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Senate Republicans' Tax Plan Has Been Upended, For Now

A new projection about the plan's impact on the deficit, along with a procedural hurdle, have at least temporarily complicated the bill.

Last updated on November 30, 2017, at 8:21 p.m. ET

Posted on November 30, 2017, at 7:30 p.m. ET

Aaron P. Bernstein / Reuters

A report from the Senate's tax scorekeepers and a ruling from the Senate parliamentarian have thrown a wrench into Republican tax plans.

The late developments Thursday have pushed Republican senators to discuss building automatic tax hikes into their plan to cut the corporate rate, in order to reduce the bill's impact on the deficit.

Republican leaders now don't plan for additional votes on the bill until 11a.m. Friday, after originally saying they planned to have a final vote either Thursday night or early Friday.

For days, Sen. Bob Corker has said that he would work to get a "trigger" included in the tax legislation, which would have increased corporate tax rates in the event that the economy doesn't grow fast enough to more completely mitigate the tax cuts impact on the deficit. The proposal was not finalized, but it was believed that the trigger would allow for $350 billion of tax increases if revenue growth fell short of mostly wiping out the added debt from decreasing tax rates.

But Republican senators found out Thursday night that the Senate parliamentarian, who is in charge of making sure legislation abides by prescribed ground-rules, would not allow a trigger mechanism into the bill. The parliamentarian determined the trigger would not be compliant with the Byrd Rule, which allows bills that fit certain narrow criteria to advance with a 51-vote majority.

Sen. David Perdue said that after the parliamentarian ruled out a trigger, there would instead be an "automatic kick in at some point in the future," but the details are still being worked out.

The demise of the "trigger" was revealed after an unexpectedly dramatic procedural vote on whether the tax bill should go back to the finance committee. Democrats had all voted yes on the proposal, while all Republicans voted no, aside from three — Corker, Ron Johnson, and Jeff Flake. The three did not vote for an extended period, huddling with Republican leadership and the parliamentarian, before eventually voting with the rest of their caucus and advancing the bill one step further.

Another factor that played into the drama on the floor was a report released soon before the vote from The Joint Committee on Taxation. The report found the Senate tax bill would increase deficits by about $1 trillion, even with effects counted from growth.

Republicans en masse rejected the report's conclusion immediately after it was released, saying it wasn't optimistic enough about the tax bill's potential impact on growth. But Senate Majority Whip John Cornyn said that it had affected Corker's thoughts on the bill, leading to his trepidation on the floor.

"Senator Corker has been pretty clear he doesn't want any deficit spending," Cornyn said after the drawn-out floor vote "He's latched onto the dynamic score by the JCT, even though I believe it's clearly wrong, in my opinion."

Cornyn said that discussions between Corker and Toomey on how to avoid growing the deficit without a trigger option were ongoing.

"Most of us are convinced" that the tax bill will meaningfully increase the growth rate of the economy, Sen. Mike Rounds said. "If we didn't think that, we wouldn't be doing the work on the bill."

James Lankford, who has also publicly suggested that he was worried about the tax bill's effect on the deficit, said earlier Thursday he was "just surprised at how small" the bill's projected effect on growth would be.

Only three Republicans would need to vote against the bill to kill it, making the threat from Corker, Flake, Johnson, and potentially Lankford enough to cause Republicans to rework the bill to appease concerns about the deficit.

Sen. Lindsey Graham said Thursday night that Corker's "concerns are real," and shared by other Republicans.

No Republicans had immediate details on how a new automatic tax-hike provision would work, in lieu of the trigger. But Cornyn suggested a "stair-step" model, where starting in the sixth year after the corporate tax cut goes into effect rates might increase by half a percentage point per year. No senators discussed what would happen after ten years, when the Senate tax bill envisions the 20 percent corporate rate becoming permanent.

Sen. Mike Rounds said late Thursday that he wasn't "sure whether there’s consensus" on how to replace the trigger, but that he thinks leadership will "have the language that would cure the issue in hand."

While Republicans have been largely critical of the JCT's conclusions, they may have to embrace them in order to get the bill passed.

Asked about the state of the bill Thursday night, Graham said, "They’re all kinds of ways to fix this, you can’t fix failing, if we fail that can’t be fixed."

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