(Reuters) President Donald Trump’s drive for a big US tax cut package headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers demanded changes in exchange for their help in moving the measure forward.
Trump was due to lobby Republicans at their weekly policy luncheon in the US Capitol, with the Senate poised for a possible vote on tax legislation as early as Thursday.
The president has called on Republicans to deliver a tax bill to his desk before Christmas. The House of Representatives has already approved its version of the package, which would cut taxes for businesses and individuals.
But a Senate Budget Committee hearing on Tuesday, which Republican leaders have hoped will send legislation to a full Senate vote, has hit a potential hurdle with Republicans Ron Johnson and Bob Corker saying they may vote against the measure.
Their opposition could be the first major obstacle for the Republican tax overhaul in the Senate, where earlier this year political infighting prevented the party from overturning the Obamacare healthcare law.
Johnson and Corker both say they will back the tax cut package if their separate concerns are satisfied. Corker, a prominent fiscal hawk, wants a measure that would prevent the tax bill from causing the federal deficit to balloon. Johnson wants a better deal for so-called pass-through enterprises that include small businesses.
Senators were working “feverishly” to address concerns, Corker told CNBC on Tuesday morning.
“I know it’s important not just to me but numbers of members who want to make sure that if for some reason these projections are off - we don’t have the growth that’s been laid out, it doesn’t generate revenues - that we’re not passing on increased debt to future generations,” he said.
Two Republican “no” votes at the committee hearing would stall the effort, as Republicans control the 23-member committee by only one vote and no Democrats are expected to support the bill.
Republicans, who control both chambers of Congress and the White House, have yet to score a major legislative victory since Trump took office in January. After their failed push to repeal Obamacare, they are eager to score a win before next year’s midterm elections, when control of the House and the Senate is at stake.
Tax cuts, deficit rises
The Senate bill would slash the corporate tax rate to 20% from 35% after a one-year delay. It would impose a one-time, cut-rate tax on corporations’ foreign profits, while exempting future foreign profits from US taxation.
But it would also add more than $1.4tn to the federal deficit over the first decade, according to congressional analysis. Republicans have said that economic growth spurred by tax cuts would generate enough new tax revenue to eliminate any new deficit.
The nonpartisan Joint Committee on Taxation is not expected to release a full macroeconomic analysis of the tax bill head of a Senate vote.
As a result, Corker and other Republican deficit hawks, including Senator James Lankford, have been holding talks with Senate tax writers and the administration about adding a provision that would raise tax rates if revenues fall short of expectations.
Other lawmakers have expressed concern that the Senate bill could effectively raise, not cut, the amount of tax paid by some people because it would eliminate a popular federal income tax deduction for state and local tax payments. They are also concerned it could increase health insurance costs for people with medical conditions.
The Congressional Budget Office (CBO), another nonpartisan research unit of Congress, said the number of Americans with health insurance would fall by 13 million by 2027 under the Republican tax bill, which would repeal an Obamacare federal fine meant to encourage people to buy health insurance.
The CBO said this would make people with incomes below $30,000 net losers under the bill, and most of those earning more would be net winners, especially those with incomes between $100,000 and $500,000.
If the Senate manages to pass the tax bill, its version and the House version will have to be reconciled into a piece of legislation that both chambers must approve before it can be signed into law by Trump.