Senate Republican leaders struck a tentative deal November 28 to advance tax reform legislation to the Senate floor by including a mechanism to reverse tax cuts if the new law doesn’t meet fiscal targets for economic growth.
Sen. Bob Corker, R-Tenn., said that the details of the fiscal trigger mechanism to be added to the Tax Cuts and Jobs Act are still being finalized, but the provision will “ensure greater fiscal responsibility should economic growth estimates not be realized.”
With Corker's support, the Senate Budget Committee voted 12-11 to approve the fiscal 2018 budget reconciliation measure needed to advance the tax bill to the Senate floor. Senate leaders expect to vote on the measure by December 1.
Fellow Budget Committee holdout Sen. Ron Johnson, R-Wis., said he agreed to support the bill because he feels optimistic about his discussions with party leaders about ways to increase the tax cuts for passthrough businesses.
“When the President of the United States tells you that he’s going to fix your problem and he asks for your vote, I was more than willing to give it to him in [committee] here today,” Johnson said in a statement after the vote.
Although the deal with Corker is seen as a way to secure the votes of several Republicans worried about the bill's effect on the federal budget, it created a new problem for other Republicans who were previously willing to support the bill.
Sen. John Kennedy, R-La., told reporters he cannot vote to implement automatic tax increases on the American people.
“If I do that, consider me drunk. I’m not voting for that," Kennedy said.
Senate Finance Committee member John Thune, R-S.D., expressed his own doubts. Thune said he doesn't like the idea of a revenue trigger or a tax trigger, but “if the agreement is made with some of our members who need this in order for us to move forward to get to 50 votes, we may have to end up agreeing to something along those lines.”
“This is a very delicate balancing act . . . we’re trying to accommodate as many concerns and address those in the best way possible without undermining the overall goal,” Thune said.
House Ways and Means Committee Chair Kevin Brady, R-Texas, withheld comments about the trigger, telling reporters that he was monitoring Senate attempts to reach whatever agreements necessary to pass the tax legislation.
Fellow committee Republican Tom Reed of New York told reporters the trigger is still under negotiation, but he is convinced economic growth from the tax bill will make using the trigger unnecessary.
Individual Mandate Repeal to Remain
Meanwhile, Sen. Lindsey Graham, R-S.C., said GOP lawmakers reached an agreement with President Trump in which the president would accept a bipartisan healthcare compromise worked out by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., in exchange for the elimination of the Affordable Care Act’s individual mandate in the Senate tax bill.
In an earlier press briefing, Murray said her bill with Alexander would have no effect on the loss of coverage for 13 million Americans caused by the mandate’s elimination. Murray said GOP leaders are attempting to hide behind the Alexander-Murray legislation, but their proposal only stops market disruption, not the loss of insurance coverage.
She said the bill addresses cost-sharing payments and state flexibility for health insurance plans. It doesn’t solve the problems created by the GOP tax plan, she told reporters. She called on the GOP leadership to remove the mandate elimination before the bill reaches the Senate floor, since budget reconciliation rules will make it too difficult to amend the tax bill.
Graham said Trump also agreed to support the version of the state and local tax deduction in the House tax bill, which keeps a $10,000 deduction for state property taxes.
Reed, a major advocate of keeping the state and local benefits in the House, said he was encouraged by the property tax agreement, but wanted to see the actual language in the Senate bill.
Early in the day, Senate Majority Leader Mitch McConnell, R-Ky., and Senate Finance Committee member John Cornyn, R-Texas, appeared alongside Small Business Administrator Linda McMahon, several Senate Small Business Committee Republicans, and industry group executives to encourage holdouts to support the Tax Cuts and Jobs Act.
"There are concerns that have been raised by the other larger passthroughs and how to make them competitive with so-called C corporations, and we're continuing to work through that," Cornyn said.
Members from the National Federation of Independent Businesses, the National Retail Federation, the American Hotel and Lodging Association, National Association for the Self Employed, and the Small Business and Entrepreneurship Council all spoke during the event to commend Senate Republicans on their work and pledge support for the Tax Cuts and Jobs Act.