Policy

Amid Senate Tensions, Hatch Eyes Bipartisan Tax Deal

Utah Republican says House GOP plan will not pass the Senate

Senate Finance Chairman Orrin G. Hatch says that despite “a lot of bitterness around here,” he plans to meet with Senate Democrats to gauge interest in a bipartisan tax proposal. (Tom Williams/CQ Roll Call file photo)

Utah Sen. Orrin G. Hatch has launched a new push for a bipartisan Senate alternative to the contentious House Republican tax plan, as President Donald Trump begins to frame administration priorities.

The Senate Finance chairman said last week he was meeting with Democratic tax writers one-on-one and hoped there would be leeway for deals, after bitter debates over Health and Human Services Secretary Tom Price and Treasury Secretary Steven Mnuchin riled the Senate and exposed deep partisan fault lines.

“I don’t think you can pass a tax bill, unless it’s bipartisan,” Hatch said in an interview.

After rolling over Democrats who boycotted a committee markup to get both nominations to the Senate floor, the top tax writer said political pressure as the 2018 midterm elections approach could eventually help to bring lawmakers together on taxes. “It may be the reason we finally do something,” Hatch said.

He referred to the fact that 23 Democrats and two independents who caucus with them — including nine Finance members — will be up for re-election in 2018, compared to just eight GOP senators.

Hatch, 82, is among the Republicans whose terms end in 2018, and he is weighing another campaign — even though he indicated in 2012 this would be his last term.

The seven-term senator said the House GOP plan would not pass the Senate, even if it moves under reconciliation instructions that would allow passage with 51 votes. He pointed to disputes over parts of the House plan, including a proposal for border adjustments to apply business income taxes to imports but not exports.

To develop a tax measure, Hatch has pointed to several legislative models, including the permanent and temporary tax breaks in the fiscal 2016 omnibus bill, a regular-order measure enacted without revenue-raising offsets. Other prototypes include two tax cuts enacted as reconciliation measures under President George W. Bush, and the 1986 tax overhaul.

Hatch’s vision for compromise drew support from former Texas Republican Sen. Phil Gramm, a consultant and longtime adviser to Senate Majority Leader Mitch McConnell of Kentucky. Gramm said in an interview that he encouraged GOP senators to follow the course that led to the 1986 law, which was largely written in the Senate.

“We ought to do what we did … in 1986, when we reduced subsidies, simplified subsidies and lowered rates,” he said.

Deal breakers

For now, leaders of both parties said any Senate talks would face a deep partisan divide over across-the-board individual rate cuts in the current House GOP and Trump tax plans.

South Dakota Sen. John Thune said he and other senior Republicans would insist on sweeping rate cuts, while Democrats such as Sens. Sherrod Brown of Ohio and Dianne Feinstein of California would push against tax cuts for wealthy families.

“Rich people don’t need more tax breaks,” Brown said.

Both sides will be looking for areas of potential common ground in a tax outline that Trump’s team plans to unveil in several weeks.

Brown said any deal would need a number of sweeteners to attract liberals like him. For example, he wants indexing for the earned income tax credit and child tax credit.

Feinstein said any bipartisan compromise likely would need to focus on “middle-income people, who live paycheck to paycheck.” She said she voted for Bush’s first tax cut in 2001 with 11 other Democrats because it expanded the child tax credit and “was not a millionaire’s bill.”

With or without a broad bipartisan deal on his panel, Hatch and other senior Republicans said they will be looking to woo Democrats if a bill gets to the floor. “That doesn’t mean you have to have everybody on both sides,” Hatch said.

Top targets for the GOP charm offensive include several centrists up for re-election, including Democrats Joe Manchin III of West Virginia, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, as well as Angus King, the independent senator from Maine who caucuses with the Democrats.

Even a few Democratic allies could help Hatch and other GOP leaders deal with procedural hurdles, and make up for potential defections from the 52-seat GOP majority.

In 2003, Bush narrowly won Senate passage for his second tax cut on a 51-50 vote. Three GOP “no” votes were offset by the “aye” votes of two Democrats and Vice President Dick Cheney.

With that precedent in mind, Hatch said he plans more huddles with Democrats in coming days to gauge their interest.

“We’re not ignoring their needs. … We’ll have to see. There’s a lot of bitterness around here,” he said. 

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