McConnell works to salvage tax bill

Senate Majority Leader Mitch McConnell (R-Ky.) has his work cut out for him to save the Senate tax bill, which stalled Thursday evening after three GOP rebels threatened to effectively kill it.

After weeks of careful negotiations, Senate Republicans are locked in a huge behind-the-scenes fight over what the tax bill should look like.

To pass the bill, McConnell and his leadership team will have to craft substantial revisions, and they have only about 24 hours to do it or otherwise postpone the effort altogether until next week.

{mosads}To appease Sens. Bob Corker (R-Tenn.) and Jeff Flake (R-Ariz.), McConnell would have to reduce the total size of the $1.4 trillion tax package by $350 billion to $450 billion.

But that approach isn’t sitting well with many Republican senators.

“It’s way too much to give to one person,” grumbled one GOP lawmaker, who asked for anonymity to give his frank opinion of the leadership’s promise to Corker. 

Rep. Mark Meadows (R-N.C.), the chairman of the conservative House Freedom Caucus, said the proposal wouldn’t fly in the lower chamber.

“Obviously we’re not in favor of that,” he said. “I don’t see that as good news.”

McConnell also could seek to win over Sen. Ron Johnson (R-Wis.) by eliminating the deduction big companies known as C corporations receive for state and local taxes.

Johnson wants to use the money to increase the proposed deduction for companies classified as pass-through businesses.

“It’s an elegant solution. I like it,” he said.

Johnson wants to increase the deduction for pass-through businesses to 25 percent, which he says would create an effective tax rate of about 28 percent.

“The best way to address the deficit is have pro-growth tax reform and that means keeping C corps” on par with pass-through businesses, he said.

Right now it looks like appeasing Johnson — rather than giving in to the demands from Corker and Flake — is the solution that would be more popular with the rest of the GOP caucus.

The problem McConnell faces in bringing aboard Corker and Flake, who are both retiring at the end of this Congress, is that Senate tax writers need to figure out precisely how to slim down the tax package by $350 billion.

Sen. John Hoeven (R-N.D.) told reporters that one proposal is to impose an alternative minimum tax on high-income individuals and big companies.

Other GOP senators, however, may prefer setting the corporate tax rate a few percentage points higher than the 20-percent rate preferred by President Trump.

Republicans control 52 seats and can afford only two defections on the legislation. Vice President Pence would break a 50-50 tie.

McConnell adjourned the Senate at 9:15 p.m. Thursday to give tax writers time to work to come up with a potential compromise.

The Senate will reconvene at 10 a.m. Friday and hold its next round of votes at 11 a.m.

McConnell told reporters earlier in the week that finding a way to get 50 votes for the tax package is like trying to solve a “Rubik’s cube,” and his words proved prophetic.

Corker, Flake and Johnson surprised Senate leaders on the floor Thursday evening by threatening to vote for what most lawmakers thought was a routine motion to send the tax bill back to the Senate Finance Committee.

McConnell stood in the well of the Senate, his arms crossed, growing red in the face, while Corker, Flake and Johnson refused to vote to defeat the motion, which all members of the Democratic caucus backed.

Senate Republican Whip John Cornyn (Texas) was overheard on the floor saying the motion would “kill the bill.”

McConnell, Cornyn and the rest of the leadership team scrambled to appease Corker and Flake by promising to lop $350 billion to $400 billion off the tax package.

Corker and Flake dug in their heels after the parliamentarian ruled that their proposal to set a trigger to roll back tax relief in case it failed to spur big economic growth ran afoul of the Senate rules.

So GOP leaders agreed to phase out a big chunk of the tax package after six or seven years.

“It’s automatically going to kick in, period. So it’s much more secure,” Corker said after the floor showdown.

It was a huge concession and left the leadership fuming as they walked off the Senate floor.

“It doesn’t look like the trigger is going to work, according to the parliamentarian, so we have an alternative, frankly, tax increase we don’t want to do to try to address Sen. Corker’s concerns,” Cornyn told reporters.

Sen. Jim Risch (R-Idaho) said chopping $350 billion off the bill threatens to upset the carefully crafted product put together by the Finance Committee.

“They put together what I think is a balanced package. The difficulty is it doesn’t take much to upset the balance,” he said.

And even if McConnell ropes in Johnson, Corker or Flake, there’s still a risk he suffers other defections.

Sen. Jerry Moran (R-Kan.) said he’s also worried about the deficit but declined to comment on the concession promised to Corker and Flake.

“I do share concerns about the deficit and I continue to be hopeful there’s a solution,” he said.