The lobbying bonanza has officially kicked into high gear. Name the industry or interest group and they’ve been on the Hill the last 48 hours to try and persuade, defend or outright defeat various provisions in a tax overhaul that all involved see as a train that’s not only moving, but almost to its final destination.
This all goes to the moment lawmakers are in right now: Behind the scenes negotiations, hammering out (or, in some cases, smoothing out) provisions for their final showing. This will largely be the ballgame over the next 10 days or so.
Reality check
Most of the tax plan is largely locked in. But a sentence here or there can make a break a company or even entire industry. Keep a close eye on these things in the days ahead.
What to watch Wednesday: The Senate is expected to vote to instruct its conferees. The process will be lengthy — it involves 10 hours of debate and Democrats can slow it all up by calling up their own motions at various points. But unlike the House, this really is expected to be a drama-free, if long, process already baked in. Only question will be if any surprise lawmakers find themselves on the conference committee.
The timeline
Expect the first “conference meeting” early next week. As we’ve reported, House leaders plan to do this behind the scenes — not a large public conference a la the Dodd-Frank Act, or various farm bills. Anything in public will largely be for public statements and for show.
GOP leaders plan to have this done the week of December 18. The House will likely go first. The Senate will follow suit. Keep in mind the government will (likely) be scheduled to shut down at the end of that week, so leaders are targeting earlier in the week for their tax votes.
The movement:
Already, sources and lawmakers are hinting at two big changes/compromises in the works.
The Alternative Minimum Tax issue: Corporations lost the respective minds by the inclusion of the corporate alternative minimum tax in the Senate bill. The secondary tax system designed to ensure tax rates paid don’t drop below a certain level isn’t very problematic when the rate is 35%. At 20%, that’s not the case — several key remaining credits and deductions (most notably the research and development credit) could fall by the wayside. The House repeals the AMT entirely. Expect that to be the preferred route, multiple sources say. And that goes for the individual AMT, too.
Deduction for State and Local Taxes: House Republicans got a very strong vote from the California GOP delegation — despite the major negative impact the SALT repeal, save for the property tax deduction capped at $10,000, may have on the state. Now they will get the payoff. Lawmakers are planning to expand the $10,000-capped deduction to include sales and income taxes as well. The exact structure is still being worked out, but this is a change most certainly in the works — on that may help House lawmakers actually pick up votes.
Just remember: The above changes, and many others that are being considered, cost money. Serious money. (The inclusion of the corporate AMT raised $40 billion at the last minute for the Senate bill.) As has always been the case, solutions are much easier to find when they don’t need to be paid for. That’s not the case in this exercise.
The danger: Administration officials have made it clear to Hill Republicans that they have zero desire to see large pieces of these proposals re-litigated or opened up to significant changes (there are also limits to how much can actually be changed in a conference committee.) As of now, there’s no expectation that every subgroup is going to get something more than they’ve already gotten. But start making accommodations for one group, and well, others tend to think they deserve something, too. That’s exactly what all parties want to avoid, several aides have made clear.
The (other) numbers:
Poll numbers to be exact. They aren’t good. At all.
Has this had a major effect on GOP lawmakers? No. But don’t think they don’t see it. I’ve spoken to several aides and more than a few lawmakers who, in candid moments, acknowledge major frustration with the fact they believe they’ve lost the message wars on this so far. Some of it is hyperbolic. Some of it is data they believe is skewed because of the budget rule constraints they have to contend with. Some of it is the fact it’s an overhaul heavily focused on the corporate side of things in a moment in history that favors, well, not that.
Gallup:
Approve: 29%
Disapprove: 56%
56% of independents disapprove of the plan
Quinnipiac:
Approve: 29%
Disapprove: 53%
61% say the plan “favors the rich at the expense of the middle class”
It’s not lost on Hill Republicans: That the relentless selling of the merits of the bill is, historically, best done by the individual who goes to work in the Oval Office each day. And needless to say, as fast and as successfully as Republicans have moved this up to this point, that laser-focused, day-in, day-out push on taxes has certainly not been there.
“Any other administration, it would be taxes. Every damn day,” one person involved in the process told CNN. “Instead we get tweets. And FBI. And Hillary. And Deep State.”
Reality: This won’t change votes — Republican lawmakers have very clearly made the calculation that doing something is better than nothing. And to be clear, President Donald Trump was, by all accounts, very effective in helping wrangle votes in the Senate. But as one GOP strategist working on the outside effort to garner support for the effort told me last night: “Man are we going to have a lot of work to do on this after the fact.”