Top GOP senator says election losses could complicate tax reform

WASHINGTON - House Republicans leaders scrambled Wednesday to patch a $74 billion hole they had created in their own tax plan, leaving them with a painful choice between scaling back the bill's benefits for individuals or reducing their proposed tax cuts for businesses.

The decision leaves lawmakers caught between nonpartisan estimates showing the bulk of the bill's tax cuts would go to businesses and the very wealthy, and demands from powerful industries and their lobbying arms looking to protect the breaks they've carved out in the House bill.

The House's scramble to move the bill forward comes as Senate Republicans said they planned to release their own tax bill Thursday, regardless of whether the House panel finishes its work. That bill, which is expected to differ significantly from the House measure, could create a political quandary for House Republicans, faced with voting next week on a tax bill with scores of controversial provisions, while another version sits across the Capitol that could be more palatable.

'It's double jeopardy,” said Rep. Ken Buck, R-Colo. 'You get hit by all the people who don't like the House bill, and then you get hit a second time by all the people who don't like the Senate bill.”

In the House, the trade-offs took on new urgency after Congress' nonpartisan tax accountant found that changes made to the bill since its introduction mean it would add $1.574 trillion to the deficit over a decade. That is $74 billion over the maximum amount of debt a GOP bill can add if Republicans want to take advantage of special rules to pass the bill through the Senate with 50 votes - a must given that Republicans hold only 52 Senate seats and Democrats have signaled broad opposition to the bill.

Republicans in both chambers will have to contend with the results of Tuesday's elections, in which state and local Republicans were drubbed by Democrats.

Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, said the losses could complicate the tax push. 'I mean, it could, because the elections went against the Republicans,” Hatch said Wednesday morning.

Asked whether he is feeling pressure to tilt the tax plan's benefits more toward the middle class, Hatch said, 'I think we've been moving that way anyway.”

Other top Republicans, including House Speaker Paul Ryan, R-Wis., said the election results underscored the importance of the GOP delivering on promised changes to the tax code.

'It doesn't change my reading of the current moment,” Ryan said of the elections during a morning event hosted by the Washington Examiner. 'It just emphasizes my reading of the current moment, which is: We have a promise to keep, and we have to get on with keeping our promise.”

Changes made to the House bill since it was released last week have largely benefited corporations at the expense of individuals.

While a change on Monday restored a $3.2 billion middle-class provision allowing those enrolled in employer-sponsored dependent-care savings plans to deduct up to $5,000 from their taxes, a revision on Friday rolled back individual tax cuts by nearly $82 billion by indexing individual tax parameters to a different measure of inflation that tends to grow more slowly.

Another amendment adopted Monday largely reversed a 20 percent excise tax levied on certain transactions between subsidiaries of multinational corporations. The tax, intended to prevent companies from shifting profits to lower-tax overseas affiliates, had generated strong resistance from powerful business interests.

Republicans say that the business tax cuts will drive economic growth, adding jobs and pushing up wages, thus creating benefits for Americans at large. But they have had to battle analyses showing that middle-class taxpayers would reap only a fraction of the bill's direct benefits, and that some of those taxpayers - such those claiming a deduction for medical expenses that stands to be repealed - would actually face a tax increase.

And although GOP leaders say that the bill will mostly pay for itself by increasing growth, that is based on speculative analyses that congressional scorekeepers have not endorsed.

Democrats have continually pounded the bill as a giveaway to the wealthy, and on Wednesday they pounced on the election results to warn of a middle-class backlash that would grow if Republicans continued their tax push.

'It should be a giant stop sign for the tax bill,” Senate Minority Leader Charles Schumer, D-N.Y., told reporters. 'Want to pass this tax bill? Want to hurt the suburbs? Make our day.”

Some Senate Democrats, buoyed by Tuesday's election results, again urged Republicans to let them join the negotiations in a bid to ensure easier passage of legislation.

'What are they afraid of? They have the majority,” Sen. Tim Kaine, D-Va., told reporters. 'It's not like we can buffalo amendments through unless we can convince them it's a good idea. It would be easier to get 60 votes in a true bipartisan process, and the product would be better - and because it's not reconciliation you could do it permanent. And it would be bipartisan. It would be easier to do that and not jam it through.”

Kaine's comments came the day after White House officials huddled with about a dozen moderate Democrats in a bid to make the legislation a bipartisan document. President Trump phoned into the meeting from Seoulin a bid to win over the Democrats, and acknowledge that he has consulted his own accountant about the potential changes in his own taxes.

Schumer, who has spent most of the year keeping his 48-member caucus unified against Trump and GOP policies, expressed confidence that Democrats would oppose the GOP bill.

'Every member is going to make up his or her mind,” he said. 'But I think unless the Republican bill gets a lot better, I'd be surprised if it gets Democratic support.”

The Republican push for tax reform 'is a lose-lose for them,” Schumer said. 'Even if they pass the bill, as people learn of all the things that are taken away, it's going to hurt them. But if they can't pass a bill, their ability to get things done is questioned even by the deep Trump supporters.”

There is another, controversial option for House Republicans as they search for a way to make the numbers work in their tax plan: use the bill to repeal the Affordable Care Act's individual mandate. That change, which would scrap a central piece of the health-care law often called Obamacare, would save the government $338 billion over 10 years - but it would also decrease the number of people with health insurance by 4 million in 2019 and by 13 million by 2027, according to the nonpartisan Congressional Budget Office.

That change, which Trump has pushed personally, would add to the degree of difficulty of passing the bill through the Senate. Multiple attempts to repeal the Affordable Care Act stumbled in the Senate, as Republican moderates balked at the scaling back of health benefits while the caucus's most conservative members complained it left too much in place.

Efforts to win over moderates on ACA repeal gained an additional complication Tuesday when 59 percent of voters in Maine, the home state of key Senate swing vote Susan Collins, R, voted to expand access to Medicaid under the Act.