Senate Republicans have a new strategy to attack Democrats on a still developing tax measure: using past legislation against them.
The campaign could be successful. Some Democrats say the GOP argument makes sense, and several say they are open to the possibility of supporting a final tax bill.
Unlike the recent GOP attempt to overhaul the U.S. health insurance system, there are several proposals Republicans are considering that have obtained previous Democratic support, at least at a basic level. Notable among them are a tax on foreign earnings by American companies and cutting the corporate tax rate.
And Republicans have pounced.
Senate Majority Leader Mitch McConnell’s office, for example, recently sent out a series of quotes from several top Democrats on the need for a tax overhaul. Included at the top was a joint statement from Ohio Republican Rob Portman and Senate Minority Leader Charles E. Schumer.
“Our current system of international taxation was put into place during the Kennedy Administration and reflects the realities of a different era. By standing still, the United States has fallen behind other countries that have adopted modern international tax rules,” the senators wrote in a 2015 white paper.
Some Democrats even see validity in the Republican attacks.
“I think they are right,” Missouri Sen. Claire McCaskill said. “There are things in this that many of us support.”
She added, however, that there were several parts of the GOP tax framework that were concerning, and she also took specific issue with the secrecy surrounding the Republican negotiations.
“They don’t think that we have good faith. … But it feels like they aren’t acting in good faith,” McCaskill said. “As far as I’m concerned, this is not a partisan exercise.”
Other Democrats sang a similar tune, and also cited the process, not the policy, as the most egregious offense by Republicans at this stage of the debate. Some said their focus at this point is less on the specific policy and more on the overall effect of the still unreleased legislation.
“Can’t add to the debt. If we are going to add to the debt, then we are defeating the purpose,” Montana Sen. Jon Tester said.
Democratic political operatives say it is beneficial for their members, at this time, to leave the door open on the tax proposal and let Republicans fight among themselves on key details.
The Democrats who have worked on tax proposals in the past, however, still see broad discrepancies between their legislation and the framework the GOP is planning to advance.
“Some of this is kind of laughable. I’ve seen the comparisons,” said Oregon’s Ron Wyden, the top Democrat on the Senate Finance Committee.
The rhetoric between the two parties on the tax effort has not been nearly as bitter as it was at this stage of the health care debate.
Democrats have so far focused their attacks on Republicans primarily on a proposal to eliminate the state and local tax deduction. But while that deduction is used by middle-class income earners, the benefit is heavily skewed to the higher-income brackets, a fact that GOP members say significantly undercuts the Democrats’ argument.
Outside tax experts see a greater possibility for at least some work across the aisle on this legislation than on the previous attempts to repeal the 2010 health care law.
“It’s never easy to get bipartisan things done in Washington, period. And we should not expect this policy area to be such an exception,” said Scott Greenberg, senior analyst at the conservative-leaning Tax Foundation’s Center for Federal Tax Policy. “With the tax system, there is at least some shared common ground.”
Some GOP members are even talking about adding Democratic priorities to the bill. Sen. Lindsey Graham, for example, came out last week in support of tying a minimum wage increase to the tax package, a provision that would likely face stiff opposition from some Republicans.
“If you add a minimum wage component to it, I think it will make it more attractive,” the South Carolina Republican said.
But conversations between the two parties at this stage are largely nonexistent or very preliminary. The White House has sought to curry favor with several vulnerable Democrats who are up for re-election next year, such as McCaskill and North Dakota Sen. Heidi Heitkamp. But members have left those meetings still seeking answers on key details.
Despite the appearance of an olive branch, the GOP is still planning to use the fast-track budget reconciliation process to move a tax bill with only Republican support — something Democrats say inherently creates bad blood between the two parties.
The Senate on Thursday evening passed the fiscal 2018 budget resolution, the first step in the reconciliation process.
There are a number of recent Democratic proposals with provisions that at least mirror ones Republicans are considering for their measure.
Former President Barack Obama in 2012, for example, proposed decreasing the corporate tax rate to 28 percent — the GOP is eyeing a rate of around 20 percent — and implementing a global minimum tax, a concept under discussion by Senate Republicans.
The GOP has also suggested a one-time tax on foreign profits of U.S.-based corporations held overseas. It’s a proposal that has obtained support in the past from both Obama and Schumer.
But there are some discrepancies among key proposals supported by both Republicans and Democrats that could be a driving wedge. The GOP framework, for example, calls for doubling the standard deduction. A prior proposal from Wyden called for tripling it.
Members will have a chance to weigh in on the legislation when it proceeds through the Senate Finance Committee, but that may not be enough for some Democrats.
“If you start with a partisan markup where the middle class are deep in the hole, it’s very hard to fix that with a lot of tinkering,” Wyden said.
And until full legislative text is released, it is difficult to determine the exact effect of the GOP plan, making it harder for those across the aisle to weigh their support.
A House Republican tax bill is expected to be released next week, marked up the following week and brought to the floor the week after that, Ohio GOP Rep. Jim Jordan said Monday night.
The former Freedom Caucus chairman said he and other members of the hard-line conservative caucus will support the Senate budget resolution that the House is expected to vote on Thursday, thanks to assurances that the tax bill will move under that accelerated timetable.
“It basically boils down to the nature of the United States Senate and what we know was likely to come out if there was a conference committee, which was probably going to be a bill closer to what the Senate had put together,” Jordan said.
The House Freedom Caucus did not take an official position on the budget during its weekly meeting Monday. Caucus Chairman Mark Meadows told reporters afterward there will be “yes” and “no” votes coming from the caucus but he expects the budget to pass. The North Carolina Republican said he has not received any urgent messages from the whip team, suggesting leadership has the necessary support for the budget vote.
Despite the anticipated quick release, Republicans have yet to make some key decisions, such as what to do with the state and local tax, or SALT, deduction.
New Jersey Rep. Tom MacArthur, who opposes repealing the deduction, said Ways and Means Chairman Kevin Brady told him Monday about the proposal he was currently considering but he declined to reveal what that is.
“In the end, he’s counting votes and that’s determining how much he moves,” MacArthur said.
The congressman said more than 21 members are standing united in opposition to repeal of the SALT deduction, which would be enough to sink a measure if no Democrats support the tax bill. Republicans currently hold 239 seats with vacancies stemming from the resignations of GOP Reps. Tim Murphy and Jason Chaffetz.
Meetings to discuss the SALT deduction are taking place Tuesday and later in the week, MacArthur said.
One idea that has been discussed is placing an income cap on who qualifies for the deduction. Proposals that focus on allowing property taxes to be deducted and excluding income taxes also remain on the table, MacArthur said. He said the Joint Committee on Taxation is scoring one of those proposals this week, but declined to say which.
“We have to have a compromise before a bill comes out,” he said. “You don’t want a bill to fail.”