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Republican tax plan faces few hurdles to final passage

Senate Majority Leader Mitch McConnell responded to a reporter’s question during a press conference Saturday in Louisville, Ky.
Senate Majority Leader Mitch McConnell responded to a reporter’s question during a press conference Saturday in Louisville, Ky.Timothy D. Easley/Associated Press

WASHINGTON — Congressional Republicans, buoyed by the Senate’s approval of a landmark tax overhaul, expressed confidence Saturday that final legislation would be agreed upon quickly and sent to President Trump by the end of this month.

While the tax bills approved by the House and the Senate diverge in significant ways, the same forces that rocketed the measures to passage appear likely to bond Republicans in the two chambers as they work to hash out the differences.

The plan to cut taxes by nearly $1.5 trillion has flown through Congress in the month since a bill was introduced in the House, with Republicans united in their belief in the economic power of tax cuts and desperate for a legislative victory to appease restless campaign donors and base supporters.

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Senate Republicans won approval for their sweeping tax overhaul just before 2 a.m. Saturday, two weeks after the House passed its own measure. The Senate vote was 51 to 49, with every Republican but one — Senator Bob Corker of Tennessee — in favor.

Senate leaders locked down the necessary votes Friday with little drama, after making concessions to a handful of wavering Republicans.

During a news conference after the Senate vote, the majority leader, Senator Mitch McConnell, Republican of Kentucky, expressed little doubt that a consensus plan would soon become law after a conference committee resolved the differences between the two bills. “This is a great day for the country,” McConnell said.

Trump echoed that optimism, writing on Twitter that “we are one step closer to delivering massive tax cuts” and that he looked forward to signing a final bill before Christmas.

The differences between the measures, though substantial, do not appear troublesome enough to prevent Trump from achieving that goal, which would be his first major legislative victory.

Among the issues that will need to be worked out: Under the Senate bill, tax cuts for individuals would expire at the end of 2025 to mitigate the losses in revenue, and the mandate that individuals obtain health insurance under the Affordable Care Act would be repealed. The House bill does not have these provisions.

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The two versions also employ different methods to try to prevent multinational companies from shifting profits out of America and into lower-tax countries.

In addition, the House bill would set a new 25 percent top tax rate for profits earned by small businesses and other pass-through companies, while the Senate bill would give the owners of those companies a 23 percent deduction on pass-through income, which is taxed at rates for individuals.

The House bill would eliminate the alternative minimum tax for corporations and individuals and eventually eliminate the estate tax. The Senate bill would maintain the corporate AMT and trim, but not end, the individual AMT and the estate tax.

Still, the bills share much of the same architecture and many core elements. Each would cut the top corporate tax rate to 20 percent from 35 percent. Each would eliminate deductions for state and local income taxes, nearly double the standard deduction for individual filers, and reduce individual tax rates.

Because of those provisions, both bills are projected to cut taxes initially for the bulk of middle-class taxpayers, yet raise them on millions of other middle-class families.

The House bill would preserve a deduction for up to $10,000 a year in state and local property taxes. The Senate bill would, too, thanks to a last-minute change that helped gain the support of Senator Susan Collins, Republican of Maine.

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Lawmakers and lobbyists will battle furiously over the small details in a consensus bill, but party leaders show little worry that big issues will trip up the plan.

Speaker Paul D. Ryan of Wisconsin said early Saturday that the House would move “quickly” to a conference committee. House members are planning to return to Washington on Monday, a day earlier than planned, to vote to proceed to conference.

“Now it’s time to take the best of both the House and Senate bills, make them even stronger in a conference committee,” Representative Kevin Brady, Republican of Texas, the chairman of the Ways and Means Committee, said in a news release Saturday, “and finalize one piece of legislation that will dramatically improve the lives of Americans for generations to come.”

After the Senate vote, some ebullient Republicans seemed to hint that a conference might not even be necessary. “We’ll see,” said Senator Orrin G. Hatch of Utah, the Republican chairman of the Senate Finance Committee, when asked if he thought the House might just take up the Senate’s bill.

If Republicans do go to conference, the House and the Senate would each need to vote again to pass the package that resulted from those negotiations, before sending the bill to Trump. If the House were to simply approve the Senate bill, it would head to Trump straight away.

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Unable to stop or stall the bill, because Republicans are employing a process that allows them to bypass a legislative filibuster, Democrats were left to fume about the tax plan and the process by which it was speeding toward approval.

Democrats charged that the Senate bill had been loaded with last-minute favors for the rich and the well-connected at the expense of the middle class, and complained that the text of the bill had been released only hours before the vote, with handwritten changes scrawled in the margins. Lobbyists saw a list detailing the changes before they did, the Democrats said.

“Is this really how the Republicans are going to rewrite the tax code?” Senator Chuck Schumer, Democrat of New York, the minority leader, asked in a floor speech before the vote. “Scrawled like something on the back of a napkin? Behind closed doors? With the help of K Street lobbyists?”

“If that’s not a recipe for swindling the middle class and loosening loopholes for the wealthy, I don’t know what is,” Schumer said.

As a group, Democrats seemed resigned to the fact that there was little they could do to stop the tax overhaul from being enacted.

“My sense is they may have a conference in name only,” Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee, said after the vote.

But Wyden predicted that Republicans would eventually regret their victory.

“The American people are going to be stunned when they see what’s really in this,” he said.

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Even if the tax cut sparks the kind of economic growth that Republicans advertise, the tax bill will increase the deficit by $1 trillion over 10 years, the nonpartisan congressional Joint Committee on Taxationcq said.

That increase would be in addition to the $10 billion in deficits over the same period that have already been forecast by the Congressional Budget Office.

As the tax legislation hurtles toward final approval, Republicans are preparing to use the swelling deficits as a rationale to pursue their long-held vision: undoing the entitlements of the New Deal and Great Society, leaving government leaner and the safety net skimpier for millions of Americans.

Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. Trump told a Missouri rally last week, “We’re going to go into welfare reform.”

Their strategy poses enormous risks, not only for millions of Americans who rely on entitlement programs, but also for Republicans who would wade into politically difficult waters, cutting popular benefits for the elderly and working poor just after cutting taxes for profitable corporations.

“The way to get at fixing the debt is to feel like everybody is willing to put something on the table,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group. “Once you have one side grab all it could, you’re never going to have the other side show up.”