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Jason Smith

The Tax Bill Cometh – Maybe?

The House passed a bipartisan tax package to expand the child tax credit and revive business tax breaks, putting up an eye-popping 357-70 tally Wednesday night. Bipartisanship — it’s not dead!

This was a major win for House Ways and Means Committee Chair Jason Smith (R-Mo.), who is the youngest tax-writing chair since the Civil War.

Democrats were also able to get a win — significant but not overwhelming — on one of their key priorities, the child tax credit.

But now watch what happens. This popular bipartisan tax bill is going to get caught up in a Senate legislative logjam over the next few weeks. Just consider what’s on the agenda already for the World’s Greatest Deliberative Body:

The Senate is currently in the middle of trying to craft a national defense supplemental, including border security money and aid to Israel, Ukraine and Taiwan. This is the chamber’s top priority right now.

The federal government’s shutdown deadlines under the current continuing resolution are coming up very soon — March 1 and March 8. Each of these bills include hundreds of billions of dollars in spending, and party leaders will need plenty of time to get them across the floor.

The FAA’s authority expires March 8. The Senate Commerce Committee has yet to mark up the upper chamber’s version of the FAA reauthorization. But March 8 is a hard deadline for the FAA to be reauthorized.

Most importantly, if the House impeaches Homeland Security Secretary Alejandro Mayorkas — which could happen as soon as next week — the Senate will need to hold an impeachment trial immediately. Impeachment has the highest privilege in the Senate.

Keep in mind: After next week, the Senate is scheduled to leave town for two weeks during the Presidents’ Day recess. In fact, the House and Senate will be in session at the same time for just three days this month, according to the current schedule.

Senate Minority Whip John Thune said that if the Senate gets on the border security-Ukraine bill by the end of next week, part of the recess may need to be scrapped. “I don’t know that you could let this thing hang out there much longer,” he said.

The Senate would likely need two weeks or so to process the tax legislation if Majority Leader Chuck Schumer tries to move it as a standalone bill.

GOP still cool to deal: It’s not just a crush of major priorities in the Senate that’s a complication here. Despite the bill clearly being on a path to a big House vote, Republican senators were no closer to getting on board Wednesday. They’ve been pushing changes to the tax bill and proposing a markup in the Senate Finance Committee, which could slow down or derail the whole effort.

The top Republican on the Finance panel, Sen. Mike Crapo of Idaho, has been in no rush to embrace it, and he’s pointed to concerns over the child tax credit expansion as the reason why.

“I look forward to working with my colleagues to vet the legislation, address concerns, and make the necessary changes to build support,” Crapo said in a statement.

Senate Republicans have picked at the child tax credit policy in the bill, the pay-for and the broader politics.

“I think passing a tax bill that makes the president look good, may allow checks before the election — means that [Joe Biden] could be reelected and then we won’t extend the 2017 tax bill,” Sen. Chuck Grassley (R-Iowa) told reporters. Those are the 2017 Trump tax cuts.

The White House has backed the package and Democrats have touted the child tax credit since their temporary 2021 expansion, which was significantly bigger than what’s in this bipartisan bill.

The bet from backers of the tax package has been that Senate Republicans will bow to pressure if the House passed it, particularly in a big bipartisan vote. We certainly expect the business lobby to turn up the heat now. The House package includes business tax benefits like one for research and development spending that Republicans have pressed for.

And there could be broader legislative vehicles on the horizon that up the stakes, such as a government funding bill.

Plus, we’re still talking SALT: In the House, the bill sailed through with one major snag — a group of New York Republicans who wanted to wedge more state and local tax deductions into the bill. That would’ve almost certainly doomed its chances. It was mainly a member-management issue for the House GOP leadership, who looked to buy off the New York Republicans for as cheap a price as possible.

That effort is ongoing this morning, with the House Rules Committee set to meet at 8 a.m. on a bill from a broader group of blue-state Republicans that would allow married couples filing taxes jointly to take double the SALT deductions — up to $20,000 — for 2023, as long as their adjusted gross income is under $500,000.

This bill might not get through Rules. If it does, the rule will likely die on the floor. That will be a massive embarrassment for the New York Republicans.

— Laura Weiss, Jake Sherman and Andrew Desiderio

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