Sen. Bob Corker’s trigger amendment a ‘poison pill’ to GOP tax bill?

Donald Trump is making promises he has no intentions of ever keeping in order to line up enough gullible GOP senators to pass the GOP tax bill.

Yesterday I told you about the mythical moderate from Maine, Sen. Susan Collins. In major policy reversal, Trump now backs bipartisan fixes to ‘Obamacare’ to get Sen. Susan Collins vote on tax bill. She is being played.

Trump apparently also made a promise on Tuesday to his arch nemesis, Sen. Bob Corker of Tennessee, to include a “trigger” provision in the bill that would automatically raise taxes if (read when) the “trickle down” effect does not produce the promised tax revenue in the future (it never has, never will).

If such a trigger provision is actually included in the Senate GOP tax bill to appease Sen. Corker, it should cause conservatives to flee from this bill. There is no chance such a provision would ever be approved in the House by the radical House GOP Freedom Caucus.

The Washington Post reports, Tension over adding ‘triggers’ to the tax bill highlights the Republican identity crisis over deficits:

THE BIG IDEA: Outside groups on the right are furiously mobilizing against an agreement that Republican leaders made with Bob Corker yesterday to get the tax bill through the Senate Budget Committee.

The Tennessee Republican negotiated a budget deal in September that the tax cuts cannot increase the national debt by more than $1.5 trillion over the next 10 years. Now he’s concerned about various gimmicks and overly rosy assumptions in the bill that would almost certainly mean the true impact on the debt is far greater than that. So the retiring senator has been pushing in recent days to include a “trigger” that would automatically increase taxes down the road if the bill fails to generate the level of economic growth that Republicans leaders keep publicly predicting.

It’s not clear what exactly GOP leaders promised Corker, who declined to share specifics with reporters. He said the amendment will be included in an updated version of the bill that is likely to be released publicly on Thursday.

But the constellation of groups funded by the billionaire industrialist Koch brothers – including Americans for Prosperity and Freedom Partners – came out strongly against any trigger last night. They were joined by Grover Norquist from Americans for Tax Reform, the Wall Street Journal editorial board and the U.S. Chamber of Commerce.

These right-wing organizations will be scoring this tax bill, so if the bill includes Sen. Corker’s trigger provision for automatic tax increases, presumably these organizations are put in the position of either having to come out against the tax bill, or taking the cynical position to vote yes because the trigger provision will be stripped out in conference committee, in which case they will lose Sen. Corker on the vote for final passage. If Corker’s trigger amendment fails to be included in the Senate GOP tax bill this week, presumably he is a no vote.

This trigger provision sounds like a “poison pill” amendment to me.

These organizations argue that a trigger, if it occurred, would likely increase taxes during an economic downturn, which they fear would cause stagnation. They also complain that it would inject even more uncertainty into the tax system, which would make it harder for businesses to plan their long-term investments.

Corker asked President Trump about a trigger during a private lunch yesterday for Senate Republicans. The president replied that he does not like the idea but will accept it if that’s the only way a bill can pass, sources said. “There’s agreement in principle, very strong agreement, with (Mitch) McConnell, with the Finance Committee — and of course the White House has been in the midst of all this, too — but the agreement was made with McConnell and the Finance Committee leadership,” Corker said later in the day.

CNBC’s Squawk Box adds, Bob Corker: Here’s what it will take to get me to vote for the tax bill:

Sen. Bob Corker said Tuesday a “backstop” to curb future budget deficits could help to win his crucial vote for the GOP tax bill.

The Tennessee Republican and others are seeking the protection in case the nearly $1.5 trillion in proposed tax cuts do not meet the GOP’s expectations for sparking economic growth. The “trigger” described by Corker would raise taxes if the plan does not boost the U.S. economy enough.

“What several of us have asked for is a backstop or trigger in that event we don’t meet the projections that have been laid out — since we’re not going to score it — that we have a backstop. And so that’s what we’ve been working on throughout the weekend and feverishly today,” Corker told CNBC’s “Squawk Box.”

“So, I hope we’ll get there. I know it’s important not just to me, but numbers of members who want to make sure that, for some reason these projections are off, we don’t have the growth that’s been laid out, it doesn’t generate revenues, that we’re not passing off increased debt to future generations,” he added.

Asked who would bear the brunt of the tax increases under the backstop provision, the senator said he did not want to take away from the “certainty” of tax policy that businesses would want to see to invest. Prompted on whether that means individuals would see their taxes raised while corporations would not, Corker responded that “both” would have an increase.

The Senate bill as it stands only temporarily cuts individual taxes while permanently chops corporate rates, in order to comply with Senate budget rules.

Corker, who has expressed fears about expanding U.S. budget deficits by trimming taxes without new revenue, is one of several Republican senators who have not yet committed to supporting the GOP bill. Republicans, who hold 52 Senate seats, can only lose two votes and still pass the bill under special budget rules, assuming all Democrats and independents vote against it.

Sens. Ron Johnson, R-Wis., and Steve Daines, R-Mont., have said they oppose the current bill due to its treatment of so-called pass-through businesses. Those businesses, which are taxed at individual rates, get fewer benefits under the plan than corporations, the senators say.

Other senators, including Jeff Flake, R-Ariz., and James Lankford, R-Okla., have also expressed doubts about the deficit.

On Monday, Corker suggested he could oppose the Republican tax bill in a procedural Senate Budget Committee vote Tuesday.

“Very possible. Yeah. Sure,” the Tennessee Republican responded Monday when asked if he could vote against the proposal.

NOTE: Neither Sen. Corker nor Sen. Johnson voted against the GOP tax bill in committee. The bill moved forward on a party-line vote of 12-11 (had one Tea-Publican voted no, a tie vote would have stalled the tax bill in committee). Senate Republican tax plan clears hurdle with help from two key GOP holdouts. Courage is in short supply among Tea-Publicans.

On Tuesday, he said he believes a plan can meet his goals and Johnson’s simultaneously. It is unclear how the Senate could cut the burden on pass-throughs further while keeping budget deficits in line.

Corker also showed little enthusiasm about the individual side of the Senate tax bill.

“If we could take the entire individual side of this, throw it in the trash can, and take it directly to the incinerator, I would be thrilled if we were only dealing with the business side as it’s turned out,” he said.

Corker added that he is “willing to swallow” the tax policy for individuals if Republicans can reduce the burden on businesses without increasing deficits.

The right-wing Weekly Standard is sounding A Trigger Warning (for Tax Reform):

Let’s hope all this talk from a small group of senators about inserting “triggers” into the tax bill triggers an outpouring of common sense among everybody else.

* * *

[T]he Senate is said to be considering a gimmick that could endanger many of the benefits of the tax changes while masquerading as financial discipline.

* * *

The problem is that there are many reasons government revenue could fall short of projections—reasons that have nothing to do with tax cuts and everything to do with the business cycle. A recession looks unlikely now, but in the coming years, it’s not impossible. A trigger would necessitate raising taxes in the middle of a recession—a move that even the most ardent Keynesian economists would resist.

Some senators seem to understand that hiking taxes as the economy slows is a political and policy loser: “I’m not going to vote to impose automatic tax increases on the American people,” said Sen. John Kennedy. “I’d rather drink weed killer than do that.” Business groups and conservative organizations also objected.

It’s bad enough that some of the provisions on individual taxes are already temporary, to comply with Senate budget rules. That’s already allowing critics to claim that the bill could hurt the poor and middle class in later years as provisions expire.

Making even more of the bill potentially temporary with a trigger tied to outside numbers would deprive businesses of tax certainty, which in turn jeopardizes investment and economic growth—which is a main reason for this bill in the first place.

* * *

But if the Senate is willing to talk about triggers, how about this one: Let’s tie their $174,000 salaries to successfully passing bills that fulfill campaign promises. If they can’t do it, too bad—it that triggers a pay cut. That’s the way triggers work.

So let’s game this out. There is virtually no chance that a trigger provision will ever be included in the final version of the GOP tax bill, so it is not clear to me what Sen. Corker hopes to achieve with this gambit. He should be a no vote on this terrible GOP tax bill (by his own admissions), and should demonstrate the courage to just come out and say so without this trigger charade. He is not seeking reelection, so he has nothing to fear in the way of retribution.

Comments are closed.