Doubts shadow GOP push for tax cuts 2.0

Doubts shadow GOP push for tax cuts 2.0
© Greg Nash

House GOP leaders on Wednesday insisted they plan to hold a floor vote on a second package of tax cuts this month, even as questions arise about whether such a move is politically smart for Republicans.

Republicans see a vote on the package, often called “tax cuts 2.0,” as a way to expand upon the tax law they passed late last year and to remind voters about the strength of the economy less than two months before the midterm elections.

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“We’re going to build on that success,” House Majority Whip Steve ScaliseStephen (Steve) Joseph ScaliseOn The Money: Midterms to shake up House finance panel | Chamber chief says US not in trade war | Mulvaney moving CFPB unit out of DC | Conservatives frustrated over big spending bills Midterms to shake up top posts on House finance panel On The Money: Senate approves 4B spending bill | China imposes new tariffs on billion in US goods | Ross downplays new tariffs: 'Nobody's going to actually notice' MORE (R-La.) said at a press briefing Wednesday. “We’re not resting on our laurels.”

But Democratic lawmakers, who all opposed the 2017 law, think a vote on more tax cuts would actually benefit them politically, since the first tax law hasn’t been overwhelmingly well-received. And not all Republicans are onboard with a vote on the second tax package, given that the legislation would extend limits on a deduction popular in high-tax states with vulnerable GOP representatives.

“The only people that are talking about their tax bill are mad about it,” said Rep. Richard NealRichard Edmund NealHouse GOP bill a mixed bag for retirement savers House panel advances key bill in new round of GOP tax cuts For Capuano in Massachusetts, demography was destiny MORE (D-Mass.), the top Democrat on the House Ways and Means Committee.

Both Speaker Paul RyanPaul Davis RyanHow does the 25th Amendment work? Sinema, Fitzpatrick call for long-term extension of Violence Against Women Act GOP super PAC drops .5 million on Nevada ad campaign MORE (R-Wis.) and House Majority Leader Kevin McCarthyKevin Owen McCarthyOn The Money: Midterms to shake up House finance panel | Chamber chief says US not in trade war | Mulvaney moving CFPB unit out of DC | Conservatives frustrated over big spending bills Midterms to shake up top posts on House finance panel The Hill's Morning Report — Sponsored by United Against Nuclear Iran — Kavanaugh confirmation in sudden turmoil MORE (R-Calif.) said Wednesday that they intend to move forward with a floor vote on a second round of tax cuts in September.

Their remarks follow House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyHouse GOP bill a mixed bag for retirement savers China imposes new tariffs on billion of US goods: report Trump announces tariffs on 0B in Chinese goods MORE’s (R-Texas) comments on Tuesday that he’s moving “full steam ahead” on the effort. Brady said he intends to release legislative text and hold a Ways and Means Committee markup on the package next week.

But the GOP divisions over the roadmap could come to a head on Thursday, when Brady and Scalise hold a meeting with lawmakers to discuss the second tax package.

The centerpiece of the tax package is expected to be a permanent extension of tax changes for individuals that Republicans passed last year, which were temporary because of the Senate budget rules used to pass the law.

A number of tax cuts in the 2017 law are set to expire after 2025, including the cuts to individual tax rates and increases to the standard deduction and child tax credit.

But one of the tax changes that top House Republicans want to extend, the $10,000 cap on the state and local tax (SALT) deduction, is controversial within the GOP caucus.

Nearly every House Republican who voted against the 2017 tax law did so because of the SALT deduction cap, and some of those lawmakers are facing challenging reelection bids. Some of the GOP “no” votes on the 2017 law said they would also vote “no” on a permanent extension.

“I do not favor that,” Rep. Leonard LanceLeonard LanceMonmouth poll: Incumbent GOP candidate trails Dem challenger in New Jersey House race Blue-state Republicans say they will vote against 'tax cuts 2.0' if it extends SALT cap House panels set up to probe indicted GOP Reps. Collins, Hunter MORE (R-N.J.) told The Hill. “I favor complete deductibility of state and local taxes.”

Lance, whose reelection race is rated a toss-up by the nonpartisan Cook Political Report, said he’d prefer that a second tax bill not get a House floor vote, since he doesn’t want it to pass. And he noted that such a bill couldn’t pass the Senate this year, since it would need 60 votes and Republicans only hold 51 seats.

“It would be an exercise in futility,” Lance said.

Other GOP lawmakers in high-tax states also said they wanted to wait and see the details of the package before deciding how they will vote.

“I want to see what’s all in it,” said Rep. Randy HultgrenRandall (Randy) Mark HultgrenJordan hits campaign trail amid bid for Speaker Doubts shadow GOP push for tax cuts 2.0 Election handicapper moves 10 races toward Dems MORE (R-Ill.), who voted for the 2017 tax law and is seeking reelection in a race that political watchers say “leans Republican.”

Bloomberg reported Tuesday, citing three Republican aides, that House Republicans were pressing pause on the tax cuts 2.0 efforts because of the concerns some were raising over extending the SALT deduction cap.

Following that report, top House Republicans said they were moving forward with a vote. Brady reiterated that he wants to extend the SALT deduction cap and said that blue-state governors should focus on lowering their states’ taxes rather than trying to circumvent the cap.

Besides concerns from some blue-state Republicans on voting to extend the SALT deduction cap, Democrats also wonder why Republicans are pursuing a vote on additional tax cuts. Democrats think the vote would backfire on the GOP and help them instead, noting that polling has found the tax law to be unpopular.

Democrats all opposed the 2017 tax law and are likely to oppose a second phase of tax cuts as well. They dislike the 2017 law because it’s expected to add the debt and largely benefit the wealthy. Democrats argue that extensions of the tax cuts would also do those things.

“The American people have seen this scam before, and the GOP Tax Scam for the rich 2.0 looks to be just as destructively tilted toward the wealthiest 1 percent as the original,” said a spokesman for House Minority Leader Nancy PelosiNancy Patricia D'Alesandro PelosiSinema, Fitzpatrick call for long-term extension of Violence Against Women Act Internal RNC poll shows Pelosi is more popular than Trump: report Indicted lawmaker angers GOP with decision to run for reelection MORE (D-Calif.) in a statement to The Hill. “Republicans apparently want to end this Congress adding even more to the debt with even bigger tax breaks for their wealthy donors.”

“I really don’t get the politics of this other than that [Republicans are] trying to appeal to a narrow set of donors or they’re trying to rewrite history,” said Frank Clemente, executive director of the liberal group Americans for Tax Fairness. “People don’t like their tax plan now because it favors the rich and corporations.”

Clemente added that he expects there will be a grass-roots effort attacking a second round of tax cuts and said it will pose political problems for vulnerable House Republicans in blue states.

“They’re being asked to walk the plank again,” he said.

Democrats have pointed to Bureau of Labor Statistics data showing real wages are flat or have fallen as evidence the tax law isn’t working.

But Ryan defended the law, arguing that people are seeing more take-home pay due to updated tax withholding guidance and that people are paying less for electricity because many utility companies have lowered bills.

“The results are there,” he said.

Backing away could also prove embarrassing for GOP leaders, who have long promised a second tax package.

Scalise encouraged Democrats to vote for the second tax package.

“Now that they’re seeing that those hard-working families across the country are benefiting, I challenge them to switch their votes and now vote yes to make those tax cuts permanent,” he said.

Rohit Kumar, a former aide to Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGOP, Kavanaugh accuser struggle to reach deal GOP making counteroffer to Kavanaugh accuser The Hill's 12:30 Report — Trump questions Kavanaugh accuser's account | Accuser may testify Thursday | Midterm blame game begins MORE (R-Ky.) who now works at PricewaterhouseCoopers, said he’s not surprised that House Republicans are committed to a vote on making the individual tax changes permanent. He said that any ad attacking Republicans over the SALT deduction cap could already be made even without the vote on extending it.

Kumar also said that he thinks there are political benefits to House Republicans pursuing a vote on making the individual tax cuts permanent, because it gives them a chance to talk about the economy — a good topic for them given the country’s strong economic growth and low unemployment.

“That’s what Republicans want to be talking about during the campaign,” he said.