Senate Passes Tax Cut Bill On Party Line Vote
The Senate passed a tax cut bill last night, but it leaves a lot to be desired.
Late last night, on a party-line vote that left little room to spare, the Senate passed its version of what it calls tax reform but what is, in reality, just another version of what we’ve seen in the past:
WASHINGTON — The Senate passed the most sweeping tax rewrite in decades early Saturday, with Republicans lining up to approve an overhaul that will touch almost every corner of the United States economy, affecting families, small business owners and multinational corporations, with the biggest benefits flowing to the highest-earning Americans.
Senators voted 51-49, as Republicans approved the nearly 500-page bill in the early morning hours after lawmakers received a rewritten version, which contained significant changes from the original bill that passed two Senate panels last month along party lines. The last-minute revisions prompted an outcry from Democrats, who said it was impossible — and irresponsible — for lawmakers to read and digest a significant piece of legislation in such a short period of time.
Speaking on the Senate floor ahead of the vote, Senator Chuck Schumer, Democrat of New York and the minority leader, called the Republican approach “a process and a product that no one can be proud of and everyone should be ashamed of.”
He went on to warn that changes made to the bill “under the cover of darkness” would “stuff even more money into the pockets of the wealthy and the biggest corporations while raising taxes on millions in the middle class.”
Many of the changes stemmed from a series of last-minute agreements reached to convince a handful of holdout Republican senators, including Susan Collins of Maine and Ron Johnson of Wisconsin, to throw their support behind the legislation. One of those Republican holdouts, Senator Bob Corker of Tennessee, voted against the legislation.
Early on Saturday morning, Mr. Pence provided a tiebreaking vote to pass an amendment offered by Senator Ted Cruz, Republican of Texas, that would allow people to use up to $10,000 a year from tax-advantaged 529 savings accounts to fund tuition at private and religious K-12 schools or certain educational expenses for home-schooled students. Right now, such accounts can only be used to pay for higher education.
The bill’s approval, coming on the heels of the House passing its own tax bill last month, is the first significant legislative victory for the Republican Party since it assumed control of the House, Senate and White House in 2017. The lightning-fast trajectory of the bill and the ability to overcome — or ignore — objections that have bedeviled previous attempts to revamp the tax code, highlights the pressure Republican leaders faced to notch a victory after several failed legislative efforts this year.
Mitch McConnell, the Senate majority leader and Kentucky Republican, called it “a great day for the country.”
House Speaker Paul D. Ryan, Republican of Wisconsin, said in a statement that with Senate approval “we will move quickly to a conference committee so we can get a final bill to President Trump’s desk.”
The president praised lawmakers on Saturday morning on Twitter, saying, “Biggest Tax Bill and Tax Cuts in history just passed in the Senate. Now these great Republicans will be going for final passage. Thank you to House and Senate Republicans for your hard work and commitment!”
Republicans have pitched the bill as a middle-class tax cut and the overhaul is intended to immediately cut taxes for about 70 percent of middle-class families. But it would raise them on millions of others, since the Senate plan eliminates some tax breaks like the deduction for state and local income taxes and phases out the individual tax cuts at the end of 2025.
Businesses fare far better, with the corporate tax rate cut to 20 percent from 35 percent and made permanent. It also offers a large tax break for the owners of small businesses and other companies that are not organized as traditional corporations, a provision that was sweetened in a last-minute deal to bring two wavering senators on board.
Democrats opposed the tax bill as a bloc, saying it was meant to help the wealthy and not the middle class. With the Senate split 52 to 48, Republicans barely had votes to spare. But the bill’s passage was made possible by a near-complete Republican embrace of the idea that about $1.5 trillion of tax cuts will pay for themselves, by producing enough economic growth and additional federal revenue to offset their costs to the Treasury.
That belief was contradicted by several studies, including one from Congress’s official economic scorekeeper, which Republicans dismissed as overly pessimistic.
Mr. McConnell waved off any deficit concerns. “I’m totally confident this is a revenue-neutral bill,” he said. “I think it’s going to be a revenue producer.”
The House and Senate will now work quickly to resolve the differences between their bills and deliver a plan to President Trump’s desk, with the aim of delivery by Christmas.
Congressional leaders raced the bill through the House and the Senate in a month, with a crush of changes coming in the 11th hour as Senate leadership worked to address the concerns of a few lawmakers whose support was critical to passage. Several changes were included to satisfy Ms. Collins, including a provision that will allow taxpayers to deduct up to $10,000 in state and local property taxes paid and allowing lower-income individuals to claim the medical expense deduction.
Senate Republicans passed a $1.5 trillion tax bill early Saturday morning that bestows massive benefits on corporate America and the wealthy while delivering mixed blessings to everybody else.
After a frantic round of negotiations, Republicans came together in near unanimity behind the landmark legislation. The final vote was 51 to 49, with Sen. Bob Corker (R-Tenn.) the lone GOP holdout. No Democrats voted for the bill.
The measure still has to be reconciled with an earlier House-passed version before being sent to President Trump. Yet in getting the bill through the Senate, Republicans succeeded where they failed earlier this year, when their efforts to repeal the Affordable Care Act collapsed in mortifying fashion.
This time, urged on by donors and fearful of facing voters in next year’s midterm elections without a legislative achievement to show, Republicans said time and again that failure was not an option.
“The American people wanted change,” said Sen. John Barrasso (R-Wyo.). “We were able to deliver.”
The centerpiece of the GOP plan is a move to lower the corporate tax rate from 35 percent to 20 percent, starting in 2019. The Senate tax bill would also temporarily cut tax rates for families and individuals until 2025.
But the bill would kill a number of tax benefits. It would subject fewer people to the estate tax, a levy charged on massive inheritances, but stop short of eliminating that tax altogether.
The most recent review of the bill by the Joint Committee on Taxation, Congress’s nonpartisan tax analysts, found that only 44 percent of taxpayers would see their burden reduced by more than $500 in 2019 but that high earners would fare much better than the poor under the bill.
And the bill makes other changes that reach far beyond the tax code itself. It repeals the individual mandate from the Affordable Care Act, a major change that was added in recent weeks as part of a broader GOP effort to dismantle the Obama-era law. The individual mandate creates penalties for many Americans who don’t have health insurance, but the repeal would leave 13 million more people uninsured. It authorizes oil drilling in the Arctic National Wildlife Refuge in Alaska. And by curtailing deductions for state and local taxes, it will put pressure on some state and local spending on education, transportation and public health programs.
Senate leaders had little margin for error, since they can lose only two GOP votes and still prevail in the closely divided chamber. Democrats are unanimously opposed to the bill, and took turns Friday delivering scorching floor speeches slamming it as a giveaway to the rich.
And as evening wore into night Friday with Republicans still fine-tuning the final language of the bill, Democrats exploded in outrage when Sen. Claire McCaskill (D-Mo.) said she received a list of planned changes from a lobbyist and not from Republicans in the Senate who were keeping all their decisions closely held.
A few minutes later, a 479-page draft of the changes leaked out to the public. It included several pages of hand-written changes to the bill. Democrats, who were effectively powerless in trying to stop the bill’s passage, tried to cast the last-second changes as boondoggles for corporations which had not been debated or explained.
Some of the hand-written changes were crammed in the margin and hard to decipher.
Sen. Jon Tester (D-Mont.) posted a video of himself on Twitter acting incredulous as he slammed the bill down on a table.
“This is your government at work,” he said in disgust.
While this narrow vote is a win for Republicans and does make it more likely that a tax cut bill will make it to the President’s desk before Christmas, it came at the end of a week in which the Senate came close to experiencing the same kind of legislative roadblock that it did on health care. For several days, the votes of a number of key Senators ranging from Jeff Flake in Arizona to Susan Collins in Maine along with a handful of others were in doubt. In some cases, it was due to specific provisions of the bill posed problems for people in their states. In others, it was due to the projections showing that the bill would add close to $1.5 trillion to the Federal budget deficit over the course of ten years combined with the impact that the proposed repeal of the Affordable Care Act’s individual mandate is projected to have on the ability of many Americans to purchase health insurance and on insurance premiums for millions more. According to a Congressional Budget Office, for example, that part of the bill would through at least 13 million people off insurance roles and ultimately lead to increased premiums and deductibles as insurance companies respond to the fact that younger, healthier Americans would be less likely to purchase insurance, thus increasing the risk premium for insurance companies and causing them to raise rates for the rest of the people in the insurance pool. In the end, though, leadership was able to make sufficient changes to pull most of the doubters over to the “Yes” side. The only Republican to vote “No” was Tennessee Senator Bob Corker, who of course is not running for re-election next year.
As for the merits of the bill, they leave a lot to be desired. In its present form, the Senate bill would add trillions to the Federal deficit and national debt at a time when we can hardly afford either one. Despite the claims of its advocates, the analysis makes clear that it will likely benefit high-income earners far more than it will benefit the middle class. Additionally, the claims that the cuts in corporate rates, which aren’t a bad idea in and of themselves, most likely will not significantly increase economic growth. In fact, most top corporate executives are on the record as saying that the savings they might receive from decreased taxes would likely be passed on to shareholders rather than invested in expansion or used to increase wages or increase hiring of new workers. Finally, contrary to the claims of Republicans, neither this bill nor the one passed by the House constitute “tax reform.” Neither bill simplifies the tax code. Neither bill will make it easier for individuals to fill out their tax returns. Neither bill simplifies the tax code. This is just another version of the same nonsense we’ve seen for some thirty years now. Congress played with rates a little, but the worst aspects of the tax code remain in place while throwing benefits to favored industries and lobbyists. Meanwhile, the rest of us are left with yet another version of “same crap, different day.”
As noted, there are significant differences between the bill the Senate passed last night and the bill the House of Representatives passed last month. Because of that, and because the GOP leadership in the House apparently doesn’t believe that the Senate bill could pass the House in its present form, the two chambers will now move forward with a conference committee composed of members from both parties in both chambers. The job of that committee will be come up with a bill that can pass both chambers even if only on a party-line vote. After that, the bill they agree on will have to pass both the House and the Senate in exactly the same form before it can be sent to the President’s desk. While there are still some hurdles in that process that will have to be overcome, it seems likely at this point that it ultimately will pass and that we’ll get the tax cuts the GOP wants before it heads into the midterm elections.