Politics

As Tax Overhaul Looms, Senate Has Upper Hand

House GOP wary of Senate’s leverage given the narrow vote margin there

The Senate’s narrow margin on the tax overhaul provides it with some leverage in conference negotiations with the House. (Bill Clark/CQ Roll Call)

The Senate’s passage of a tax overhaul illustrated a fragile coalition of support that ironically provides the chamber with the upper hand headed into conference committee negotiations with the House.

House Republicans wanted a conference process on the two chambers’ differing tax bills to prevent the House from getting jammed by the Senate, as they acknowledge has happened frequently on major bills.

But some members realize that a conference committee may still result in a final product that tracks more with Senate priorities given the thin margin of support in that chamber.

Senate passage came after days of negotiations in which several Senate Republican holdouts were offered significant concessions to secure their votes, with some changes designed just to appease a single senator.

“You have senators over there negotiating 400 billion things. That’s why people want to be in the Senate, not in the House,” Pennsylvania GOP Rep. Ryan A. Costello said, acknowledging that the Senate “absolutely” has the upper hand heading into conference.

Senate Majority Leader Mitch McConnell said Friday he expects negotiations to go smoothly. 

“We’ve moved our initial thinking on this in the direction of the House bill, for example the property tax deduction, in order to get the bills closer together than they were,” the Kentucky Republican said. “I’m not saying the conference will be a piece of cake, but I don’t think there’s much chance we won’t be able to reconcile our differences and move forward.”

While Costello is not as adamant about the procedural argument for going to conference as other members, he said he supports it “on the basis that we need all members to feel that their opinion matters.”

“And if you’re just going to eat a Senate bill, then the only reason that we passed our first tax bill was to force the Senate to act,” the member of the moderate Tuesday Group added.

Another Pennsylvania Republican from the opposite end of the political spectrum, Freedom Caucus member Scott Perry, also acknowledged the power the Senate holds.

“Could we get jammed? Yes,” he said. “Does this member have confidence that we’re going to get concessions, meaningful concessions, from the Senate? Likely not.”

All for show?

Perry also suggested that a conference committee likely won’t be holding a ton of formal meetings to hash out their agreement.

“When you say ‘conference,’ people have in their mind something where everybody sits around the table and talks about different things, works out [differences],” he said. “That could be what it looks like, but I suspect it won’t look like that.”

House Ways and Means ranking member Richard E. Neal also suggested the conference committee will likely only meet for show. The Massachusetts Democrat said he has “relatively low expectations” and it’s likely the Republicans will have most everything done before the committee even has its first meeting. Nonetheless, he said Democrats should still name conferees.

The House is scheduled to vote Monday on a motion to go to conference on the tax bill. Republican leaders added the legislative day to the schedule to get the conference process moving.

More votes to spare

House Republicans have more votes to spare than Senate Republicans in terms of passing a final measure or conference report.

Assuming all Democrats remain opposed to the measure, the Senate can lose just two GOP votes — with Vice President Mike Pence casting a tie-breaking vote — but the House can lose 22.

Only 13 Republicans voted against the tax bill the House passed Nov. 16. Of those “no” votes, 12 came from members from the high-tax states of New York, New Jersey and California over concerns about the partial elimination of the state and local tax deduction, also known as SALT.

GOP leaders are working on a proposal to partially restore the deduction for state and local income taxes, which is fully repealed in both chambers’ bills, to address the concerns of California Republicans. But the Senate would have to agree to that in conference.

That’s just one of many issues the two chambers will have to tackle. Other House priorities include eliminating expiration dates for tax cuts for individuals, fully repealing the estate tax and maintaining the corporate rate at no higher than 20 percent.

“When that conference report comes back, both chambers equally have to be able to support it in a good strong way,” House Ways and Means Chairman Kevin Brady told Roll Call when asked if the Senate has the advantage because they have fewer votes to spare.

The Texas Republican said he’s “not satisfied yet with the House or the Senate version” of the tax overhaul and he’s expecting improvements to be made in conference.

“My goal is, pick the best of both, and in some ways do better than both,” he said. “I think we’ve learned from the process what’s important, what’s really hitting the targets we want from a pro-growth and a simplification standpoint and what not yet has done that.”

Bad blood

House Republicans have no shortage of complaints about the Senate. And while they personally like many of their colleagues across the Rotunda there’s clearly some bad blood resulting from institutional power dynamics.

“We do our work, we take the hard votes,” Freedom Caucus member Dave Brat said, expressing his frustration that the Senate has the upper hand in the tax negotiations, as they have had in other legislative matters.

The Virginia Republican’s frustration is shared widely across the GOP conference and has also been expressed recently in regard to the Senate not passing any appropriations bills after the House passed a 12-bill omnibus in September.

House Republicans’ grievances with the Senate reached a boiling point this year amid the Senate’s failure to pass a health care overhaul.

“When you’ve got three or four senators that have the history of what they did with the health care bill, that’s a problem,” Texas GOP Rep. Randy Weber said.

On whether the Senate will exercise a heavy hand in the tax negotiations, the Freedom Caucus member said, “I don’t know what they’re predisposed toward.”

Many other lawmakers also said they couldn’t predict what will come out of conference when asked about the prospect that the Senate could effectively jam the House because of its fragile vote coalition.

“This is new for a lot of the members, as far as we’ve actually got something come back from conference,” Republican Study Committee Chairman Mark Walker of North Carolina said. “We know what’s important to us in the House. How much of that [we get] would be pure speculation on my part.”

Rep. John Katko, co-chairman of the Tuesday Group, said he is hopeful the House will be able to secure its priorities in conference, noting, “There’s a lot in the Senate bill that concerns me, especially for my constituents.”

The New York Republican said the more the final bill resembles the House measure over the Senate version the better.

As to whether the House position can prevail given the fluidity among Senate Republicans, Katko said, “That’s a very good question. I’m hopeful. If we want to get it done, it’s going to have to happen.”

Tax writers optimistic

While some rank-and-file Republicans are skeptical about the conference process, GOP tax writers were more confident.

“For the first time since I’ve been here, the House is better organized and in a stronger position to advance its objectives,” said Ways and Means member Carlos Curbelo, currently in his second term. 

Asked why he believes that, the Florida Republican said, “No. 1, I think our product is better for the most part, even though there are some elements of the Senate bill that I prefer. We’ve also built our coalition in a very competent manner with no drama. Senators know, for example, that we have firm commitments to our [state and local tax] colleagues, colleagues from higher-tax states. So I really feel momentum on the House side.”

Rep. Jackie Walorski, another tax writer, said she is “completely optimistic” the House GOP will be able to secure its priorities, saying the motivation and focus has not wavered.

“There’s nothing good-looking about the process,” the Indiana Republican said. “But the process works.”

Niels Lesniewski contributed to this report.

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