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PrintSenate passes tax reform, but the hard part remains
The Senate handed Donald Trump a significant victory early this morning, voting 51-49 along party lines to pass a massive overhaul of the tax system that Republicans hope will jump-start the economy and create millions of jobs.
The legislation would bring the first overhaul of the U.S. tax code in 31 years. It would slash the corporate tax rate, offer more modest cuts for families and individuals, and eliminate several popular deductions.
Trump hailed the bill's passage on Twitter, thanking Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch, R-Utah. "Look forward to signing a final bill before Christmas!" the president wrote.
Democrats derided the reforms as a GOP gift to the party's wealthy and corporate backers at the expense of lower-earning people.
The bill is "removed from the reality of what the American people need," said Senate Minority Leader Chuck Schumer, D-N.Y.
Republicans achieved success by making several last-minute changes to the legislation to assuage the fears of deficit hawks and address some other issues like property tax deductions and pass through provisions for small business. In the end, only one Republican – Senator Bob Corker – refused to back the bill.
The bill now goes to a House-Senate conference committee that will have to deal with the differences between the two bills. While Trump hailed the passage of the bill in the Senate and said he hopes he can sign a bill "by Christmas," the dissimilarity in approaches to tax reform by the two houses of Congress makes coming to an agreement on a final measure by Christmas iffy.
Regardless, it is the spending cuts mandated by the bill that will likely become the next battleground as massive cuts in federal benefit programs like Social Security, Medicare, and welfare become the next political hot potato.
With so much attention focused on the tax bill itself, neither lawmakers nor many of the advocacy groups had paid as much attention to the depth and breadth of the cuts that will ensue unless the House and Senate come up with a bipartisan deal to stop them. Some groups had run Medicare ads, but they were largely overshadowed by the tax debate itself.
The tax bill hit snags in the Senate late Thursday, as Republicans worked on ways to ease the concerns of deficit hawks. Leaders were still scrambling for votes.
But within the GOP, leaders are confident that once the tax bill is passed, they can strike a quick deal to waive the federally mandated cuts. But Democrats deeply opposed to the tax bill aren't making any promises they'll agree to bail out their rivals – raising the risk of a historic gutting of government programs.
"This would be unprecedented," said William Hoagland, a senior vice president at the Bipartisan Policy Center and a former GOP Senate staffer with expertise on the budget. "The law never envisioned that we'd eliminate programs."
GOP leaders are asking moderates like Susan Collins (R-Maine) to back the tax package with the mere promise that lawmakers can find a bipartisan solution during an already divisive year-end crunch that could lead to a government shutdown.
One senior House GOP source was confident a deal on spending would go through. "A statutory PAYGO sequester has never happened, and we will prevent one from being triggered," the source said, adding that Congress has until the end of the year to work it out.
The far reach of the Republican tax plan is the consequence of limitations placed on Congress under the "pay-as-you-go" rule. The decades-old law, revamped during the Obama presidency, requires Congress to offset the cost of each piece of legislation or risk spending cuts painful to both parties.
Lawmakers have repeatedly voted to waive this rule, a total of 16 times, for major bills like the Obama-era stimulus and multiple tax cut packages under George W. Bush.
The GOP's $1.5 trillion tax plan would trigger $150 billion in cuts to domestic programs every year for a decade if Congress doesn't step in, according to the CBO. That would include $25 billion from the money Medicare pays health care providers.
It should be understood that both parties in the past have used this cynical ploy to include spending cuts in legislation they never intend to go through with. This is not to say that these programs shouldn't be cut, or their growth controlled. But what is required to cut them responsibly is a scalpel. The tax plan would take a meat ax to those programs – a deliberate ploy to get lawmakers to waive the paygo rule later.
Democrats are making noises about not going along with the ploy this time. They may vote against a waiver of the paygo rule in order to put the onus for the draconian cuts on Republicans. Aside from raising doubts about whether it's smart politics for the Democrats to go to the mattress on the paygo waiver, it's going to be difficult enough to come up with a spending bill in the next ten days to keep the government from shutting down.
This is a political sideshow compared to the historic nature of the tax cuts. In one stroke, Republicans have cut corporate taxes – cuts that could keep more businesses in the U.S., create more U.S. jobs, and perhaps even convince some companies that have moved overseas to come back.
I don't think too many of us thought Mitch McConnell had it in him to ramrod this bill through the Senate. But there is little doubt that he and his lieutenants deserve the lion's share of the credit for getting the bill to the finish line.
The Senate handed Donald Trump a significant victory early this morning, voting 51-49 along party lines to pass a massive overhaul of the tax system that Republicans hope will jump-start the economy and create millions of jobs.
The legislation would bring the first overhaul of the U.S. tax code in 31 years. It would slash the corporate tax rate, offer more modest cuts for families and individuals, and eliminate several popular deductions.
Trump hailed the bill's passage on Twitter, thanking Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch, R-Utah. "Look forward to signing a final bill before Christmas!" the president wrote.
Democrats derided the reforms as a GOP gift to the party's wealthy and corporate backers at the expense of lower-earning people.
The bill is "removed from the reality of what the American people need," said Senate Minority Leader Chuck Schumer, D-N.Y.
Republicans achieved success by making several last-minute changes to the legislation to assuage the fears of deficit hawks and address some other issues like property tax deductions and pass through provisions for small business. In the end, only one Republican – Senator Bob Corker – refused to back the bill.
The bill now goes to a House-Senate conference committee that will have to deal with the differences between the two bills. While Trump hailed the passage of the bill in the Senate and said he hopes he can sign a bill "by Christmas," the dissimilarity in approaches to tax reform by the two houses of Congress makes coming to an agreement on a final measure by Christmas iffy.
Regardless, it is the spending cuts mandated by the bill that will likely become the next battleground as massive cuts in federal benefit programs like Social Security, Medicare, and welfare become the next political hot potato.
With so much attention focused on the tax bill itself, neither lawmakers nor many of the advocacy groups had paid as much attention to the depth and breadth of the cuts that will ensue unless the House and Senate come up with a bipartisan deal to stop them. Some groups had run Medicare ads, but they were largely overshadowed by the tax debate itself.
The tax bill hit snags in the Senate late Thursday, as Republicans worked on ways to ease the concerns of deficit hawks. Leaders were still scrambling for votes.
But within the GOP, leaders are confident that once the tax bill is passed, they can strike a quick deal to waive the federally mandated cuts. But Democrats deeply opposed to the tax bill aren't making any promises they'll agree to bail out their rivals – raising the risk of a historic gutting of government programs.
"This would be unprecedented," said William Hoagland, a senior vice president at the Bipartisan Policy Center and a former GOP Senate staffer with expertise on the budget. "The law never envisioned that we'd eliminate programs."
GOP leaders are asking moderates like Susan Collins (R-Maine) to back the tax package with the mere promise that lawmakers can find a bipartisan solution during an already divisive year-end crunch that could lead to a government shutdown.
One senior House GOP source was confident a deal on spending would go through. "A statutory PAYGO sequester has never happened, and we will prevent one from being triggered," the source said, adding that Congress has until the end of the year to work it out.
The far reach of the Republican tax plan is the consequence of limitations placed on Congress under the "pay-as-you-go" rule. The decades-old law, revamped during the Obama presidency, requires Congress to offset the cost of each piece of legislation or risk spending cuts painful to both parties.
Lawmakers have repeatedly voted to waive this rule, a total of 16 times, for major bills like the Obama-era stimulus and multiple tax cut packages under George W. Bush.
The GOP's $1.5 trillion tax plan would trigger $150 billion in cuts to domestic programs every year for a decade if Congress doesn't step in, according to the CBO. That would include $25 billion from the money Medicare pays health care providers.
It should be understood that both parties in the past have used this cynical ploy to include spending cuts in legislation they never intend to go through with. This is not to say that these programs shouldn't be cut, or their growth controlled. But what is required to cut them responsibly is a scalpel. The tax plan would take a meat ax to those programs – a deliberate ploy to get lawmakers to waive the paygo rule later.
Democrats are making noises about not going along with the ploy this time. They may vote against a waiver of the paygo rule in order to put the onus for the draconian cuts on Republicans. Aside from raising doubts about whether it's smart politics for the Democrats to go to the mattress on the paygo waiver, it's going to be difficult enough to come up with a spending bill in the next ten days to keep the government from shutting down.
This is a political sideshow compared to the historic nature of the tax cuts. In one stroke, Republicans have cut corporate taxes – cuts that could keep more businesses in the U.S., create more U.S. jobs, and perhaps even convince some companies that have moved overseas to come back.
I don't think too many of us thought Mitch McConnell had it in him to ramrod this bill through the Senate. But there is little doubt that he and his lieutenants deserve the lion's share of the credit for getting the bill to the finish line.
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