Revenue Trigger Looms as Source of Friction: Tax Debate Update

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Sen. Thune Says Fiscal Trigger May Be Needed in Tax Bill

The Senate tax bill is headed for a marathon debate this week as Republican leaders plan to hold a floor vote as early as Thursday -- but first, the measure had to go through the Budget Committee, where key GOP lawmakers were raising objections. Here are the latest developments, updated throughout the day:

Revenue Trigger Looms as Source of Friction (5:20 p.m.)

Shortly after Republican Senator Bob Corker told reporters that he thought he had a deal with Senate leaders to add a revenue trigger to tax legislation that’s awaiting a floor vote this week, at least one fellow Republican heaped disdain on the idea.

"I am not going to vote to implement automatic tax increases on the American people,” said Senator John Kennedy, a Louisiana Republican. “If I do that, consider me drunk. I’m not voting for that.”

Corker and other senators have called for a provision that would implement tax increases if the tax cuts in the bill don’t stimulate enough economic growth to avoid deficits. The bill is estimated to boost deficits by $1.4 trillion over 10 years before accounting for any growth.

Corker, who joined 11 other Republican senators on the Senate Budget Committee in voting to advance the tax bill to the floor Tuesday, told reporters he had worked out a trigger provision before the vote. “It’s a trigger to kick in at different revenues should we not meet the targets,” he said.

After the committee vote, Senator John Thune also criticized the idea. “In the long-run, it’s not in our best interest to have a mechanism that would create a tax increase,” said Thune, the Senate’s third-ranking Republican leader, in an interview with Bloomberg Television.

Anti-tax advocate Grover Norquist also slammed it. “The key to pro-growth tax reform is permanence and certainty,” he said in a statement. “No one invests in response to ‘maybe.’ A trigger that threatens tax hikes is a self-fulfilling threat to kill jobs.”

Freedom Partners, a group affiliated with billionaire industrialists Charles and David Koch, came out against the idea as well. “It’s hard to imagine a more counterproductive policy than imposing automatic tax hikes on an economy that isn’t growing as fast as expected,” said Nathan Nascimento, the group’s executive vice president. -- Sahil Kapur, Allyson Versprille, Laura Davison and John McCormick

Senate Plan Survives Narrow Budget Panel Vote (3:19 p.m.)

The Senate Budget Committee voted 12-11, on party lines, to send the Republican Senate tax bill to the floor Tuesday -- a vote that may set the stage for handing President Donald Trump a signature legislative victory.

A full Senate vote could take place as early as Thursday -- and would keep Congress on track to hammer out a compromise between House and Senate versions of the tax legislation in time for Trump’s sign-off before the end of the year.

The measure’s fate at the budget panel was in doubt until two Republican holdouts, Bob Corker of Tennessee and Ron Johnson of Wisconsin, dropped their objections shortly before the vote.

Corker said before the meeting began that he would vote yes, saying he’d reached an agreement with Senate tax writers on a broad outline for a revenue-trigger provision that he and other GOP senators are seeking. The trigger would raise taxes if the tax bill doesn’t create enough economic growth to prevent increasing federal deficits.

Johnson has called for more generous tax breaks for partnerships, limited liability companies and other so-called pass-through businesses. He had earlier said he’d vote against the measure as written, but said he voted “yes” at the committee “based on the progress” that has been made in recent days.

“I’m getting commitments we are going to get this fixed,” he said.

The panel’s meeting was preceded by chants of “kill the bill” from a large crowd as Senator Bernie Sanders, the Vermont independent, entered the room. During the meeting, a protest broke out as disabled people chanted, “You are stealing money from the sick and the poor.”

Trump met with GOP senators just before the committee vote in an hourlong question-and-answer session, said Senate Majority Leader Mitch McConnell of Kentucky. McConnell said it was difficult to wrangle the 50 votes Republicans will need from their 52-member caucus to get the measure approved.

“It’s a challenging exercise,” he said. “Think of sitting there with a Rubik’s cube and trying to get to 50.” --Kaustuv Basu, Erik Wasson, Laura Davison, Allyson Versprille and Laura Litvan

U.S. Chamber Opposes Revenue-Trigger Idea (12:45 p.m.)

The chief economist for the U.S. Chamber of Commerce said a proposal to insert a revenue trigger into the Senate tax bill “is a terrible idea.”

J.D. Foster, who also serves as the business group’s senior vice president for economic policy, questioned in an online article how officials would measure any shortfall that would activate the trigger, how the mechanism would respond to a recession and how it would operate if Congress passes additional tax legislation later.

Republican Senators Bob Corker of Tennessee, James Lankford of Oklahoma and Jeff Flake of Arizona have proposed amending the Senate bill to include a trigger that would raise taxes if the bill’s tax cuts fail to produce enough economic growth to avoid increasing federal deficits. The Senate bill is estimated to reduce federal revenue by $1.4 trillion over 10 years -- before accounting for any larger economic effects.

Lankford said Tuesday afternoon that he and others are still working on the basic design of the provision. He added: “we hope that it would never be used.” -- Sahil Kapur and Laura Davison

GOP Moderate Wants to Keep Property-Tax Break (12:11 p.m.)

Republican Senator Susan Collins said she wants to retain an individual income tax deduction for state and local property taxes -- a change that would mirror a provision in legislation that has already passed the House.

Collins, a moderate from Maine, said she’s involved in talks to make changes to the Senate bill today. As written, the Senate legislation would repeal all of the deductions available for state and local income, sales and property taxes. Her proposal would retain the property tax break, but cap the deduction for them at $10,000 a year. The House bill contains the same cap.

Collins also said she would like to retain the existing top individual tax rate, which is 39.6 percent for those making $1 million or more -- another provision that would mirror the House bill. The Senate bill would cut the top rate to 38.5 percent.

Collins said she thinks the Senate bill isn’t popular because it hasn’t been fully explained to the public.

“I think it hasn’t been fully described, and I think some groups against it have mobilized, and they are selectively taking positions,” she said. “But there are also some provisions that need to be fixed.”

Collins has previously said that the Senate bill should drop its repeal of the Obamacare individual mandate -- a provision that’s estimated to save the federal government more than $300 billion over 10 years and lead to 13 million people without health coverage. -- Erik Wasson

GOP Senate Leaders Working on Changes to Bill (10:20 a.m.)

Senate Republican leaders met with at least one lawmaker who wants changes to the chamber’s tax bill -- and they’re working out a number of issues in the legislation, Senator John Thune said Tuesday.

GOP leaders hope to have some resolution on various issues -- including a request to add a revenue trigger to the bill that would increase taxes if there’s not enough growth to cover the cost of its tax cuts for businesses and individuals -- by this afternoon, said Thune, the Senate’s third-ranking Republican leader.

Senator Bob Corker, one of three GOP senators seeking the trigger provision, emerged from a meeting in Senate Majority Leader Mitch McConnell’s office saying he was “hopeful” that senators could reach a deal before the Senate Budget Committee meets at 2:30 p.m. Tuesday.

“We’re working through the issue,” he said. He added: “There’s a lot of work to do right now.” -- Erik Wasson and Laura Litvan

Corker Seeks to Add Trigger Before Panel Vote (9:20 a.m.)

Republican Senator Bob Corker, who’s seeking to build a revenue trigger into the Senate tax bill, said that projections about the bill’s effects on the larger economy are “sort of made up,” and Congress needs to protect against increasing the national debt.

“We do need to have this trigger issue worked out before the budget vote today,” Corker said Tuesday during an appearance on Fox News’s “Fox & Friends.” The Senate Budget Committee is scheduled to meet this afternoon to consider the tax bill.

The legislation is estimated to increase federal deficits by $1.4 trillion over 10 years before accounting for any growth effects, but its supporters say it would unleash enough growth to cover that cost.

“But what you want to make sure is that these projections are right,” Corker said. “These are all sort of made up, if you will.”

Corker, who plans to retire from representing Tennessee in the Senate after 2018, has asked the chamber’s tax writers to change the bill in order to build in provisions for tax increases if the measure doesn’t yield the growth they’ve promised. GOP Senators James Lankford of Oklahoma and Jeff Flake of Arizona also back the idea of a trigger.

“What I don’t want to do is lose my integrity and actually help hurt our nation and our children when we have $20 trillion in debt,” Corker said Tuesday, adding that he thinks the odds favor overall passage of the tax bill. “I don’t want to on the way out the door support something that I know is going to damage our nation.” -- Toluse Olorunnipa

Senate Bill In Limbo With Budget Panel Drama (4:00 a.m.)

The Senate’s tax-cut bill faces a crucial committee vote Tuesday as Republicans try to push it through to full Senate passage by the end of the week.

Normally, the Senate Budget Committee vote on the tax legislation would be a mere formality -- but on Tuesday, at least two dissident Republican senators are trying to use the occasion to push their leaders to change the bill. Each of those votes is crucial; the panel is split between 12 Republicans and 11 Democrats, so a single Republican senator could block the legislation from going to the floor.

Senator Ron Johnson of Wisconsin wants a deeper tax cut for pass-through businesses -- and says he won’t vote for the bill as written. Senator Bob Corker of Tennessee wants a provision that would impose tax increases if the bill doesn’t generate enough economic growth to cover the $1.4 trillion in revenue losses it’s estimated to produce over 10 years.

“I’m not exactly sure what’s going to happen in committee, we’re working diligently to fix the problem,” Johnson told Wisconsin reporters on Monday, according to his office. “If we develop a fix prior to committee, I’ll probably support it but if we don’t, I’ll vote against it.”

As of Monday night, no deal had emerged. “We’re still negotiating, let’s put it that way,” said Senator John Thune, the chamber’s third-ranking Republican leader.

Corker said his potential “no” vote shouldn’t be a surprise. He has said he’d oppose any tax bill that didn’t pay for its tax cuts by creating enough economic growth. Now -- amid various independent findings that the bill would fall short -- he’s asking for a safeguard.

“This is not a threat,” Corker said, adding that he’s sticking to a pledge he made more than a month ago.

The fast-track procedure that GOP leaders are using to try to win passage with as few as 50 senators’ votes allows them to bring a tax bill that would comply with Congress’s 2018 budget to the floor and to protect it from any Democratic attempt to talk the bill to death. The budget instructed the Senate Finance Committee to write a tax bill that would add no more than $1.5 trillion in deficits over 10 years, and it instructed the Energy and Natural Resources Committee to produce a bill cutting deficits by at least $1 billion.

Both committees produced such bills earlier this month, and now the Budget panel is scheduled to meet to formally combine them into a single piece of legislation.

Corker showed during the committee vote on the budget itself that he was willing to use his leverage. He struck a deal limiting the deficit increase to $1.5 trillion in negotiations with fellow committee member Senator Pat Toomey that were brokered by Majority Leader Mitch McConnell and the White House. -- Erik Wasson and Kaustuv Basu

What to Watch on Tuesday:

  • The House has already cleared its bill, which differs in significant ways from the Senate’s version. Both chambers will have to agree on a compromise before it could go to President Donald Trump for his signature. House Ways and Means Chairman Kevin Brady may reveal some of his goals for those negotiations during a speech to the American Enterprise Institute at 8:30 a.m. in Washington.
  • Trump meets with GOP senators at lunchtime, a session that may end shortly before the Budget panel convenes.

Here’s What Happened on Monday:

  • Senator Rand Paul, a Kentucky Republican whose vote was in question, threw his support behind the tax-cut plan. “I’m not getting everything I want -- far from it,” he wrote in an op-ed posted on the Fox News website.
  • Republican Senators James Lankford of Oklahoma and Jeff Flake of Arizona joined Corker in calling for a tax-increase trigger that would kick in if the tax cuts don’t spur enough economic growth to cover their cost.
  • McConnell’s aides said any fundamental changes to the Senate bill won’t be considered -- and any senators who want to make costly changes must offer ways to cover their proposals’ costs -- according to a person who attended a meeting with the staff members Monday.

— With assistance by John Voskuhl, Erik Wasson, Kaustuv Basu, Toluse Olorunnipa, Laura Litvan, Laura Davison, Allyson Versprille, and John McCormick

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