Senate Republicans breathed a collective sigh of relief early Saturday morning when a $1.4 trillion tax bill that had teetered on the brink of failure passed with only one GOP defection.
Senate Republican Whip John Cornyn (R-Texas) and Senate GOP Conference Chairman John Thune (R-S.D.) played key roles in helping Senate Majority Leader Mitch McConnell (R-Ky.) salvage the bill, according to lawmakers and aides familiar with the process.
Meeting with the rebels in his Capitol office just off the Senate floor, Cornyn agreed to increase the deduction for pass-through businesses to 23 percent and pay for it by raising the tax rate on repatriated foreign earnings, according to an aide familiar with the conversation.
That settled the concerns of Johnson and Daines, who were worried that large C corporations were getting a better deal than small- and medium-sized businesses that file as pass-through entities.
“The leadership is pretty good at separating people,” Johnson remarked Thursday evening, after he and two other Republicans had briefly held up the bill.
Corker and Flake, both worried the bill would bust the deficit, wanted to shrink the size of the package by $350 billion. But such concessions would have cost GOP leaders the votes of other Republicans.
“I thought that was a terrible idea and I and a number of other senators expressed that view vigorously,” said Sen. Ted Cruz (R-Texas), who led opposition to the proposal. “On the Senate floor we had an extended discussions with Bob [and] Mitch McConnell.”
“A consensus emerged of virtually every Republican senator that adding $350 billion of additional taxes was the wrong way to go,” he said.
Thune, the third-ranking member of the GOP leadership, served as a liaison between McConnell’s team, the Finance Committee and rank-and-file members throughout the tax debate.
Another important tactical victory was securing the support of moderate Sen. Susan Collins (Maine), one of three Republicans who voted to defeat legislation repealing ObamaCare earlier in July.
Portman played a leading role in coaxing Collins to support the legislation.
He had breakfast with her Wednesday morning and worked closely with McConnell to ease her concerns over language repealing ObamaCare’s individual mandate, which the Congressional Budget Office warned could raise insurance premiums by 10 percent.
McConnell and Portman assured her that the effect on premiums would be offset by moving legislation to authorize cost-sharing reduction payments to insurance companies, according to sources familiar with the talks.
They also promised to add a bill Collins sponsored with Sen. Bill Nelson(D-Fla.) to set up reinsurance pools for high-risk patients.
McConnell also pledged that he would not allow a $25 billion cut to Medicare mandated by “pay-as-you-go” rules in 2018, something Collins said would have been a deal breaker.
Collins touted the assurances when she met with reporters Thursday morning at a breakfast sponsored by The Christian Science Monitor and sounded hopeful about voting for the tax overhaul.
Conservatives in the House have voiced opposition to the proposals, arguing they would prop up ObamaCare. But some House Republicans see a scenario where the proposals could be added to the bill to prevent a government shutdown and ultimately be approved.
Portman’s biggest contribution was to handle the technically difficult task of transforming the U.S. tax system for corporate profits earned overseas into a territorial one.
The former U.S. trade representative’s expertise came in handy when GOP leaders were trying to find a way to pay for increasing the deduction for pass-through businesses. They ultimately decided to increase the tax rate on corporate profits held overseas.
Portman explained to colleagues the concession would not dampen the economic punch of the bill.
“It’s all about trade-offs, but I don’t think that will have the negative economic impact that other ideas would have because those are earnings that have already occurred and it doesn’t change behavior going forward,” he said Friday after the deal was struck.
GOP senators say Toomey played an essential role throughout the process by pushing back on efforts to raise the tax rate for large companies known as C corporations above the 20 percent favored by Trump.
He also hammered out an agreement with Corker earlier in the debate to limit the overall size of the package to $1.5 trillion. While Corker voted “no” in the end, the deal set the parameters of the bill and allayed the deficit worries of other senators.
Scott played an instrumental role in keeping the threshold for the popular mortgage interest deduction at $1 million in the Senate bill — a break with House Republicans, who capped it at $500,000.
Scott was also a consistent advocate for providing more tax relief to individuals, something GOP leaders were able to achieve after including language to repeal the individual mandate, which raises an estimated $338 billion over the next decade.
McConnell locked up the vote of another important moderate, Sen. Lisa Murkowski (R-Alaska), by promising to include language allowing oil and gas drilling in Alaska’s Arctic National Wildlife Refuge (ANWR).
Murkowski said she negotiated the concession directly with McConnell.
“It was with the majority leader himself, letting him know very early on that I wanted to see the ANWR provision included in reconciliation,” she said.
Murkowski said she approached McConnell with the request “at least” in early January.
With Johnson, Daines, Collins and Murkowski behind the bill, the deficit hawks didn’t have much leverage left with the leadership.
Sensing the shift in momentum, Flake split from Corker in exchange for a pledge from GOP leaders that they would work with him to “enact fair and permanent protections” for immigrants who came to the country illegally as children.
Trump rescinded the Obama-era Deferred Action for Childhood Arrivals program, which granted work permits and temporary protection from deportation to recipients, in September.
Flake said he had extended conversations with Vice President Pence, who was a close ally when they both served in the House, about finding a way to help recipients of the program.
While Pence stopped short of promising the administration would back legislation, Flake said he felt confident afterwards.
Flake said he also got GOP leaders to eliminate what he called an “$85 billion expensing budget gimmick” from the bill.