WASHINGTON - Benjamin Franklin, who famously said that nothing in this world can be certain “except death and taxes”, would love the Republican tax cut bill that’s headed for a vote in the Senate this week.
The historic tax cut legislation, approved by the Senate Budget Committee on a party line vote, would slash the corporate tax rate from 35 percent to 20 percent in 2019, and reduce individual and family tax rates over the next eight years.
In a year when President Trump and the GOP majority in Congress have failed to deliver on their promises to kill Obamacare and enact other legislation in their campaign agenda, passage of their tax reform bill would be a major, far-reaching political victory for the president and his party.
First and foremost, it would give the U.S. economy a major booster shot, after eight long years of anemic, sub-par economic growth under Barack Obama’s presidency that rarely rose above the 2 percent range.
In anticipation of the tax cut vote, the stock market has soared to record highs, while the Commerce Department reported Wednesday that the U.S. gross domestic product (GDP), the broadest measurement of the economy’s growth rate, rose to 3.3 percent in the third quarter.
While several Republican senators have been seeking changes in the bill, others have recently climbed onboard.
One GOP holdout is Sen. Ron Johnson of Wisconsin, who still holds a grudge when Republicans withdrew financial support for his re-election bid last year, believing he could not win, though in the end won another term.
Earlier this month, Johnson told Senate leaders that he could not support the tax cut bill because it favored large corporations over other businesses that are taxed under the individual tax rates.
But expanding the corporate tax cut rate to individual businesses, too, would worsen the deficit, to the tune of over $100 billion, the bill’s managers said. As of mid-week, Johnson was a “no” vote.
Sen. Bob Corker of Tennessee was a potential no vote, too, because he believes the bill will add far too much to the deficit.
To get his vote, he sought a fiscal “trigger” that would bring in additional revenue if the tax cuts failed to boost economic growth rates as promised.
That deal ignited a wave of protests from pro-growth tax cutters. “The idea of a ‘tax hike trigger’ should be rejected on it’s merits,” said David McIntosh, president of the influential Club for Growth.
“Any senator who understands basic business principles and truly cares about the deficit should understand that this trigger is an automatic tax increase and will actually harm economic growth,” McIntosh said in a statement.
“It will have harmful impacts on American businesses and undermine any economic growth potential in this tax reform bill because businesses will not invest due to the possibility of a higher tax rate,” he argued.
The details of Corker’s amendment remain under wraps, but he told reporters that “There’s an agreement in principle, very strong agreement, with [Republican Leader Mitch] McConnell, with the Finance Committee…”
Such backroom deals, apparently, were being made all over the place in a desperate effort to win enough votes for passage, and Trump was giving away favors, too.
Sen. Susan Collins of Maine reportedly met privately with the president who, she said, appeared to favor federal subsidies to assist low-income Americans who can’t afford health insurance. And to preserve property tax deductions that were in danger of being cut out of the tax code. “It’s certainly progress,” she said.
As Senate Republicans prepared for a full court battle with the Democrats this week, it still remains unclear that they have just enough GOP votes to pass the tax cut plan.
In a chamber where the GOP majority is a fragile 52 votes, Republicans can affford to lose two members and still win. That’s because Vice President Mike Pence is empowered under the Constitution to break a tie.
The House has already approved its own tax cut plan, and if McConnell can squeeze 50 votes for the Senate’s version, the bills are headed for a conference between the two chambers to iron out their differences.
If the Republicans can produce and enact a tax cut bill, Trump will certainly sign it in a New York minute and then watch this economy take off.