For the first time in the long slog to pass health care and tax reform, Republican and Democratic senators could face a tough vote that presents genuine political challenges for both parties.
The vote would be on an amendment that Utah Sen. Mike Lee and Florida Sen. Marco Rubio announced they would introduce to the tax bill on Wednesday. The amendment would expand the child tax credit by making it refundable up to payroll tax liability (15.3 percent of earnings). That actually makes it useful to poor people. They would pay for this by nudging up the corporate tax rate that the bill sets, from 20 to 22 percent.
Increasing child tax credit refundability and paying for it with increased corporate taxes sounds… popular! And difficult to vote against. Which makes the politics of doing this within a hotly contested, tightly managed tax package tricky.
For Republicans there are a couple of problems. First, the 20 percent corporate rate is one of the president’s “red lines,” a number the party has oriented this entire process around. It’s unclear if the president would agree to this, and it would set another obstacle for the conference committee to resolve.
Even if Republican leaders are willing to boost the corporate tax rate a percent or two, they might not want to use that money on Rubio and Lee’s amendment. Each percentage point increase in the corporate tax rate corresponds to about $100 billion in revenue over ten years, cash that other senators are already eyeing. Wisconsin Sen. Ron Johnson, for example, is withholding his vote until he gets additional help for pass-through businesses that could cost about $100 billion. And one of Maine Sen. Susan Collins’ demands is preserving the SALT property tax deduction. She told me Wednesday that in the amendment she’ll offer, she would partially offset that cost by increasing the corporate rate to 21 percent. It would not be Republicans’ usual move to use $200 billion dollars, that they could give to homeowners or car dealers, on poor parents. Especially if Rubio and Lee’s votes for the final package don’t hinge on it.
But what about Democrats? What if all 48 Senate Democrats voted for this and then picked up a few more Republicans? That would both improve the bill, from their perspective, and throw a wrench in Republicans’ conference committee negotiations. On the other hand, it would also be putting their fingerprints on a process they call a “scam,” and adding a family-friendly provision to a bill that they otherwise regard as a giveaway to the rich. Even if no Democrats went on to vote for the final package, it would allow Republicans to claim that the process had been “bipartisan.”
The underlying question that Democrats have to start thinking about: Is this bill likely enough to pass now that they’re willing to use their votes to improve it during amendment? Or would that be conceding defeat, and should they instead refuse to engage in what’s been a partisan process?