House Republicans are pushing for another vote on tax cuts this year, which they hope will give them a boost as they head toward a midterm election that shows Republicans trailing Democrats in the polls.
House Ways and Means Committee Chairman Kevin Brady plans to unveil a “Tax Cuts 2.0” proposal before lawmakers head out for a five week recess at the end of the week.
The legislation’s central element will be a provision to make the recently passed tax cuts permanent for individual filers whose lower rates will otherwise expire in 2025. Brady made it clear Republicans will be looking to give any help they can to the middle class.
“Today is about how we can strengthen America’s economy even more, and we think the best place to start is with America’s middle class families and small businesses,” Brady said during a meeting with President Trump last week.
Most House lawmakers are in favor of the proposal, which GOP leaders plan to bring to the floor in September in order to help Republican lawmakers in the weeks leading up to the critical midterm elections.
House Republicans need all the help they can get. The party’s 18-seat House majority is hanging by a thread, politically.
Polls show Democrats with a small but consistent advantage on the generic ballot. Analysts predict the House GOP is poised to lose about nine seats, while 25 seats are rated as pure toss ups, according to the non-partisan Cook Political Report.
Republicans have been disappointed in polls that show their original $1.5 trillion tax cut bill passed in December 2017 is not as popular as many in the GOP predicted it would become after people received bigger paychecks and corporations used some of the tax savings for bonuses, higher wages and more hiring.
The tax cut bill temporarily lowers most individual tax rates and cuts the corporate tax rate permanently from 35 percent to 21 percent.
“Public opinion on the Republican lawmakers’ signature accomplishment has never been positive, but potentially growing uncertainty about how American taxpayers will be affected does not seem to be helping the GOP’s prospects for November,” Patrick Murray, director of the Monmouth University Polling Institute, said recently after releasing a poll showing a 34 percent approval rating for the tax reform law.
But Brady believes the second phase of tax reform will bolster an already growing economy and give voters more certainty about their tax rates. Recent polls have shown growth in the number of voters who see the country moving in the right direction, even if the tax cuts themselves are not getting high marks.
“You’re going to see, I think, permanence of the individual tax cuts and those small business cuts will be the centerpiece of this,” Brady said on Fox News Sunday Morning Futures last week. “And people I think overlook the growth impact long term. That alone could help create a million and a half new jobs in America and continue to raise paychecks significantly in the long term.”
Brady is planning to add other elements to the tax cut legislation but has not disclosed the details.
President Trump has his own ideas. He wants the bill to include a provision that would lower the 21 percent corporate tax rate to 20 percent, but Brady has not publicly agreed with Trump’s proposal.
“We are working with the president on the rest of the elements,” Brady told Fox.
Brady’s bill to make the individual tax rates permanent is expected to pass the GOP-led House, despite concerns among fiscal hawks that more tax cuts will further grow the deficit. Brady acknowledged that the bill did not call for offsetting the cost of making the individual tax cuts permanent, meaning it will add to the deficit.
The Congressional Budget Office is projecting the deficit is already expected to increase by nearly 20 percent this year, party due to the existing tax cuts which have reduced revenue to the Treasury.
If the bill passes the House, it faces much longer odds in the Senate. Senate Majority Leader Mitch McConnell, R-Ky., said he’s interested in a bill making the individual rates permanent, but has not indicated when, if at all, the Senate would consider it.
It would be much more difficult to pass the measure in the Senate because of the 60-vote filibuster threshold. Republicans control only 51 seats and one Republican, Sen. John McCain, of Arizona, is absent.
And at least one GOP Senator, Bob Corker, of Tennessee, who is retiring, told the Washington Examiner he won’t back a bill making the individual rates permanent because it will further increase the deficit.
“There is no way in heck I’d vote for it,” Corker said.
Still, holding a Senate vote making the individual rates permanent would put pressure on red-state Democrats running in states dominated by President Trump in 2016.
Sen. Claire McCaskill, D-Mo., who is tied in the polls against her GOP opponent, said “I would love to make the tax cuts for regular families permanent.” But McCaskill said it should be paid for, perhaps by taking certain tax breaks away from high-income earners.
“Let’s look at the tax code and pay for this in a way that’s responsible, the way [Republicans] used to lecture me, before they took power,” McCaskill said.
