Many House Republicans planning to vote “yes” on their tax bill Thursday are doing so with the understanding the measure is far from perfect and hoping their concerns will be addressed later during House and Senate conference negotiations.
Sound familiar? It was the same strategy several members employed in voting for a bill in May to partially repeal and replace the 2010 health care law.
The increasingly elusive conference committee — the House and Senate have only formed one so far this Congress, on the defense authorization bill — is supposed to be the backstop for legislation moving through Congress.
But more often than not on major legislation, the Senate gets the last word, and the House is forced to accept the other chamber’s version.
House GOP leaders have promised their members that won’t be the case with the tax code rewrite.
“We’re going to go to a conference committee and we’re going to address all these issues,” Speaker Paul D. Ryan said Tuesday. “And we’re taking feedback from all of our members on an ongoing basis because, again House, then Senate, then conference committee and that’s the process we have in front of us.”
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Some members are skeptical about the chances for a conference committee based on past practice.
“There’s always skepticism,” Freedom Caucus member Dave Brat said. But the Virginia Republican added that Ryan has been clear on the need for a conference, particularly to address differences between the House and Senate on the state and local tax deduction. The Senate bill would fully repeal the tax break, which members acknowledge would be fatal to final passage in the House.
Other members wonder whether the conference will be able to produce some of the bigger changes they’re seeking, given the ambitious timeline. Republicans are aiming to send a finalized bill to the president’s desk by Christmas.
The House is expected to pass its bill Thursday in a vote that could be somewhat close, while the Senate is hoping to pass its legislation the week after Thanksgiving.
If all goes according to the GOP’s plan, that would leave just two more legislative weeks for the chambers to reconcile their differences in conference committee and pass whatever is agreed on, all in the middle of high-stakes negotiations over government funding.
“I do not think it will take long until we come back with that final version and move that to the president’s desk in December,” House Majority Leader Kevin McCarthy told CNBC on Tuesday.
No sure thing
Even if leaders follow through on their commitment to go to conference over the tax bill, there’s no guarantee that lawmakers who are still requesting changes will get what they want.
It has been difficult enough for House and Senate tax writers to strike a balance within their separate bills that they believe can pass, so they face a daunting task trying to agree on one version that can clear both chambers.
“There are so many issues, this is so complex. … This is one that I really think needs to go to conference,” said Florida GOP Rep. Mario Diaz-Balart, who is voting for the House tax bill. “But there is never a guarantee that what comes out of conference can pass both chambers.”
A conference committee is like a high-stakes Jenga game. You remove or add one building block (provision) and the entire structure (bill) could crumble. The balance has to be just right to ensure any changes don’t result in lost votes or lost money.
Tax writers are working under strict budget reconciliation rules, under which the tax bill cannot add more than $1.5 trillion to the deficit over 10 years. After that time period, the measure must be deficit-neutral to comply with the Senate’s Byrd rule.
The Senate on Tuesday night illustrated just how difficult that is to adhere to when it released changes to its bill designed to comply with the Byrd rule that would sunset the individual tax cuts in the bill after eight years.
House GOP members hadn’t really digested the Senate changes as of midday Wednesday. And the changes they’re seeking in conference would mostly cost money and make it harder for tax writers to comply with the Byrd rule.
“It’s not going to be easy,” said Michigan Republican Mike Bishop, a Ways and Means member.
He noted that House Republicans know there will be a lot of work to do when the bill gets to conference and part of that involves compliance with the Senate rules. “That’s the hand that we’ve been dealt,” Bishop said.
Freedom Caucus Chairman Mark Meadows said many members of his hard-line conservative group are voting “yes” Thursday with the caveat that at least some of their outstanding concerns need to be addressed before they’ll support final passage.
“We have enough votes to make sure it doesn’t pass on final passage if they’re not addressed,” the North Carolina Republican said.
The Freedom Caucus did not take an official position in support of the tax plan, but the conservative Republican Study Committee did.
RSC Chairman Mark Walker said the No. 1 thing his caucus will be pushing for in conference is repeal of the individual mandate, which is not in the House bill but was added to the Senate version.
“Other things that are still important to us is the phase out of the death tax, making sure there’s no delay in the business rate reduction as well,” the North Carolina Republican said, using a term for the estate tax popular with many conservatives.
Two items in the bills that will take the most work to reconcile are provisions addressing small-business tax relief — the House creates a special rate for pass-through entities, while the Senate offers a deduction — and preventing international tax avoidance.
On the latter, GOP Rep. Greg Walden said he has concerns some of the provisions affect companies like Intel and Nike, both of which do business in his eastern Oregon district. “There will be room for some adjustments as we go forward,” he said, explaining his “yes” vote.
New Jersey Republican Tom MacArthur is also voting “yes” Thursday despite lingering concerns about the House plan to reduce the mortgage interest deduction for new homes to $500,000 of debt and to eliminate the deduction for second homes. Since the Senate doesn’t do either, he’s hopeful there will be an acceptable compromise reached in the conference committee.
“You have to know those things that are absolutely essential for you to vote ‘yes’ and those things you think will be improved,” MacArthur said. “This isn’t a blind hope in conference. The Senate kept mortgage interest deductibility at $1 million [of debt].”
Still, some Republicans, such as California Rep. Darrell Issa, aren’t willing to invest in hope and vote “yes” Thursday when they know there’s a chance they’ll have to vote “no” on final passage.
“The Senate bill is not acceptable. The House bill is not acceptable. So I can presume the combined bill will not be acceptable,” said Issa, among the most vulnerable House Republicans next year.
“Can I assume it will get worse? Yeah. … I’m not going to vote ‘yes’ on a bill that when it comes back may be just as bad and then I vote ‘no,’” he said.