Deficit issue looms over Republican tax bill as Senate nears vote

U.S. President Donald visits St. Louis, Missouri to speak about tax reform
U.S. President Donald Trump points to a large “Merry Christmas” card on the stage as he arrives to deliver remarks on tax reform in St. Louis, Missouri, U.S. November 29, 2017. REUTERS/Kevin Lamarque

November 29, 2017

By David Morgan and Susan Cornwell

WASHINGTON (Reuters) – Congressional Republicans scrambled on Wednesday to reformulate their tax bill to satisfy lawmakers worried about how much it would balloon the U.S. budget deficit, as the measure moved toward a decisive U.S. Senate floor vote later this week.

Stocks rallied on optimism that the tax overhaul package could pass, but obstacles remained, including attempts to address the estimated $1.4 trillion that the bill would add to the United States’ $20 trillion national debt over 10 years.

Senate Majority Leader Mitch McConnell said lawmakers would take a procedural step forward on Wednesday by voting whether to begin formal debate on the bill. That could lead to a vote on Thursday or Friday.

Democrats oppose the legislation, but only a simple majority of senators will be needed to start debate on the bill, which aims to cut taxes on corporations, other businesses and a wide range of individuals and families.

Republicans have a 52-48 majority in the 100-member Senate, giving them enough votes to approve the bill if they can hold together. Without Democratic support, Republicans can afford to lose no more than two of their own votes.

President Donald Trump traveled to Missouri on Wednesday to give a speech imploring members of his own party to get behind the effort, which would be his first significant legislative achievement since taking office in January.

“A vote to cut taxes is a vote to put America first again,” Trump said, adding the bill could “cost me a fortune” and that his wealthy friends were not happy. “My accountants are going crazy right now. It’s all right. Hey look, I am president, I don’t care. I don’t care anymore.”

Democrats say the tax cuts are a giveaway to corporations and the wealthy at the expense of working Americans. Some Democrats have said Trump and his children would gain from the bill, which would repeal the estate tax on inherited wealth.

Among Americans aware of the Republican tax plan, 49 percent said they were opposed, up from 41 percent in October, according to a Nov. 23-27 Reuters/Ipsos poll released on Wednesday. The latest online poll of 1,257 adults found 29 percent supporting the plan and 22 percent saying they “don’t know.”

The sweeping tax package was developed over several months behind closed doors by a small group of senior congressional and Trump administration figures, with little input from many Republican lawmakers and no involvement from Democrats.

SCHUMER’S CONCERNS

Senate Democratic leader Chuck Schumer said on Wednesday the secretive process produced starkly partisan legislation that was still being amended to confront unanticipated objections.

“We’re potentially only one day away from a final vote on a bill to rewrite the U.S. tax code, and significant parts of the Republican bill are still up in the air. By the time of the vote, no one will have a definitive analysis of how the bill would impact the economy,” he said.

A major sticking point in the Senate has centered on how the bill deals with the federal deficit and the national debt.

Senator Bob Corker, one of the few remaining fiscal hawks in the Republican Party, wants to add a tax snap-back provision to the bill that would raise taxes automatically if economic growth targets are not hit in the future to offset a higher deficit.

That trigger proposal has become a target of growing criticism among conservative Republicans and lobbyists, including interest groups aligned with the billionaire industrialists Charles and David Koch, who say the prospect of tax hikes could undermine future economic growth.

“I’d prefer not having it there. We’re probably going to have one. But I’d prefer not having it,” Republican Senate Finance Committee Chairman Orrin Hatch told reporters.

‘GETTING A DEAL DONE’

Republican Senator David Perdue, a businessman from Georgia, said lawmakers could find common ground on a measure that delays any tax hike for at least five years and spreads the prospective burden among those who benefit from Republican tax cuts.

“This is about getting a deal done,” Perdue told a news conference with Republican senators and representatives of Koch-aligned groups including Americans for Prosperity.

Democrats and independents were trying to persuade nonpartisan Senate officials to disqualify parts of the bill, including one to allow drilling in the Arctic National Wildlife Refuge, as impermissible under Senate rules, an aide said.

Key Republicans voiced cautious optimism about the bill.

Republican Senator Susan Collins said she would vote to open debate on it despite her qualms about its inclusion of a repeal of a federal fine in the Obamacare individual mandate that is meant to compel many Americans to buy health insurance.

Collins said Republican leaders had promised her the Senate would take up healthcare provisions this year to help mitigate the impact of changing the mandate, including one to help insurers cover expensive patients, and one to continue Obamacare subsidy payments for low-income people for two years.

Senator Jeff Flake, an Arizona conservative who has not committed to voting for the tax bill, told NPR he was more comfortable with it because of the “trigger” provisions.

(Additional reporting by Amanda Becker, Susan Heavey and Tim Ahmann in Washington, Steve Holland in Missouri and Chris Kahn in New York; Writing by Jeff Mason; Editing by Kevin Drawbaugh and Peter Cooney)

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