The Republican tax overhaul effort is in for a marathon debateon the Senate floor at the end of this month, with dozens of doomedDemocratic amendments. But the real action will be elsewhere,behind closed doors.

Two parallel and largely private negotiations will determine thecontent of the bill that's due for a full Senate vote as early asNov. 30: One is aimed at getting about a half-dozen wavering GOPsenators on board. The other will attempt to smooth the path for afinal House-Senate compromise in December.

Neither will be easy. GOP leaders must write a bill that canpass under the Senate's strict budget rules while cobbling together50 Senate votes without alienating the House GOP's coalition ofconservatives and moderates from high-tax districts. They'll alsohave to avoid political land mines such as the divisive health-caredebate that has riven Republicans for much of this year.

House and Senate staff members are already working on ways toavoid a drawn out process for reconciling their differentlegislation, said Neil Bradley, chief policy officer for the U.S.Chamber of Commerce. He said he's bullish on the prospects for acompromise next month.

“The fact that they have hit all of their marks so far, it isnow more likely,” he said. Key questions include how to taxpartnerships and other so-called pass-through entities and how torewrite international tax laws to limit corporate tax avoidance, hesaid.

Bill Hoagland, a former GOP Senate staff member who helpedshepherd former President George W. Bush's 2003 tax cuts throughCongress, said he's “totally convinced” lawmakers will try tofast-track the formal methods for resolving House-Senatedifferences—like a “conference committee” in which members work outdifferences in a deliberative process.

“A true conference committee would drag out into next year,”said Hoagland, now a senior vice president at Washington'sBipartisan Policy Center, an independent research group.

Here's a guide to what to expect.

What's the schedule from here?

Congress is trying to make a self-imposed deadline of adoptingtax legislation by year's end—to achieve a major legislativeaccomplishment before the 2018 mid-term elections. But they won'taccomplish much of note this week; both chambers are out for theThanksgiving holiday. When lawmakers return, the Senate has only 15legislative days left on its official 2017 calendar. Expect thechamber to vote on a tax bill during the week of Nov. 27.

If all goes smoothly for Senate leaders, that vote would mostlikely occur late on the evening of Nov. 30 or after midnight onDec. 1. It'll come only after a “vote-a-rama,” an overnight seriesof votes on what could be dozens of amendments offered by bothDemocrats and Republicans.

While the House approved its tax bill with relatively littledrama last week, the Senate vote has much higher stakes. The GOP'snarrow, two-vote majority in the Senate means that if the chamber'sleaders can put together enough votes to pass a bill, the finallegislation will probably look a lot like their version.

“The House always has to accede to the Senate because it's justmath,” said conservative economist Stephen Moore. “If you don't get50 votes in the Senate you don't have a bill. I've always thought alot of the House activity was theatrics and the real activity isgoing on in the Senate.”

What are the sticking points in theSenate?

Significant differences remain between the House and Senate taxplans: The Senate is proposing to repeal the so-called “individualmandate” that individuals must have health insurance, a requirementof the 2010 Affordable Care Act. Its plan also would delay acorporate income tax cut by one year and would make individual taxcuts temporary; they'd expire in 2026.

Then there's the issue of state and local tax deductions forindividuals: The Senate would repeal them entirely while the Housewould preserve a property-tax deduction up to $10,000. Even thatwasn't enough to win the support of a dozen GOP House members fromhigh-tax states last week.

Beyond that, the Senate would use a different approach from theHouse to cutting taxes on partnerships, limited liability companiesand other “pass-through” businesses—a potential sticking pointamong GOP lawmakers. Sen. Ron Johnson of Wisconsin last week saidhe can't support the plan as written because it offers too manyadvantages for major corporations and not enough for pass-throughs,which range from mom-and-pop grocers to large, closely heldcompanies to law firms, accounting firms and investment firms.

And a trio of senators has expressed concern about the $1.4trillion tax cut's effects on the federal deficit.

How will Obamacare affect the tax debate?

Mustering 50 votes may require some delicate bargaining.

The biggest obstacle may be the planned repeal of the individualmandate imposed by the Obamacare law, a move that would leave 13million people with no health coverage by 2027, according to theCongressional Budget Office. The change would save the federalgovernment as much as $318 billion by then—because it would have tospend less on insurance subsidies—according to the CBO. GOP taxwriters would use that savings to help reduce the deficit impact ofthe tax cuts.

But Republican Sens. Susan Collins of Maine and Lisa Murkowskiof Alaska have expressed concerns about the move. Neither has drawna red line on it yet, but Collins said Sunday that the Senateproposal “needs work.”

“I don't think that provision should be in the bill,” she saidof the individual-mandate repeal on ABC's “This Week” program. “Ihope the Senate will follow the lead of the House and strike it.”She said that for some middle-income families health-insurancepremiums would increase, canceling out any tax cut the bill wouldgive them.

“That's the one big potential sticking point —whether they canget 50 votes for repealing the individual mandate in Obamacare,”said Moore, the conservative economist. “If they can't, then theyget stymied again.”

What about fiscal impacts?

The bill's potential effect on federal deficits and the nationaldebt is already under scrutiny. Three Republicans —Tennessee's BobCorker, Arizona's Jeff Flake and Oklahoma's James Lankford—haveraised alarms about the deficit, which the legislation wouldincrease by $1.4 trillion over a decade, before accounting for theeconomic growth that its backers say would ensue. Independentanalyses suggest there wouldn't be enough such growth to cover thefull cost of the tax cuts.

“The biggest land mine is the tension between addressingconcerns of senators that would increase the cost of the bill andsenators who are already concerned about the deficit”—as well assome provisions in the bill that some regard as “gimmicks” designedto disguise its deficit impacts, said Ed Lorenzen, a senior adviserfor the nonpartisan Committee for a Responsible Federal Budget. Onesuch ploy, he said: The bill sets individual tax cuts to expire in2026—though party leaders say a future Congress won't let thathappen.

Amid the tax debate, Republicans are pursuing a separate dealwith Democrats to pursue new federal spending levels. When reportsemerged last week that those discussions included talk of a $200billion spending increase that wouldn't be offset by other cuts,Corker lashed out.

“We're $20 trillion in debt, and it's party like there's notomorrow time in Washington,” he said on Twitter. At the same time,Arizona's John McCain has called for the budget deal to increasemilitary spending, and GOP leaders who want his vote on a budgetdeal and a tax package can ill-afford to ignore his aims.

So how likely is passage this year?

On taxes, McCain has said he wants the legislative process tofollow “regular order.” In the end, that may be the mostchallenging demand of all—given the time constraints thatRepublican leaders have set for themselves.

House Speaker Paul Ryan said earlier this month that the Houseand Senate would work out their differences in a conferencecommittee. “We're going to conference,” he told reporters at a Nov.9 news conference. “Why are we going to conference? Because we'redoing this the right way. We're doing this regular order.”

The speaker's office is standing by that plan. “We will go toconference,” Ryan spokeswoman AshLee Strong said in an email.

Much will depend on how the rest of November goes. This week, onrecess, members of Congress will hear from local constituents onwhat they like—and don't like—about the emerging tax legislation.They may be in for an earful.

Last week, Quinnipiac University released a poll that saidAmerican voters disapprove of the GOP plan, 52% to 25%. Overall,voters said the proposals benefit the rich at the expense of themiddle class, 59% to 33%, according to the poll, which had a marginof error of plus or minus 3 percentage points.

The plan is a moving target, of course. But given thosenumbers—and the other potential obstacles—Stan Collender, a formerDemocratic congressional aide, said he thinks the prospects for theSenate vote next week “are 50-50.”

From: Bloomberg News

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