President Trump walked into the Capitol Tuesday on a mission to convince Republican senators to back the party’s tax bill, its last best hope for a major victory in 2017.
To get that win, Trump appears to be willing to do anything. He told senators he supported Maine Sen. Susan Collins’s demand that if the tax bill repeals Obamacare’s individual mandate, then Congress should also pass legislation stabilizing the law’s markets. (Which would do little to stanch the insurance losses of the individual mandate.) He is receptive to an idea from Republican deficit hawks for automatic tax increases if the federal deficit balloons in later years under the tax plan — essentially a reverse stimulus to hike taxes if the economy winds up in trouble.
Trump was willing to be everything to everyone in a series of meetings with senators and left Capitol Hill with serious momentum behind the tax overhaul that the White House and Republican leaders so deeply desire.
“It was great. It was fun,” Sen. Lindsey Graham (R-SC), who also met privately with Trump, told reporters. “He was so good. He was so nice, so nice, so upbeat, so good. The best meeting we had. I really thought the president hit it out of the park.”
The bones of the bill are the same: This is still a massive corporate tax cut, at a time when most Americans say taxes on businesses should be higher, and a tax cut for the wealthiest Americans at the expense of the middle class and the poor. But Republicans are willing to set all of that aside to score this political win, and these last-minute deals would help grease the wheels.
Senate GOP leaders plan to put the bill up for a vote later this week, needing 50 of their 52 members to support it.
Two Republicans crucial for the bill’s passage, Sens. Bob Corker (TN) and Ron Johnson (WI), voted for the tax plan in a Budget Committee hearing Tuesday afternoon, paving the way for it to reach the Senate floor. Collins, another vote long thought to be in doubt, said that she was optimistic after the president’s visit.
Plenty could still go wrong for Senate Republicans as they seek an elusive win on the biggest tax overhaul in a generation. Their narrow margin for error could still prove too difficult to overcome. But senators were in the mood to cut deals Tuesday to make it work.
The deficit “trigger” deal that could help pass the tax bill
Perhaps the biggest hurdle for the tax bill has been a handful of senators worried about the effect on the federal deficit. Two prominent swing votes — Corker and Sen. Jeff Flake (R-AZ) — are concerned about the potential $1 trillion increase in the deficit under the tax bill, and now that they’ve announced their retirement, they were said to be real risks to the bill.
But Corker, Senate leaders, and the White House are working on a plan that would address those concerns. The details are yet to be finalized — “It is literally a work in progress,” Graham told me — but the gist would be that in later years, if the federal deficit hit a certain threshold, there would be automatic tax increases to prevent it from continuing to grow.
Corker told reporters that the White House is “all fine with this” and that he had been talking for days with Senate Majority Leader Mitch McConnell and the Senate Finance Committee about the exact number — however many billions of dollars being added to the deficit — for this trigger.
The talks seem to be moving in the right direction. Corker said that he would vote for the tax plan in the Budget Committee, where he could have stopped it, “because of the agreement we just came to.”
Trump seems on board.
“He didn’t throw cold water on it. He just simply said, Let’s put it together and whatever it takes to put together our team,” Sen. Mike Rounds (R-SD) told reporters. “I thought it was a very good message.”
The devil, of course, could be in the details. Sen. Ted Cruz (R-TX) has proposed an addendum to this trigger concept stipulating that if federal deficits came in lower than expected instead of higher, there would be automatic tax cuts for individuals.
Corker didn’t sound thrilled when asked about the idea, noting, “I’m not negotiating with Ted Cruz.” He also referenced the nation’s “huge deficits” and said that his own proposal would only institute automatic tax increases, not cuts.
Most outside analyses project that, even accounting for any economic growth encouraged by the tax bill, the federal deficit will continue to grow under the plan. So the specifics of the trigger — and whether they satisfy Corker, who has feuded with Trump in the past few months — will matter a lot.
But the president clearly did his best to smooth that road on Tuesday, and he appears to have found a receptive partner in Corker.
Trump still might have a “pass-through” problem. But maybe not.
Only two Republican senators have outright opposed the current tax bill, and both for the same reason: Sens. Steve Daines (R-MT) and Ron Johnson (R-WI) want to see a bigger tax break for “pass-through” businesses, which are companies organized as sole proprietorships, partnerships, LLCs, or S corporations that don’t pay the corporate income tax.
By Monday night, Johnson said he was ready to vote against the tax bill in the Budget Committee, killing it in its last procedural step before coming to the Senate floor, if there wasn’t a fix for pass-through businesses.
As Dylan Matthews explained for Vox, the current tax proposal “still shields those companies from the corporate tax, and adds a new 17.4 percent deduction on pass-through income for people who own the companies.” Johnson and Daines want to see that number go up — closer to 20 percent.
“I want to see changes to the tax cut bill that ensure Main Street businesses are not put at a competitive disadvantage against large corporations,” Daines said in a statement.
Again, Trump and Republican leadership have been receptive to the general idea.
Over the weekend, Johnson met with Trump and Vice President Mike Pence, and both “agreed this is a problem to be fixed, and we'll get it fixed,” he said.
His lunch with Trump on Tuesday was more tense. Johnson stood up and addressed Trump with hus concerns, prompting a back-and-forth about the details of pass-through businesses, Sen. Jim Risch (R-ID) said. Leaving the lunch, senators weren’t willing to confirm reports of the exchange being heated or combative. Rather, Sen. Richard Shelby (R-AL) called it “candid.”
But by Tuesday afternoon, after lunch with Trump and meeting Republican leadership, Johnson decided he would vote for the bill in committee after all, to keep the process moving — a sign of earlier dealmaking conversations taking shape.
“There are a number of moving parts at the moment, but it is a very good two-way conversation with the leader and the chairman of the Finance Committee,” Daines told reporters before meeting with Trump on Tuesday. “My concerns about mainstream businesses were heard loud and clear, and I think we are going to get some additional help there.”
He didn’t have any details on what that deal would be exactly — or when the specifics would come together. But there was a strong air of satisfaction, enough to make his “no” vote look much more like an “undecided” vote.
Trump is also cutting deals with Susan Collins, the toughest GOP vote
For another tough vote, that of Susan Collins, Trump was willing to make a lot of concessions on Tuesday.
Collins is the most moderate member of the Senate Republican conference. She opposed every version of Obamacare repeal that her party’s leaders put forward earlier this year. When the Senate added the repeal of Obamacare’s individual mandate to its tax bill, which would lead to an estimated 13 million fewer Americans with insurance and rising premiums, her vote was thought to be lost.
But as Collins made a series of requests in the meetings with Trump, the president seemed happy to oblige, brushing away his past comments on the health care law in a bid for the Maine senator’s vote.
Trump told senators he would support an Obamacare stabilization bill negotiated by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA), which Collins wants the Senate to pass if the individual mandate is repealed in the tax bill. The centerpiece of that bill is funding for the law’s cost-sharing reduction subsidies, which Trump had repeatedly derided as bailouts for insurance companies.
The president also said he would support a bill by Collins and Sen. Bill Nelson (D-FL) providing more federal funding to health insurers to offset any premium increases that might result from a sicker marketplace if the mandate is repealed. The Collins-Nelson bill provides $4.5 billion over two years to help reduce premiums. Both those bills could be passed in a year-end government spending deal, Graham said.
Collins had another demand: She wants the tax bill to allow state and local property taxes to be deducted from a person’s tax bill. The Senate bill would currently eliminate that deduction entirely; the House had eliminated the deduction for state and local income taxes, while preserving a deduction up to $10,000 for state and local property taxes.
Trump said he would also support changing the Senate bill so it matched the House bill, according to Collins and other senators.
It seemed there was no deal that the president couldn’t reach Tuesday. With the Senate bill heading for the floor just weeks after its introduction, Republicans are in the fast lane to pass a major tax bill, one centered on a huge corporate tax cut that most Americans oppose, in a matter of days.
It could all go wrong. Collins still has other demands. Sen. John McCain (R-AZ) hasn’t committed to voting for the bill. Corker or Flake could decide the deficit price is just too high. Or Trump could antagonize a wavering Republican on Twitter, as he’s been known to do.
But hours away from a first vote, the tax plan looks on track.