Daily tax chat 4: Is there $350 billion under the couch cushion?

Daily Tax Chat 4: Is There $350 Billion Under the Couch Cushion?

Daily Tax Chat 4: Is There $350 Billion Under the Couch Cushion?

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Nov. 30 2017 11:06 PM

Daily Tax Chat 4: Is There $350 Billion Under the Couch Cushion?

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Senate Majority Leader Mitch McConnell after leaving a tax reform news conference in the Dirksen Senate Office Building on Capitol Hill Thursday in Washington, D.C.

Chip Somodevilla/Getty Images

The Senate is expected to vote on the Republican tax reform bill this week. Until they do, Slate political writer Jim Newell and economics writer Jordan Weissmann will assess the bill’s chances of passage in daily Slack chats. This is the fourth of those chats. Read Wednesday’s chat here.

Jordan Weissmann: So things got complicated Thursday.

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Jim Newell: Yes. Which is why I am home right now and not at the Capitol waiting for a 4 a.m. vote.

Weissmann: God bless.

To be honest, I’m shocked. Full disclosure: I wrote not one, but two pieces predicting that Republicans would simply shrug off the JCT’s dynamic score.

Newell: Well, 50 out of 52 of them did.

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Weissmann: True!

But still. It came out. Showed that the tax cuts wouldn’t come close to paying for themselves. And suddenly stopped the bill cold.

Well, that and the fact that the trigger got nixed because of the reconciliation rules.

Which—good riddance.

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Point being, the deficit hawks ... are kind of trying to stick to their principles?

Or so it seems. I don’t know. How does this look to you?

Newell: They’re sticking to their principles insofar as adding $350 billion in additional revenue (that may never materialize) to cover a $1 trillion gap can be considered appropriately “deficit hawkish.” But it was quite a scene on the floor. Bob Corker and Jeff Flake (along with [Ron] Johnson, who doesn’t care about the deficit but is always happy to join a group of people willing to screw with Mitch McConnell) kept a procedural vote open until they got an agreement from leaders.

Part of me wonders if McConnell knew the trigger wouldn’t fly with the parliamentarian, and was just hoping to roll Corker. Instead, Corker got the news, and now they’re going to add another $350 billion in revenue into the bill. Overnight.

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Weissmann: And didn’t Angus King get involved?

Newell: Well, it was King’s motion they were voting on, and it was a motion specifically to send the bill back to committee to make it deficit-neutral. And Corker went over to talk to him about it. So I don’t know if Corker et al. were seriously consider voting for King’s motion, or just bluffing that they might.

Either way, it worked.

Weissmann: So now it looks like the 20 percent corporate rate is only going to be temporary.

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Or at least, that was the last I saw. They're going to increase it in steps after 6 years, half a percentage point a year, until it hits 22 percent.

I’m trying to understand why they aren’t just making the rate, like, 20.5 percent immediately and leaving it.

Is the idea that Republicans will vote to stop the increases?

Newell: That might be part of it. Stepping up to 22 percent after year 6 isn’t $350 billion though. There would have to be more.

Weissmann: Or do they just have to give Donald his 20 percent rate?

Yeah, that’s the other thing. $350 billion is a lot! And RonJohn still wants more money for pass-throughs, no?

Newell: There’s all sorts of pressure to up the corporate rate a point or two to cover various things—Susan Collins’ asks, the Rubio-Lee child tax credit amendment, RonJohn’s stuff. So I was expecting it to go up to 21, 22 by the end of this process. But not for deficit hawks!

I don’t want to take credit, since I saw someone else say this on Twitter, but they could solve all of these problems by just going with a 25 percent corporate rate.

Weissmann: I was having the same thought walking back to the office.

Newell: Which is still a 10-point corporate tax cut.

Weissmann: If they just fucking raised the rate to 25 percent, included Rubio-Lee, and left out the estate tax change, the bill would both do more popular things, and be less of a money sink.

But that can’t possibly happen, right? I imagine they’re just going to start making like the House and start taxing grad students and whatnot.

(To be clear, this is just my inner pessimist talking.)

Newell: I don’t think it can happen, or at least they’re not there yet. Which is absurd. Like, is a 5-point difference really the end of the world? I guess to the Club for Growth. And Donald Trump.

Our Populist President!

But to your earlier question that I missed, yeah, the point is that they would just stop the increases later. But then there are concerns about corporate “confidence” and “stability” and whatnot.

Weissmann: It’s not even for Donald Trump. He still gets his pass-through cut. He and Ivanka and Eric will still do just fine.

Yeah, but corporations aren’t gonna get too worked up about a potential 2 point increase in 5 years.

Newell: True.

Weissmann: If the marginal return on some investment is so slim that a potential 2 percent change in your tax rate will make or break the decision to do it.

I mean, you get the idea.

Anyway, they’re in a weird place scrambling for revenue. And coming up with new ways to make the bill look more fiscally responsible that may or may not come to fruition.

Here’s my question then:

If it’s just Corker and Flake making noise at this point, why do they care? They can still get to 50 (51 with Pence) without them. Or is Lankford still their third musketeer?

Newell: I was wondering about that. I think it’s just moving parts. Maybe they don’t think Johnson, with his furious hatred of Mitch McConnell, is reliable, even though he usually caves. They still have to figure out Collins. I’m not sure about Lankford. He committed to the bill a couple of days ago, figuring the trigger would be in there. He’s sort of junior and not retiring, so I don't know if he has the stomach to follow through with Flake and Corker.

Friday morning I will try to Figure Out Lankford.

If they’re agreeing to give Flake and Corker this, though, they clearly don't think they have the votes without them. Because they HATE doing this.

Weissmann: Meanwhile, where’s Murkowski on all this? I read that the ANWR sweetener got nixed because of reconciliation.

Shouldn’t she start making other demands? Like, I don’t know, a throne made of oil cans for her Senate office? She could go big.

Or, is ANWR still in the air?

Newell: I don’t think that’s official, and I think they can work around it. I think she likes the bill overall, tbh.

Weissmann: I guess a lot of Alaskans are probably self-employed.

Newell: Obviously she LOVES the bill when it includes a bunch of polar bears swimming in oil, but she likes it otherwise.

Weissmann: The drowning polar bears are dessert.

Her baked Alaska, if you will.

Newell: Jordan.

Weissmann: I’m not going to apologize for who I am Jim.

Newell: Anyway, the next votes are at 11 a.m. Friday. When we wake up, we’ll see what illusory future tax increases they decide on.

Weissmann: It’s like Christmas morning a month early. Except Santa is actually a lobbyist for the Chamber of Commerce.

Jim Newell is a Slate staff writer.

Jordan Weissmann is Slate’s senior business and economics correspondent.