President Donald Trump predicted the U.S. economy is “going to start to rock” when the Republican rewrite of the U.S. tax code is complete after a six-week sprint.
GOP lawmakers posted their sweeping, 503-page bill — with permanent tax cut for U.S. corporations and temporary benefits for individuals — on Friday evening after gaining key votes from two Republican senators who’d threatened to oppose it. Now, with votes planned in the House and Senate by the middle of next week, Trump is closing in on his first major legislative victory.
The bill — hammered out behind closed doors by Republican leaders — would slash the corporate tax rate to 21 percent, the lowest that rate has been since 1939. It would provide across-the-board tax cuts for most individuals, but then wipe them off the books by 2026. Whether to extend them would be up to a future Congress.
Trump’s White House applauded Friday’s developments, which Press Secretary Sarah Huckabee Sanders called a major step toward achieving the president’s promises of faster economic growth and “much needed financial relief to all Americans.”
“It’ll be fantastic for the middle-income people and for jobs, most of all,” Trump said on Saturday at the White House before boarding Marine One for Camp David, the presidential retreat in Maryland. He predicted U.S. economic growth “could go to 4, 5 or even 6 percent, ultimately.”
“We are really going to start to rock,” Trump told reporters.
House leaders plan to hold their vote Tuesday. Timing for the Senate vote was less clear, though Senate Majority Leader Mitch McConnell said the chamber would “get this bill done” next week.
Everything You Need to Know About the GOP Tax-Overhaul Plan
Trump and congressional Republicans have repeatedly pitched the tax measure as a boon for the middle class, despite independent analyses of earlier versions that said most of the benefit would go to higher earners. The final bill would provide a larger tax cut for the highest earners by shaving the top individual tax rate to 37 percent from 39.6 percent, a lower level than was proposed in either the House or Senate versions.
“This April 15 filing season — that is the last time you will file under this monstrous, broken tax code,” House Ways and Means Chairman Kevin Brady said Friday evening. Brady kicked off a remarkably rapid law-making effort on Nov. 2, when he released an initial bill. The final version reflects significant changes — many of them aimed at shoring up GOP votes.
Republican Senator Marco Rubio of Florida, who had announced his opposition to an earlier version of the legislation, switched to “yes” after tax writers changed the bill to broaden the child tax credit’s benefits for working families. Rubio said in a Twitter message that the change “is a solid step toward broader reforms which are both pro-growth and pro-worker.”
Senator Susan Collins, a Maine Republican who hasn’t committed to supporting the final legislation, issued a news release saying she’d secured “major wins” in it, including provisions that would temporarily broaden an individual deduction for medical expenses and broaden the types of state and local taxes that can be deducted below a $10,000 cap.
Collins also seeks approval of separate legislation that would shore up individual health insurance markets — where experts say premiums could rise because the tax bill would repeal the Obamacare individual mandate. The Congressional Budget Office has previously estimated that the change would lead to as many as 13 million fewer Americans having health coverage over a decade.
But the most surprising announcement came from Bob Corker of Tennessee — the only Republican senator who voted against an earlier Senate version of the legislation — when he said that he’d reversed course and would vote “yes.”
Corker’s concern — that the legislation would increase federal deficits — was not addressed in the GOP’s final product. In fact, the Congressional Budget Office estimated on Friday that the legislation would increase deficits by $1.455 trillion over 10 years, an amount that’s slightly higher than the projection for the version Corker opposed earlier this month.
‘Disappointing’ on Deficit
“This is a bad day to be a deficit hawk,” said Steve Ellis, vice president of Taxpayers for Common Sense. “While Senator Corker’s decision is disappointing, the entire Republican conference should be against this deficit-financed tax cut,” Ellis said.
McConnell himself had cited deficit concerns earlier this year in discussing tax legislation. “It will have to be revenue-neutral,” he said in an interview with Bloomberg News. “We have a $21 trillion debt.”
By changing his position, Corker, who’s exchanged bitter remarks with Trump over the president’s personal style, cleared the way for the president’s first real policy victory on Capitol Hill.
Whether it will constitute a political victory remains to be seen. Public opinion polls have shown that earlier versions of the bill were unpopular, but Trump administration officials and GOP leaders predict the tax cuts, once finalized, will gain favor in 2018, ahead of congressional elections.
Democrats — all of whom voted against earlier versions of the legislation in both chambers — have decried the rapid, largely secretive process that produced the bill.
“This monstrosity is a bill that only Donald Trump and Republicans, who have accomplished next to nothing in this Congress, could love,” said Representative Lloyd Doggett, a Texas Democrat who serves on the tax-writing Ways and Means panel. “It will not grow our economy, it only burdens us with an immense amount of debt.”
On Wednesday, Federal Reserve Chair Janet Yellen offered only a lukewarm endorsement of the legislation’s effect on the national economy. “It’s not a gigantic increase in growth,” Yellen said during a news conference.