Senate Republicans May Be One Vote Away From Passing Tax Bill

• The Senate will convene at 10 a.m. Friday to continue the debate on taxes, ahead of a possible final vote later in the day.

• Republicans seemed to be inching toward victory on Thursday and picked up the support of Senator John McCain of Arizona.

• But they faced a setback late in the day when they were left scrambling to find hundreds of billions of dollars in extra revenue to satisfy concerns about the bill’s deficit effects.

• Lawmakers are now mulling options that would result in a tax increase down the road, including a possible increase in the corporate tax rate and the revival of the alternative minimum tax on wealthy individuals and some companies.

• Early Friday morning, Senator Steve Daines, Republican of Montana, announced his support of the tax bill. A spokesman for another Republican holdout, Ron Johnson of Wisconsin, said Mr. Johnson also supports the plan.

The Senate once again appears poised to pass Republicans’ sweeping tax overhaul, after party leaders picked up the votes of two holdouts, Mr. Daines and Mr. Johnson. If Senator Susan Collins of Maine signs on to the bill, and no surprise opponents pop up at the last moment, Republicans would have 50 votes.

That is enough for a victory if Vice President Mike Pence breaks the tie, even if two deficit hawks in the party remain opposed to the bill: Senators Bob Corker of Tennessee and Jeff Flake of Arizona. It could also accelerate the rush to reconcile the House and Senate versions of the tax plan before a Dec. 12 special election in Alabama, where Republicans are in danger of losing a seat.

Mr. Corker and Mr. Flake have pushed to scale back the tax cuts in the Senate bill by as much as one-third, in the wake of a report from the congressional Joint Committee on Taxation that projected the bill would add $1 trillion to deficits over the course of a decade, even after accounting for economic growth. Their insistence has angered many Republican colleagues who do not want to reduce the $1.4 trillion tax cut package.

On Thursday night, Republicans were discussing several possibilities for changing the bill to address their concerns, including gradually raising the corporate tax rate in later years in order to save as much as $500 billion.

If the bill proceeds with Mr. Corker and Mr. Flake opposed, it would have no margin for error in the event of a second Senate vote, following a conference with the House to work out the bills’ differences. That could prove precarious for Republicans: Their candidate in the Alabama election, Roy Moore, is dogged by sexual misconduct allegations and locked in a tight race with Democrat Doug Jones.

If Mr. Moore loses and the seat flips to the Democrats before the tax bill is sent to President Trump’s desk, Republicans would either need to win over Mr. Corker or Mr. Flake, or to persuade House Republicans to accept the bill passed by the Senate without changes.

Republican leaders ended Thursday with the same problem they started with: They still need to secure 50 votes to be able to pass their tax bill.

Their effort appeared to be gaining momentum on Thursday, with talk of a final vote later that night or early Friday.

But by the end of the day, they were contending with twin setbacks, both involving how the bill would affect federal budget deficits.

The congressional Joint Committee on Taxation said in an analysis released on Thursday afternoon that the legislation would add $1 trillion to federal budget deficits over a decade, even after accounting for economic growth.

In addition, a provision meant to prevent ballooning deficits ran into parliamentary problems. The provision would have increased taxes if economic growth fell short of expectations, but it was deemed by the Senate parliamentarian to run afoul of budget rules that must be followed if the bill is to be shielded from a Democratic filibuster.

Without the so-called trigger, the votes of a handful of Republicans, including Senator Bob Corker of Tennessee, appeared at risk.

“Senator Corker has been pretty clear he doesn’t want any deficit spending,” Senator John Cornyn, Republican of Texas, said on Thursday, adding that he did not agree with the Joint Committee on Taxation’s assessment.

To pass the tax bill in the Senate, Republican leaders can lose only two of their members, assuming Democrats are unified against the measure.

The Senate will convene on Friday morning and the debate on taxes will continue. At some point, the Senate will undertake a marathon of amendment votes known as a vote-a-rama. Eventually, there would be a final vote on the legislation.

But in the meantime, Republicans need to decide how they want to change their bill. To satisfy Mr. Corker, for example, Republicans were discussing putting in place tax increases that would take effect some years from now, a step that would soften the deficit effects of the legislation.

Will they decide to raise taxes?

The options under discussion to satisfy the deficit hawks could essentially result in a tax increase down the road. Lawmakers have talked about raising the corporate tax rate above 20 percent after a period of years. There’s also discussion about reviving the alternative minimum tax, or A.M.T., on high-net individuals and some companies.

Both of those ideas are unlikely to sit well with some Republicans, including those in the House, who could be criticized for essentially voting to increase taxes.

Lawmakers may decide that’s a risk worth taking or they could ultimately decide to jettison the deficit hawks’ concerns and lose their votes.

Mr. Daines and Mr. Johnson had objected to the bill because of how it treated pass-through businesses, whose profits are distributed to owners and taxed at individual rates.

The Senate tax bill allows pass-through owners to deduct 17.4 percent of their business income as a way of lowering their taxes. Republicans were planning to increase the deduction to 20 percent to address the concerns over how pass-through owners were being treated by the bill.

Now, the deduction is to be raised to 23 percent, a spokeswoman for Mr. Daines said.

“After weeks of fighting for Main Street businesses including Montana’s farmers and ranchers, I’ve decided to support the Senate tax cut bill, which provides significant tax relief for Main Street businesses,” Mr. Daines said in a statement on Friday morning.

Mr. Johnson now supports the Senate bill as well, a spokesman said on Friday morning.

As Republicans mull changes to their tax plan, the spotlight will focus on several senators with varying concerns.

Republican leaders do not need to win over all of these lawmakers. In fact, they could decide that some demands are simply not worth meeting — assuming they can satisfy other Republicans and therefore get the 50 votes they need. Vice President Mike Pence can also provide a tiebreaking vote.

At least a handful of senators have expressed concerns about the deficit, including Mr. Corker and Senators Jeff Flake of Arizona and James Lankford of Oklahoma. Now that the trigger is dead, Republicans may need to come up with another idea to protect against piling up debt as a result of the tax overhaul.

Then there is Ms. Collins, a moderate Republican who has her own concerns about the tax overhaul. She wants the bill to allow individuals to deduct up to $10,000 in property taxes, and adding that provision could help win her over.

Content originally published on https://www.nytimes.com/2017/12/01/us/politics/senate-tax-bill-debate-vote.html by THE NEW YORK TIMES