Senate GOP tax bill hurts poor, CBO says; Trump signals changes

WASHINGTON — Senate Republicans were working Monday to lock up votes for their tax overhaul plan, which they still hope to have on President Trump's desk before Christmas.

But getting those votes locked up appeared more difficult as an official congressional scorekeeper said people with lower incomes fare worse from tax reform than previously estimated.

Trump, who signaled that further changes would be made to the legislation,  met Monday with Republican members of the Senate Finance Committee. He heads to Capitol Hill on Tuesday for lunch with the full Senate Republican Conference.

Senators leaving the White House meeting expressed confidence they would soon get a tax bill to Trump's desk.

Asked if that meant by Christmas, Sen. Orrin Hatch of Utah, the committee chairman, said: "I hope so."

At a later event, Trump called the bill "a tremendous tax cut" and "the biggest tax reduction in the history of our country."

VIDEO: What's going on with the Trump tax plan?

A floor vote has not been scheduled, but the last preliminary step will come Tuesday in the Senate Budget Committee, which meets to merge the tax bill with one that would open part of the Arctic National Wildlife Refuge for oil exploration.

That step is part of the process known as "reconciliation" that would allow the Senate to pass a tax bill and the oil exploration bill with only 50 votes, plus one from Vice President Mike Pence, instead of the 60 votes that would be needed under normal procedure if Democrats were to filibuster the bill.

Passage with 50 votes means Republicans cannot afford to lose more than two of their own senators, however, and more than that were wavering.

Sen. Ron Johnson, R-Wis., has said he would not support the bill in its current form because it provided bigger tax breaks to large corporations than to companies, known as pass-throughs, whose owners report business income on their personal tax returns.

Sen. Steve Daines, R-Mont., raised a similar issue.

"I want to see changes to the tax cut bill that ensure Main Street businesses are not put at a competitive disadvantage against large corporations," Daines said in a statement. "Before I can support this bill, this improvement needs to be made."

The treatment of pass-throughs was one area where Trump signaled revisions are coming.

"With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well," Trump wrote on Twitter.

Speaking after lunch with Trump, Hatch said the Republicans do not have a Plan B.

"We intend to get to get to 50 (votes)," Hatch said, adding they were working with Johnson and others who have voiced skepticism about the tax plan.

"We always have to deal with everybody," Hatch said. "We'll see what happens."

Sen. John Cornyn, R-Tex., said the Senate hopes to vote this week and then work with the House on differences that remain.

The Senate plan makes "substantial improvements" to the House version, Cornyn said, and "we'll work through those when we get to a conference committee with the House."

VIDEO: Differences between House, Senate tax plans

Another wavering senator is Bob Corker, R-Tenn, who said when he voted in October for a budget resolution that he wanted the tax changes to be permanent _ some of which are not _  and for the tax bill to reduce deficits when economic growth is taken into account, which it doesn't. He complained at the time that tax writers had not cut enough loopholes to offset lowering rates. 

Every study by outside analysts has shown that the bill would increase deficits in the coming decade, even when the "dynamic" effects of economic growth are included.

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The Tax Foundation, a think tank whose research has been cited often by the tax bill's proponents, said even when factoring in growth, the bill would increase deficits by $516 billion over the coming decade.

The Senate measure also would make the reductions in tax rates for individuals temporary — the current tax code would kick back in after five years — while reductions in corporate rates would be permanent.

Corker serves on the Budget Committee, and his vote on the reconciliation measure there Tuesday could signal whether changes under discussion have secured his support.

“Senator Corker spent the entire Thanksgiving break on the phone with his Senate colleagues and with the administration working on a responsible path forward," Corker spokeswoman Micah Johnson said. "While more work remains, all parties are hopeful that the final bill will be good for our country.”

Meanwhile, a new study by the Congressional Budget Office breaks down the Senate bill and provides new details about the impact of repealing what's known as the Obamacare mandate, the requirement in the 2010 Affordable Care Act that everyone have health insurance.

READ THE STUDY: Congressional Budget Office Cost Estimate

The Senate added the Obamacare measure to the bill because CBO had determined it would save the government $318 billion over the coming decade, and the Finance Committee used those dollars to offset other changes to tax rates. The committee had to keep the total revenue loss over the coming decade below the $1.5 trillion to comply with the October budget resolution.

CBO estimates that without the health-insurance mandate, the government would spend less on Medicaid and subsidized private insurance because healthy people who would be eligible for the coverage would not sign up for it unless they had to. The agency also predicted some people who want coverage would not be able to afford it because the smaller number of people in the marketplace would cause premiums to rise 10% a year for those who remain in government-managed exchanges.

Combined, there would be about 4 million fewer people with coverage in 2019, growing to 13 million by 2027.

In estimating the overall impact of the tax bill, including the repeal of the insurance mandate, CBO said that everyone earning under $30,000 comes out worse than they would be with no changes in 2019. And by 2027, everyone earning under $75,000 comes out worse.

Conversely, people in every income group earning more than $75,000 would pay less in taxes or get bigger benefits such as credits over the coming decade under the bill, CBO said. The report found bigger losses for people at the bottom than a similar study by the Joint Committee on Taxation released earlier this month.

For example, where JCT said people making $40,000 to $50,000 would pay $4.1 billion more in taxes in 2027, CBO estimated that increase as $5.3 billion. 

While relying on the CBO's estimate of savings to offset tax changes, Senate Republicans have criticized the office's estimates of the impact on insurance markets and rejected the argument that people with lower incomes would be hurt by the tax bill.

“Given that the nonpartisan Joint Committee on Taxation has already said that doing away with Obamacare’s individual mandate will not strip subsidies from low-income Americans, the logic in this report is confusing and erroneous," said Julia Lawless, a spokeswoman for Finance Committee Chairman Orrin Hatch,

USA TODAY reporter Michael Collins contributed to this story.

© 2017 KGW-TV


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