. That vote will require a simple majority for approval. Republican leaders have that locked up right now, so it will be more pro-forma than anything else.
Once they move to the bill: there will then be 20 hours of debate, when amendments can be offered. The clock won’t run continuously — Democrats can force delays, or the Senate could go out of session for the night, etc., but keep an eye on that clock, because when it expires, it start vote-a-rama.
During that time period, any senator can offer any germane amendment to the tax bill for as long as they please. Yes, this means the Senate will likely go over night and into the morning Thursday to Friday.
The final vote: We can’t tell you when it’s going to be and won’t be able to until near the end of the vote-a-rama. Just how it is. Republicans are tentatively planning Friday, but it’s impossible to provide firm guidance on exactly when.
Of note: Leaders are planning to address the outstanding issues through the amendment process — some in an large, all encompassing amendment that will likely come toward the end of the process, others as standalone proposals. Aides say these amendments aren’t likely to show up in the near term — they are still in the early stages of drafting them. But these will be the things that make or break the bill, so keep your eyes peeled.
Where the Leader concerns sit:
Same players as before for the most part:
Sen. Susan Collins
Sen. Bob Corker
Sen. Ron Johnson
Sen. John McCain
Add in Sen. Marco Rubio, for reasons outlined below
Where the deals sit:
The Deficit “Trigger”: This idea has been floating for days, and it appears to be on its way into the bill in some form or fashion now. This idea is crucial to getting the support of Corker, Sens. Jeff Flake and James Lankford. In short, Republicans would set up a trigger that would raise taxes automatically if growth projections aren’t met. How it would be structured is still being worked out. The details here are huge.
Of note: the idea of automatically raising taxes on everyone is an anathema to most Republicans — Sen. John Kennedy of Louisiana said he was opposed and added, colorfully as always: “If I do that, consider me drunk.” There are also the economic issues here — growth doesn’t appear and recede in isolation. What happens if the US enters a recession? What if there’s a financial crisis? What if, on the flip side, more revenue comes in than expected? Should there then be automatic tax decreases?
One other wrinkle: There’s serious question this will pass muster with the parliamentarian. And if the parliamentarian kills this because it runs afoul with the budget rules, well, you’ve got a deficit hawk problem again.
On top of all of that: Outside groups and tax-cut advocates are coming out in full force against the idea. This idea is riddled with potential pitfalls.
The SALT Deduction + health care provisions: As we’ve reported, Senate Republicans are edging closer to including the House compromise on repealing the deduction for state and local taxes in their bill — keep the property tax deduction, but cap it at $10,000. This something Sen. Susan Collins of Maine wants, and Trump told her she’d get it. He also said he’d support a bipartisan Obamacare subsidy legislation from Sens. Lamar Alexander and Patty Murray, as well as a separate reinsurance proposal Collins has in future legislation. How can he follow through on that promise? That’s an open question. The likely vehicle for the health care provisions would be an end of the year spending bill. Which raises the question: What end of the year spending bill?
Pass-through rate cut expansion: Something is going to change on the tax rate on pass-through income. What will it be? TBD. It doesn’t appear as urgent anymore, as Johnson appears somewhat chastened in his steadfast opposition, even on the floor, but it’s clear there will be tweaks.
The revenue issue: A SALT deal costs money — lots of it. So does any change to pass-throughs. Republicans, according to the Congressional Budget Office, have about $80 billion to work with and still stay under the $1.5 trillion deficit target. In other words, they are going to need to find new revenue source somewhere. That inevitably risks upsetting someone or some industry.
Bottom line: All of these potential deals are big breakthroughs for Republicans. But all can fall apart still — and that would send the bill back to its tenuous standing of this morning.
What about John McCain
Several aides continue to stress the same point to me: every member matters, but don’t leave the final vote in McCain’s hands. The benefit of say, Sen. Rand Paul being a clear “yes,” Lisa Murkowski certainly on her way there, even Collins seeming very amenable to getting there, is that it won’t come down to McCain. But GOP aides are still keenly watching where he goes on this — just without the pressure. leaders are mostly hands off with him right now, CNN has learned.
“We’re giving him space to get to a place where he’s comfortable,” one senior aide told CNN. “We want him to get there and we don’t want to do anything in the meantime to get in the way of that.”
Four wild cards to watch
The Byrd Bath: for those who forgot, read CNN’s Lauren Fox’s great primer from the health care debate on the procedural restrictions Republicans must pass muster on in the next few days.
The Joint Committee on Taxation Dynamic score: The Joint Committee on Taxation told lawmakers Tuesday that they would produce a dynamic score by late Wednesday. This is potentially a very, very big deal, as it will be the first nonpartisan government entity to produce an analysis that actually projects the economic growth from the bill. As in, the thing Republicans have been promising would be enormous. If the projection falls far short … that may create new problems for the deficit hawks.
Rubio: He again took to the Senate floor to demand the child tax credit — which is doubled in the bill, to $2,000 from $1,000 — also be fully refundable. This also costs serious money., Republicans don’t currently have and aren’t planning to find. How far is Rubio willing to go on his push for this? It’s an open question, but one to pay attention to going forward.
The Senate bill is starting to look fairly similar to the House proposal: The corporate rate is permanent. On the individual rates — there are more, but they line up overall. Include the SALT compromise and tweaks to the pass-through rate and voila, you’re getting closer. Which raises the question — if the Senate passes this, is a House-Senate conference even necessary? House leaders have said unequivocally there will be a conference. Their members have demanded it and would be outraged by any alternative path. But don’t be surprised to see the idea of the House just eating the Senate bill start to bubble up in the days ahead.
