- The Tax Cuts and Jobs Act, the House GOP tax reform bill, passed the House on Thursday.
- The Senate bill’s path faces a murkier outlook, especially after the defection of GOP Sen. Ron Johnson on Wednesday.
- Republicans’ path ahead for the tax bill remains rocky at best.
House Republicans sailed their tax reform bill through the chamber on Thursday. But the broader Republican push to overhaul the federal tax code still looks like it could be in trouble – due to problems on the other side of Capitol Hill.
On Wednesday, Sen. Ron Johnson of Wisconsin became the first Republican senator to come out publicly as a “no” vote for the current version of the chamber’s Tax Cuts and Jobs Act.
But his skepticism isn’t unique: A handful of GOP senators have wavered on the proposal. With only a 52-seat majority in the chamber, Senate Republican leaders have little room for error – and a lot of people to win over.
“We’re not ready to throw in the towel on the tax bill, it’s way too premature for that,” Greg Valliere, chief strategist at Horizon Investments, said Thursday. “But it’s in trouble – and the best scenario for proponents of the bill may be for Vice President Pence to eventually break a 50-50 tie in the Senate, where a Republican insurrection may be brewing.”
The Senate has problems
Momentum for the GOP tax bills in the House and Senate had been steady up until the Johnson announcement.
The Wisconsin senator said he wants to ensure that pass-through businesses – like limited-liability corporations and S-corporations, in which the owner counts the business profit as their income – receive as much benefit from the TCJA as large corporations.
While the outright “no” from Johnson is the biggest public blow to the bill so far, Republican leaders have lingering concerns around other members.
Sens. Susan Collins and Lisa Murkowski helped to bring down the Obamacare repeal and replace efforts in July and September, and the Senate TCJA’s proposal to repeal the Obamacare individual mandate could throw their votes into flux.
Then there are Sens. Bob Corker and Jeff Flake, both of whom have been frequent critics of Trump. Both senators have expressed concern over the TCJA’s addition to the federal deficit. Even with increased economic growth, the bill could add over $1 trillion to the federal deficit over 10 years, according to independent studies.
“There are several of us that are trying to figure out a way to make sure this doesn’t hurt us relative to deficits,” Corker told Politico. “We’re looking globally at the whole thing and trying to do what we can to make it more fiscally palatable.”
Valliere said Johnson’s decisions and lingering questions about other members means two things.
“First, this week’s developments could slow the tax-writing process as Senate GOP leaders scramble to address concerns of Johnson and others,” the strategist wrote. “Second, we’re now entering a period, probably lasting for weeks, of significant uncertainty about the Senate vote count.”
The Finance Committee, however, is working through their markup of the bill, and Senate Majority Leader Mitch McConnell is still shooting for a full vote on the bill the week after Thanksgiving.
The House might, too
The House isn’t exactly out of the woods, either.
Any bill that passes the Senate is likely to have significant differences from the House version. That means that the House will either have to pass the Senate’s version or the two chambers will have to form a conference committee to iron out their differences.
In that scenario, leaders in each chamber would have to make some tough choices in order to win over their members.
Already, 13 Republican House members voted against the TCJA on Thursday because of its partial repeal of the state and local tax deduction. The Senate bill includes the full repeal of the deduction, which could cause more members to defect.
Additionally, a group of Republican House members voted against the various Obamacare repeal and replace bills in the spring. They could balk if the mandate repeal, which the Congressional Budget Office said could leave 13 million more people without insurance, is included.
“If Senate passage is truly jeopardized, the Republicans may have only one option – make the bill palatable to a handful of moderate Democrats,” Valliere said. “But there would be a price to pay: a final tax bill that’s far less generous to the wealthy and corporations than the measure” that passed the House Thursday.