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House passes GOP tax bill, upping pressure on struggling Senate effort

The Washington Post logoThe Washington Post 11/17/2017 Mike DeBonis, Damian Paletta

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Video by Associated Press

The House passed its version of the Republican tax overhaul Thursday, notching a key win for President Trump and House Speaker Paul D. Ryan (R-Wis.). But obstacles remain in the Senate, which is refining its own version of the legislation amid objections from key GOP senators.

The bill passed with 227 votes in favor and 205 against. Thirteen Republicans voted against the bill. No Democrats voted for it.

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Trump and Republican leaders in Congress are aiming to pass a bill that would cut taxes by as much as $1.5 trillion by the end of the year. Both the House and Senate bills deliver the majority of the cuts to businesses and wealthy Americans, but there are significant differences between the bills that will have to be resolved.

Trump visited the Capitol shortly before the early-afternoon vote, speaking to Republican lawmakers behind closed doors to urge them to support the cornerstone of his economic agenda.

Trump's parting words to Republicans, according to a person in the room who was not authorized to comment publicly: "I love you. Now go vote."

Even before the vote, GOP leaders were confident that the pep talk wasn't necessary. Fewer than a dozen of the 240 House Republicans said they were opposing the bill or had lodged strong objections, as of Wednesday morning. The GOP could have lost up to 22 votes and still passed the bill Thursday.

"There's not a lot of minds to change in there," said Rep. Tom Cole (R-Okla.)

Cole said that Trump's remarks were upbeat and packed with one-liners and that the president did not include the type of threats he delivered when he visited lawmakers ahead of a crucial health-care vote.

Trump thanked party leaders, expressed optimism about the Senate bill and said he believed that Congress ought to move to "welfare reform" after completing the tax bill, according to several members in the room who spoke on the condition of anonymity to discuss the private meeting. He also mentioned his trip to Asia, including his efforts to free several UCLA basketball players accused of shoplifting in China, the members said.

On Wednesday, House Majority Whip Steve Scalise (R-La.) the vote count was "looking real good" after weeks of working with individual members to explain the plan and address objections that ranged from the parochial to the fundamental.

"I think most people know how important it is to cut taxes and get the economy moving again, and this bill does that," he said.

House Republicans, however, voted on the bill with key questions unanswered.

Trump and GOP leaders have long claimed that their plan will create economic growth that will offset the bill's $1.5 trillion revenue cut, negating any long-term impact on the national debt.

House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told reporters last month that "dynamic scores" of the tax plan, taking economic growth into account, would be available before a floor vote. But neither the Joint Committee on Taxation nor the Trump administration has released any analysis showing whether the GOP's economic claims are viable.

One optimistic study of an earlier iteration of the House bill, by the conservative-leaning Tax Foundation, found that it would, in fact, create 890,000 jobs and marginally increase wages and growth over the long term. But that would offset only a portion of the bill's total cost, adding roughly $1 trillion to the budget deficit over the long term.

The House bill delivers more than 80 percent of its overall cuts to corporations, business owners and wealthy families who are subject to the federal estate tax, according to estimates released by the Joint Committee on Taxation, Congress's nonpartisan tax analyst. But most middle-class Americans would see an immediate tax cut because of a lowering of individual tax rates, the near-doubling of the standard deduction and a larger child tax credit.

But many households that itemize their deductions — taking advantage of write-offs for state income taxes, medical expenses, and more — could see immediate tax increases. In future years, the benefits of the bill for individuals wane because of the phaseout of a key tax credit and the use of a slower measure of inflation to recalibrate bracket levels.

It remains unclear whether the final tax bill will resemble anything like what the House passed Thursday. A Senate version of the bill, titled the Tax Cuts and Jobs Act, contains major differences — including a controversial repeal of the Affordable Care Act's mandate that individuals purchase health insurance.

That provision would save the government about $300 billion over the next decade as it paid out less in insurance subsidies for low- and middle-income Americans, according to the nonpartisan Congressional Budget Office. The change would also, according to the CBO, result in 13 million more Americans going without coverage.

The Senate bill also takes a considerably different approach to the taxation of multinational corporations, as it phases in a lower 20 percent corporate tax rate and phases out virtually all individual tax cuts after 2025 to comply with the chamber's complex budget rules. Republican senators say those individual tax cuts will eventually be extended by a future Congress.

And with key Republican senators balking, and the GOP holding only a two-vote Senate majority, the bill could still change drastically. Sen. Ron Johnson (R-Wis.) said Wednesday that he was unwilling to support either the House or Senate bills unless major changes are made to the way businesses are taxed, while Sen. Susan Collins (R-Maine) reiterated that it would be "a mistake" to pursue the individual mandate's repeal in the tax bill.

Several other GOP senators, including Bob Corker (Tenn.), John McCain (Ariz.) and Lisa Murkowski (Alaska), have yet to declare their support for the bill.

The Senate Finance Committee continued a multiday meeting to debate and amend the bill on Thursday. Chairman Orrin G. Hatch (R-Utah) said debate over the bill could continue into Friday, but he was hopeful they would end debate in his panel on Thursday.

Republicans on the panel were able to block numerous amendments by Democrats that sought to change how the tax cuts would be delivered. One amendment, offered by Sen. Ron Wyden (D-Ore.), would make tax cuts for individuals permanent and make tax cuts for corporations temporary. The bill currently makes tax cuts for companies permanent and forces tax cuts for individuals to expire in 2026.

But Wyden's amendment was defeated by a 14-12 vote, with Hatch accusing Wyden of trying to put a "poison pill" in the bill by cutting the corporate changes short. Hatch said he would allow Democrats to make the tax cuts for individuals permanent but only if it doesn't impact the corporate tax cuts. This would add hundreds of billions of dollars to the debt, and could become a difficult vote for Democrats.

They are expected to have that debate once the bill goes to the Senate floor next month.

One political pothole in the Senate bill is its complete elimination of the deduction for state and local taxes, also known as "SALT." That could repel House Republicans representing such high-tax states as New York, California and Illinois who are currently supporting the House bill, which preserves a limited deduction for up to $10,000 of property taxes.

Republican leaders expect to resolve the differences between the House and Senate bills, should they emerge, in a conference committee. Brady and Scalise both say that the final compromise bill will include the House SALT provision.

"We have a lot of good members who are for this bill only because we addressed and fixed the SALT problem," Scalise said. "No knock on [the Senate] bill, but it's not something they had to focus on, and it will have to be in a final product."

But Democrats, who have railed against the bill's benefits for corporations and the wealthy, warned that dozens of Republican members would pay the price if the deduction was modified at all.

"Democrat or Republican, they just basically said 'drop dead' to the Northeast and West Coast," said Rep. John B. Larson (D-Conn.), a senior member of the Ways and Means Committee.

The leaders of the moderate Blue Dog Caucus, who had previously signaled a willingness to work with Republicans on a tax plan, said Wednesday that the group "simply cannot support a bill that, by every kind of measurement, has been determined to add over $2 trillion to the deficit at the expense of middle-class Americans."

"We are not convinced that the middle class gets a fair shake when it comes to the deductions that have been eliminated, where the tax brackets are set, and whether and where jobs will be created," said the joint statement from Reps. Jim Costa (D-Calif.), Henry Cuellar (D-Tex.), and Daniel Lipinski (D-Ill.).

Paul Ryan wearing a suit and tie: House Speaker Paul D. Ryan (R-Wis.) points to boxes of petitions supporting the Republican tax bill that is set for a vote Thursday as he arrives for a news conference on Capitol Hill in Washington, on Tuesday, Nov. 14, 2017. © J. Scott Applewhite/AP House Speaker Paul D. Ryan (R-Wis.) points to boxes of petitions supporting the Republican tax bill that is set for a vote Thursday as he arrives for a news conference on Capitol Hill in Washington, on Tuesday, Nov. 14, 2017.
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