GOP eyes big prize for tax bill: Manchin’s vote

Senate Majority Leader Mitch McConnell (R-Ky.) is making a bid for the support of Sen. Joe Manchin (W.Va.), a prominent centrist Democrat, on tax reform.

McConnell invited Manchin to his office shortly before the Columbus Day recess to talk about tax legislation, among other issues. 

Manchin, who is running for reelection next year in a state that President Trump won in a landslide, is one of GOP’s top targets as they seek bipartisan support for their No. 1 legislative priority.

Last month, Trump invited Manchin and two other centrist Democrats, Sens. Joe Donnelly (Ind.) and Heidi Heitkamp (N.D.), to the White House for a bipartisan working dinner to talk about taxes. Donnelly and Heitkamp are also up for reelection next year in states won by Trump.

Manchin says he told McConnell he could support a tax-reform bill as long as it doesn’t add too much to the deficit, aligning himself with Sen. Bob Corker (R-Tenn.).

Corker says the legislation should not add “a penny to the deficit” under a special dynamic scoring model that takes into account economic growth projected from tax reform.

“That deficit bothers us. It really bothers us. So you got to find a combination that works, that’s reasonable, responsible for our kids and grandkids and really works,” Manchin said after the meeting.  

Manchin wants to modify Trump’s tax plan by setting the corporate tax rate at 25 percent and setting the rate for pass-through businesses at 30 percent. 

Trump and GOP leaders have proposed putting the corporate and pass-through rates at 20 percent and 25 percent, respectively.

Manchin says money stashed overseas should be taxed at 10 percent; Trump’s tax plan didn’t propose a rate for accumulated foreign earnings.

“My concern is I really think that 20 percent is too low — 25 percent corporate … is good,” Manchin said, summarizing his discussion with McConnell.

“Ten percent [for] repatriation, 30 percent [for] pass-throughs. We just talked back and forth to see if there’s flexibility and movement,” he said.

McConnell has also reached out to Donnelly.

The GOP leader spoke briefly to him on the Senate floor recently, according to a person familiar with the discussion.

Donnelly has told the leader that he is willing to continue discussing ideas on tax reform. 

The Indiana senator also traveled with Trump to Indianapolis last month for his speech on tax reform and pressed the president during their White House dinner to support his proposal to combat the outsourcing of American jobs. 

But Senate Republican aides see Manchin, who is the most prominent of the three centrist Democrats and who has an amiable relationship with Trump, as the big prize.

They think Donnelly and Heitkamp are more likely to sign on to tax reform if Manchin jumps first.

But some Republicans say Manchin’s demands are a non-starter and predict there’s no chance that he would buck his party and cast the decisive vote for a bill that Democratic leaders say is a giveaway to the wealthy and corporations.  

“There’s no value to bipartisan. He is never going to vote for that bill unless he’s the 51st, 52nd or 53rd vote. He would never be the 50th vote and everybody knows that, so what’s the point?” said Grover Norquist, president of Americans for Tax Reform, who has worked closely with the Trump administration on taxes.

Norquist said that Manchin knows that the administration has drawn a bright line at setting the corporate and pass-through rates at 20 percent and 25 percent. 

He believes the Democrat is already positioning himself to vote against Trump’s tax plan, even though Manchin is up for reelection next year in a state that Trump won with a bigger margin than any other. 

“He knows perfectly well that the administration has said that they will not budge beyond 20 percent,” Norquist said.

“So he announced he’s willing to cut a deal at something the White House won’t do in order to sound reasonable but never actually have to cast the vote?” he added.

Norquist said setting the corporate tax rate at 25 percent is unacceptable because it would fail to make United States as competitive as China, once state-level taxes are factored in.

“If you put us at 25 percent instead of 20, you put us behind China because China is at 25 [percent] and we have an average of 5 percent business tax at the state level,” he said. 

Republicans control 52 seats in the Senate and can afford only two defections on a tax bill, assuming every member of the Democratic caucus votes against it; Vice President Pence would break a 50-50 tie.

Normally, controversial legislation needs 60 votes to pass the Senate, but Republicans plan to use a special procedural pathway known as reconciliation to advance the bill with only Republican votes. 

That’s the strategy GOP leaders used to move ObamaCare repeal-and-replace legislation, but it backfired spectacularly when three Republicans, Sens. John McCain (Ariz.), Susan Collins (Maine) and Lisa Murkowski (Alaska), killed the measure in late July. 

After coming under intense fire for failing on health care, McConnell is looking for some insurance on tax legislation, with unified GOP support far from guaranteed. 

Corker and Collins have already raised concerns about the deficit impact of Trump’s tax plan.

“I’m obviously concerned about the debt and I think the joint taxation and CBO’s analyses are going to be very important,” Collins told The Hill, referring to the Joint Committee on Taxation and the Congressional Budget Office, which project the future revenue and deficit impact of legislation.

The Committee for a Responsible Federal Budget, a fiscally conservative advocacy group, estimates Trump’s plan could add $2.2 trillion to the debt over the next 10 years.

Republican leaders also worry that McCain and libertarian Sen. Rand Paul (R-Ky.), who both opposed a last-ditch attempt to replace ObamaCare last month, may not be certain yes votes. 

Collins says she’s going to wait until the Senate Finance Committee drafts the details of the tax bill before taking a position, but she warned that some proposals are likely to have more of a positive impact on economic growth than others. 

“It’s very complex because certain kinds of tax reform and cuts have a positive impact on [gross domestic product] and thus do not add to the deficit, while that’s not true of others,” she said.

Beyond the three centrists, McConnell does not have many prospects for cooperation on taxes in the Senate Democratic caucus.

All but three Senate Democrats signed a letter over the summer pledging to work with Republicans on tax reform only if the legislation met certain “prerequisites.” 

Democrats demanded the bill not cut taxes for the wealthy, that it be passed under regular order and not through a special process to avoid a filibuster, and that it not add to the deficit. 

The only three who didn’t sign it — and whom McConnell identified in August as potential partners — were Manchin, Donnelly and Heitkamp.

Heitkamp has not yet heard from McConnell, according to a Democratic aide.