Today on the Hill: Tax Reform Moves to Senate Floor as ‘Revenue Trigger’ Emerges as Key Issue

The Senate’s tax reform bill cleared another hurdle yesterday, being approved out of the Senate Budget Committee on a 12-11 vote after Republican skeptics Sens. Ron Johnson (R-WI) and Bob Corker (R-TN) backed down from threats to vote against the bill in committee. However, Sen. Corker’s vote came on the premise of an emerging agreement to include a so-called ‘revenue trigger’ that would raise taxes should the anticipated economic growth from the package fail to boost government revenues as much as claimed by the bill’s proponents. That agreement is now a serious point of contention in the Republican caucus, setting deficit hawks such as Sens. Corker, Jeff Flake (R-AZ), and James Lankford (R-OK) against low-tax advocates such as John Kennedy (R-LA), Chuck Grassley (R-IA), and Pat Toomey (R-PA) – all of whom have already announced their opposition to the inclusion of the so-called trigger. While the tax reform package continues to sail through the legislative process, this significant policy hiccup will need to be resolved as the package now moves to the Senate floor.

 

Senate Majority Leader Mitch McConnell (R-KY) will be bringing the Senate’s version of the National Defense Authorization Act (NDAA) — a now defunct bill given that the Senate approved the House’s version last month — in order to bide time for Republicans to set up a game plan for floor consideration of tax reform legislation. A motion to proceed on the tax reform bill (H.R. 1) could come as soon as this afternoon, which would trigger a 20 hour debate window, followed by a vote-a-rama on proposed amendments. That timeline would put the bill on a path for a final up-or-down Friday, but the process should be considered to be in flux given the many moving pieces that are still in play. And as with the Affordable Care Act (ACA) repeal effort earlier this year, the bill may waver from surely dead to surely on the way to approval within only a few hours.  

 

The House has a relatively quiet day scheduled in the midst of the Senate’s excitement. Lawmakers will vote on the Senate-passed resolution to implement required workplace environment training for Members and employees of Congress following the avalanche of recent sexual harassment scandals. The resolution has bipartisan support and will be considered under suspension of the rules. A bill requiring congressional approval for mineral withdrawal in Minnesota forests will also be considered pursuant to a rule. The legislation is partisan and was approved on a party-line vote out of the Natural Resources Committee earlier this month.

The Senate’s tax reform bill cleared another hurdle yesterday, being approved out of the Senate Budget Committee on a 12-11 vote after Republican skeptics Sens. Ron Johnson (R-WI) and Bob Corker (R-TN) backed down from threats to vote against the bill in committee. However, Sen. Corker’s vote came on the premise of an emerging agreement to include a so-called ‘revenue trigger’ that would raise taxes should the anticipated economic growth from the package fail to boost government revenues as much as claimed by the bill’s proponents. That agreement is now a serious point of contention in the Republican caucus, setting deficit hawks such as Sens. Corker, Jeff Flake (R-AZ), and James Lankford (R-OK) against low-tax advocates such as John Kennedy (R-LA), Chuck Grassley (R-IA), and Pat Toomey (R-PA) – all of whom have already announced their opposition to the inclusion of the so-called trigger. While the tax reform package continues to sail through the legislative process, this significant policy hiccup will need to be resolved as the package now moves to the Senate floor.

 

Today on the Hill: Tax Reform Faces Budget Committee Test; Trump to Talk Tax Reform, Gov’t Funding with Congressional Leaders

The Senate’s route to considering tax reform legislation this week has become clearer over the past 24 hours, but its ultimate outcome still hangs in the balance. The Senate Budget Committee is scheduled to consider the bill this afternoon, which will be a crucial test given that two Republicans who have expressed reservations on the bill — Sens. Ron Johnson (R-WI) and Bob Corker (R-TN) — sit on the committee and could prevent the legislation from moving forward if they vote against it. Senate Finance Committee Chair Orrin Hatch (R-UT) said yesterday that “we’re gonna make them happy,” but did not go into detail on the changes that are being considered. Deficit hawks, such as Sen. Corker, have been discussing a so-called ‘trigger-mechanism’ that would raise tax rates if economic growth is lower than anticipated and leads to larger deficits, while Sen. Johnson is hoping for more favorable provisions for pass-through businesses. Should the bill secure their votes today in the Budget Committee, it will set up Senate floor consideration beginning tomorrow.

 

This Week on the Hill: Tax Reform Faces Crucial Test on Senate Floor

Last week’s much-needed break comes ahead of an anticipated legislative frenzy for the remainder of the calendar year. Republicans are racing to finish their tax reform push and the legislative calendar will be complicated by the expiration of government funding on Dec. 8. Given that Democratic votes will be needed for any funding package, expect for the minority party to seek concessions on issues such as a possible bipartisan healthcare fix and the protection of the Deferred Action for Childhood Arrivals (DACA) program. Currently, Congress is slated to be in session only 12 days for the remainder of 2017, but that could change if Congressional leaders want more time to finish their legislative projects.

 

Health Policy Report

The Week in Review

Both chambers of Congress were in recess for the Thanksgiving holiday. The most notable development in the absence of floor action was the formal release of legislative text detailing the Senate tax reform plan, which will likely appear on the Senate floor this week.

 

In RealClearPolicy: TRP’s Shea McCarthy Discusses the Implications of Tax Reform for Healthcare

Today, RealClearPolicy published an article authored by Thorn Run's Shea McCarthy that outlines the implications of implications of the various tax reform bills on the nation's healthcare system. With the Senate eyeing a vote on its version of a tax overhaul bill after thanksgiving, McCarthy noted that stakeholders should take the implications of the GOP's once-in-a-generation tax reform effort seriously. "Of particular note in this context is the repeal of the Affordable Care Act’s individual mandate, which the Senate has proposed as an offset, providing over $300 billion in savings due to millions fewer individuals receiving subsidized health insurance," wrote McCarthy.  "Additionally, a rarely discussed provision in congressional PAYGO rules could require over $135 billion in annual cuts to mandatory spending, targeting health-care programs including Medicare and ACA funding." McCarthy also discussed the political complexities of passing the bipartisan Alexander-Murray ACA stabilization deal, noting that the Senate Majority reached tentative agreement to hold a separate vote on the health-care deal negotiated by Sens. Lamar Alexander (R-TN) and Patty Murray (R-WA) after the Senate repeals the individual mandate in its tax reform bill.

 

Financial Services Report

Our Take

It is interesting to view the recent votes on Tax Reform through the historical prism of the last time we had comprehensive tax reform in 1986.   While a review of all the roll call votes show some party line votes, it seems like most of the votes were more strong bipartisan totals.   While we have shared our thoughts about the wisdom of using a “once in a generation opportunity” to pass temporary changes to the code privately with many of you, it seems telling that this tax effort is a reflection of the ideological “silo-ing” that continues to advance in our country.  

 

Health Policy Report

The Week in Review

Tax reform headlines dominated the week as both chambers took significant steps to advancing tax reform legislation. On Thursday, the Senate Finance Committee advanced the upper chamber’s legislation on a party-line vote after a contentious four-day markup.  That move came on the heels of the House approving its version of tax reform legislation on the chamber floor despite 13 Republican defections over the inclusion of a repeal of the state and local tax (SALT) deduction. Both versions include important provisions for the healthcare industry, which are broken down in detail below.

 

Today on the Hill: House, Senate Reach Landmarks in Tax Reform Push Ahead of Thanksgiving Recess

Washington will have a week to catch its breath after a breakneck news cycle closed yesterday with the House passing its version of tax reform, and the Senate Finance Committee finishing its markup of their tax proposal. The House passage was by a 227 to 205 margin with 13 Republican defections, featuring lawmakers almost exclusively from high-tax states that will be disproportionately hit by the elimination of the state and local tax deduction (SALT). Passage on the House floor is the last immediate step for lawmakers in the lower chamber, who will now wait on the Senate to attempt to pass their own tax reform package.

 

Today on the Hill: House to Vote in Key Day on Tax Reform

While tax reform has remained the dominant headline for most of the last month, today marks a particularly important day as the House aims to vote on its package and the Senate tries to mend the first few cracks in the Republican plan. Starting with the House, four hours of debate started last night ahead of an anticipated vote today. Republicans are confident that they will be able to approve the bill (H.R. 1) today on the strength of their majority, which will likely be their last action before breaking for the Thanksgiving recess next week. Republican leadership will be able to afford 22 defections and a whip count from The Huffington Post shows 10 Republicans expected to vote no, with another 5 “leaning” no and 10 undecided. The Republicans lined up against the tax proposal are almost exclusively from states that would be hit hardest by the reduction of the state and local tax (SALT) deduction used as a revenue raiser in the House plan. All Democrats are expected to vote against the plan.

 

Today on the Hill: Tax Reform Rewrite in the Senate Includes Individual Mandate Repeal; House Plan Reaches Chamber Floor

The Senate Finance Committee’s version of tax reform legislation got a significant rewrite yesterday that would provide for deeper tax cuts, but possibly embroil the plan in the political thicket on healthcare. Specifically, yesterday’s changes involve making a host of individual tax cuts temporary, boosting the child tax credit to $2,000, and perhaps most importantly, eliminating the Affordable Care Act’s (ACA) individual mandate for insurance coverage. By getting rid of the individual mandate, the Senate plan gains about $338 billion in revenue to help pay for other changes in the tax plan, but it would likely come at the cost of millions of more individuals lacking insurance and an increase in health insurance premiums for many consumers. Some conservatives, particularly in the House, have also balked at the idea of advancing the Alexander-Murray ACA stabilization package as a contingent part of the deal. The Finance Committee markup continues today; the latest chairman’s mark of the Senate’s legislation is attached.