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Republicans Have Tax Bill Victory in Sight as Democrats Try to Chip Away at Support Corker Says He Faced ‘Tough’ Decision in Supporting Republican Tax Bill
(about 9 hours later)
WASHINGTON — Republicans return to Congress this week with victory in sight on their long-awaited tax bill as the House and Senate gear up to vote on the $1.5 trillion tax overhaul as soon as Tuesday. WASHINGTON — A day before Republicans are expected to begin voting on their $1.5 trillion tax cut, the big question was not whether it would pass but why the lone Republican Senate holdout, Bob Corker of Tennessee, suddenly flipped his position to support a bill he once said was fiscally irresponsible.
The bill’s expected passage along party lines had Democrats scrambling over the weekend to try to pressure a late supporter of the legislation, Senator Bob Corker, Republican of Tennessee, to vote against the bill. The theories varied from political to financial. Some suggested Mr. Corker, who has said that he will not seek re-election to the Senate, may be rethinking his political future, while others claimed he was bought off by a late-added provision that would benefit people with large real estate holdings, including him.
With just a 52-48 majority in the Senate, Republicans have little room for defections given that Senator John McCain, Republican of Arizona, is getting medical treatment in his home state and is not expected to return to Washington in time for the vote. Democrats are now looking to change the trajectory of the bill by convincing Republicans who had initially wavered on the bill to vote against it this week. In an interview on Monday, Mr. Corker dismissed those theories and said he faced a wrenching decision as a Republican lawmaker with deep concerns about the country’s mounting debt and a strong desire to overhaul the tax code. In the end, he said, he put his fiscal principles aside on the assumption that the nation would be better off with the tax cuts than without.
Much of that focus was trained on Mr. Corker, who surprised many in Washington last week when he dropped his objections to the legislation, which had centered on the deficit impact of a $1.5 trillion tax cut. “It’s been really tough, especially because I did think, I really felt like we could have had a bipartisan bill that would have really withstood more fully the test of time,” Mr. Corker said.
Last Wednesday, Mr. Corker said the final changes being made to the bill had done little to assuage his concerns that his own party was being fiscally reckless. “I talked to people that I respected. When I came here, I had concerns about deficits, but I also wanted progrowth tax reform to occur, so I had this pull between the two, if you will,” he said, adding, “I just felt like this was a once-in-a-generation opportunity and if I looked at myself as the deciding vote, did I feel like our country was better having it in place or not better having it in place?”
“My deficit concerns have not been alleviated,” said Mr. Corker, who lamented that the bill could have been made better with more time. His decision highlights the trade-offs that Republicans, who have long pushed for fiscal responsibility, are making as they seek to score their first legislative victory since assuming political control. The $1.5 trillion tax bill, which cuts taxes for businesses and individuals, is expected to add $1 trillion to the deficit over the next 10 years, according to the congressional Joint Committee on Taxation. Rather than pay for those cuts, lawmakers are relying on rosy assumptions about economic growth and suggesting they will cut spending on programs like Medicare and Social Security to help bring down the deficit.
On Friday, Mr. Corker cast those concerns aside and said he would back the final version of tax legislation, which is still projected to add as much as $1 trillion to the deficit, according to the Joint Committee on Taxation. He said that while the bill was imperfect, it would still be good for the country. Mr. Corker has been the most vocal about the need to rein in the federal deficit. He voted against the initial Senate bill, the only Republican to do so, after party leaders rejected his request to require automatic tax increases down the road if the overhaul did not generate enough revenue to pay for itself.
As new details in the tax bill came to light over the weekend, a theory emerged that Mr. Corker’s vote was won in exchange for a last-minute provision in the bill that would benefit real estate developers by making it easier for them to take advantage of a new, more generous tax structure for pass-through businesses. As recently as last Wednesday, Mr. Corker said the final changes being made to the combined Senate and House bill had done little to assuage his concerns that his party was being fiscally reckless.
Mr. Corker, who was active in the real estate business in Tennessee before becoming a senator, retains a financial stake in companies that could benefit. “My deficit concerns have not been alleviated,” said Mr. Corker, who lamented that the bill could have been improved with more time.
Critics of the Republican tax overhaul adopted a new rallying cry to hammer a bill that they think is packed with goodies for the rich: “The Corker Kickback.” On Friday, Mr. Corker stunned many in Washington when he said he would back the tax bill, which, while imperfect, would still be good for the country.
Mr. Corker denied knowing anything about the new benefit in an interview with the International Business Times over the weekend. Opponents of the tax plan immediately searched for a motive in the hope that they could alter his vote in the narrowly-held Senate. With just a 52-to-48 majority in the Senate, Republicans have little room for defections given that Senator John McCain, Republican of Arizona, is receiving medical treatment in his home state and is not expected to return to Washington in time for the vote. On Monday, two additional Republican senators, Mike Lee of Utah and Susan Collins of Maine, said they would vote yes.
On Sunday, Mr. Corker sent a letter to Senator Orrin G. Hatch of Utah, the Republican chairman of the finance committee, to provide an explanation of how the provision got into the bill. As new details in the tax bill came to light over the weekend, an article published by the International Business Times suggested that Mr. Corker’s vote was won in exchange for a last-minute provision that would benefit real estate developers by making it easier for them to take advantage of a new, more generous tax structure for so-called pass-through businesses, whose owners pay taxes on profits through the individual code.
Mr. Corker, who was active in the real estate business in Tennessee before becoming a senator, retains a financial stake in companies that could benefit from the change.
Critics of the Republican tax overhaul adopted a new rallying cry to criticize a bill that they say is packed with advantages for the rich: “The Corker Kickback.”
Mr. Corker, in the interview, called the accusations ”disheartening” and said that he had not changed anything in the final bill.
“There’s nothing to buy me off with,” Mr. Corker said.
On Sunday, Mr. Corker sent a letter to Senator Orrin G. Hatch of Utah, the Republican chairman of the Finance Committee, asking that he explain how the provision became included in the bill.
“Because this issue has raised concerns, I would ask that you provide an explanation of the evolution of this provision and how it made it into the final conference report,” Mr. Corker wrote. “I think that because of many sensitivities, clarity on this issue is very important and hope that you will respond in an expeditious manner.”“Because this issue has raised concerns, I would ask that you provide an explanation of the evolution of this provision and how it made it into the final conference report,” Mr. Corker wrote. “I think that because of many sensitivities, clarity on this issue is very important and hope that you will respond in an expeditious manner.”
Mr. Hatch, in a letter issued on Monday morning, said he was “disgusted” by reports suggesting Mr. Corker had played a role in the provision’s addition and said Mr. Corker had actually wanted a less generous pass-through exemption than had been included. Mr. Hatch, in a letter issued on Monday morning, defended Mr. Corker and said he was “disgusted” by reports that suggested Mr. Corker had played a role in the provision’s addition. He said Mr. Corker had wanted a less generous pass-through exemption than had been included.
“I am unaware of any attempt by you or your staff to contact anyone on the conference committee regarding this provision or any related policy matter,” Mr. Hatch wrote. “To the contrary, virtually all the concerns you had raised in the past about the treatment of pass-through businesses in tax reform were to voice skepticism about the generosity of various proposals under consideration.”“I am unaware of any attempt by you or your staff to contact anyone on the conference committee regarding this provision or any related policy matter,” Mr. Hatch wrote. “To the contrary, virtually all the concerns you had raised in the past about the treatment of pass-through businesses in tax reform were to voice skepticism about the generosity of various proposals under consideration.”
The provision was pushed for inclusion by Senator Jim Inhofe of Oklahoma, a Republican who circulated a letter signed by 10 senators asking for the treatment. Mr. Corker was not among those who signed the letter. During debate on the bill, Mr. Inhofe proposed an amendment that would allow a tax deduction for all businesses structured as pass-through entities, including trusts, which were excluded from the original Senate bill that passed. Mr. Corker was not among those who signed the letter. Mr. Inhofe has not been shy about taking credit for securing the provision, praising the final bill for “including my amendment to ensure family-owned businesses of all types are treated the same under the tax code.” In fact, the Senate bill that Mr. Corker voted against already contained big benefits for the real estate industry. In large part, that is because of a provision cutting taxes for the owners of pass-through entities. Such businesses, like partnerships and limited liability companies, do not pay taxes themselves, but instead pass through their tax liabilities to their owners. Currently, such income is taxed at rates as high as 39.6 percent. But under the Senate bill, much of that income could be taxed at a rate as low as 29.6 percent. The bill limited those tax savings, partly by pegging the lower taxes to the size of a company’s workforce.
Democrats remain unconvinced and they have taken to social media in an effort to voice their concerns about “the Corker kickback,” a hashtag that was going viral on Sunday night. The final bill released on Friday included a new provision permitting the real estate industry to take advantage of the lower tax rate, tying the savings to the value of their properties — regardless of their size or their number of employees. Mr. Hatch said he had inserted the provision after discussions with the House and Senate negotiators writing the final bill and a congressional leadership aide pointed out that a version of it was in the House bill.
“There really isn’t any other good explanation is there?” Representative Ted Lieu, a Democrat from California, wrote on Twitter, suggesting that the so-called kickback was the reason that Mr. Corker decided to back the bill. Democrats remain unconvinced, and they have taken to social media to voice their concerns.
Others, however, suggested that Mr. Corker’s change of heart was more political than financial and that he did not want to be the lone Republican to vote against his party’s tax bill. “There really isn’t any other good explanation is there?” Representative Ted Lieu, a Democrat from California, wrote on Twitter, suggesting that the provision was the reason that Mr. Corker decided to back the bill.
Others, however, suggested that Mr. Corker’s change of heart was more political than financial and that he did not want to be the lone Senate Republican to vote against his party’s tax bill.
“The conspiratorial speculation about Corker’s real estate pass-through holdings seems thin to me,” said Scott Greenberg, a tax analyst at the conservative Tax Foundation. “Perhaps a simpler explanation for Corker’s flip is that his vote wasn’t needed before but is needed now.”“The conspiratorial speculation about Corker’s real estate pass-through holdings seems thin to me,” said Scott Greenberg, a tax analyst at the conservative Tax Foundation. “Perhaps a simpler explanation for Corker’s flip is that his vote wasn’t needed before but is needed now.”
Senator John Cornyn, Republican of Texas, seemed to confirm on Sunday that pragmatism was in play during the final negotiations over the bill when he was asked about how the party got Mr. Corker on board. In Tennessee, Mr. Corker’s intended vote was welcomed on Monday.
“What we’ve tried to do is cobble together the votes we needed to get this bill passed, at the same time, maintaining the integrity of the largest tax cuts we’re going to be seeing since 1986,” Mr. Cornyn said on ABC News. “We’re very happy with his final position,” said Bradley Jackson, the president of Tennessee’s Chamber of Commerce, who had discussions with Mr. Corker and his office in recent weeks.
Mr. Corker said his turnaround came after he engaged in deep discussions with business groups in Tennessee and around the country, the Republican leadership in Congress, his Senate colleagues and his wife. He also spent many private moments considering how to vote, meditating over the question on the balcony of the Senate chamber.
While Mr. Corker said it was “not something that’s pleasant” to be the only Senate Republican to oppose the tax bill, his colleagues were generally respectful of his decision and only prodded him gently.
In the end, Mr. Corker was convinced that the additional debt that the tax bill would pile on was manageable relative to the country’s $43 trillion balance sheet and that businesses in his home state should have the opportunity for the additional foreign investment and other benefits that he believed the tax cuts would facilitate.
He said that he planned to make fiscal restraint a priority next year as Republicans move on to other initiatives like infrastructure and wanted to ensure that any legislation to help rebuild America’s roads and bridges was actually paid, and not financed, through deficit spending. After 2018, when his term expires, Mr. Corker’s future is less clear. But he said he was not ruling out running for office again in some capacity.
The final bill was not a ‘home run,’” Mr. Corker said, noting that he was at peace with his choice.
“I feel like it was the right decision. I have no qualms about it,” Mr. Corker said.