Celebrating the Senate tax bill passage is premature

I’m guessing that most of us were asleep by the time the Senate passed the tax bill in the wee hours of the morning. It was a straight party line vote in the end, with the sole exception of Bob Corker. (And the only way Corker would have voted for it was if President Trump condemned it.) They didn’t even need Mike Pence to break a tie, though he was on hand and ready to do so. So now it’s time for the GOP to party like it’s 2099, right? Well… maybe. (NBC News)

The Senate passed a sweeping and contentious overhaul of the tax code early Saturday morning, moving one step closer to sending the bill to President Donald Trump’s desk for his signature.

The bill passed 51-49 along party lines with just one Republican, Sen. Bob Corker, voting against it.

The legislation would bring the first overhaul of the U.S. tax code in 31 years. It would slash the corporate tax rate, offer more modest cuts for families and individuals, and eliminate several popular deductions.

Trump hailed the bill’s passage on Twitter, thanking Senate Majority Leader Mitch McConnell and Finance Committee Chairman Orrin Hatch, R-Utah. “Look forward to signing a final bill before Christmas!” the president wrote.

Democrats derided the reforms as a GOP gift to the party’s wealthy and corporate backers at the expense of lower-earning people.

The process isn’t finished yet by a long shot. This package, assuming it makes it through, is going to be passed the same way Obamacare was. Most of the members haven’t read the finished version, which included multiple handwritten markups scrawled in the margins, and it’s going through reconciliation, rather than having a single bill passed by both chambers. The House and Senate versions now have to be combined before they can be sent for Trump’s signature and they’ve only got a few days to manage the feat if the President want’s to keep his promise of delivering this “Christmas present” in his first year.

So what wound up making it into the bill and what fell by the wayside? Heather Long actually has a pretty good (if typically skewed a bit to the left) list of “winners and losers” over at the Washington Post. I’ll pick out a few for you which seem pertinent.

In an effort to start off the weekend on a bright note, let’s start with some winners. Assuming this horse actually gets whipped across the finish line, it’s a huge win for both Donald Trump and Mitch McConnell. Trump has done plenty of executive orders this year and the House has passed any number of bills, but little of substance has actually made it into law. Tax reform is arguably one of the biggest deals they could take on. McConnell’s leadership has constantly been under scrutiny because he’s mostly been unable to get the GOP delegation on the same page on major issues. So that will be nice for them.

Corporations certainly made out well, with a 15% reduction in the base corporate tax rate and a chance to bring back money parked overseas at a discount. This will probably fire up the stock market even more, so your 401Ks will be looking pretty good going into next year. Whether that translates into more hiring and expansion by employers remains to be seen. (I would guess there will be a modest amount of that happening, but not enough to return us to levels anywhere near what was seen in the mid to late 90s.)

The House version eliminated the death tax entirely. The Senate bill doesn’t, but it more than doubles the threshold to above eleven million dollars, so that’s at least something. We’ll have to see which idea makes it into the final language.

So what’s the bad news? If you thought that fiscal conservatives in the GOP were serious about slashing the deficit and reducing the national debt, you may now grab a beer and start day drinking. The Republicans basically had to sell their souls to get 51 votes on this and the deficit is going to balloon. As far as I can tell, neither major party is interested in reducing our debt or really even slowing down the rate of growth.

There are also some “promises” which aren’t written in stone, but will likely be honored. In order to get Jeff Flake to sign on, they had to promise him that a bill to provide amnesty for the “Dreamers” would be coming shortly. There is zero mention of what, if anything, we’re getting in return for that. While it’s still a bad idea, it would be tolerable if we got full funding for the wall, more resources for ICE and the Border Patrol, and passage of Kate’s Law. Will we? Let’s just say that I’ll be extremely (and pleasantly) shocked if it happens.

All in all, this is good news for the President and the Senate Majority Leader while being a huge loss for Chuck Schumer. But the joke may be on all of us if there’s yet another trillion dollars dumped on the deficit. That ghost is coming back to haunt us one of these days, and probably sooner rather than later.

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David Strom 9:21 PM on March 24, 2023